Technically, Sun Pharma (CMP: 861) has strong support of around 860-848-840 zone (good demand zone) & consecutive closing below 840, it may fall to 800-770-750-730-720-700-674 zone in the extreme bear market scenerio.
On the ascend, sustain above 860, immediate to short term target may be 890-896 & 920-944-961 zone. Sustain above 961, it may further scale to 991-1010-1031-1055-1075 in the mid term. Only consecutive closing above 1075, Sun Pharma may target 1121-1143-1200 zone in the long term (FY:16-17) under the bull case scenerio. (1010-1075 may be a good supply zone)
Bottom Line: Technical Trading Levels (Positional)
| SL</>5 | FROM SLR | |||||||||
| Sun Pharma | CMP | 861 | ||||||||
| T1 | T2 | T3 | T4 | T5 | T6 | T7 | SLR | |||
| Strong > | 860-848 | 890-896* | 920-944 | 961 | 991 | 1010*-1031 | 1055 | 1075* | <840 | |
| Weak < | 840 | 800-790* | 770 | 750 | 730 | 720-700 | 674 | 650-625 | >860 | |
The first result (Q4) of Sun Pharma after merger with Ranbaxy leaves the market in a puzzled situation & well below street estimates. There is sequentially around 11% decline in sales & 59% fall in OP amid cost of Ranbaxy merger (one time) and significant fall of sales in lucrative US market as a result of price cuts & frequent supply disruptions because of FDA embargo.
Looking ahead, market may further watch results of the next few quarters to have a sense of real impact of the merger, more pro-active management guidance, situation in US market, ghost of FDA and sales in other overseas market.
Being the number one pharma company in India, sequentially higher domestic performance may not be an issue for Sun Pharma, given its robust professional management and its success in handling acquisitions. Pharma is a recession proof industry, specially in India--be it drought or no drought, people will take medicines at any cost. Along with significant change in life style for young demography in India & increasing health consciousness among all types of generation, demand of pharma products will be ever green. For Sun Pharma, honeymoon period may be over with Ranbaxy merger, now its time to get it work. One of the recent good news is that, its also made a pact with Astra for distribution of its (Astra) cardio vascular drug (Axcer) in India, which may yield good sales.
As par BG metrics of TF model, median valuations of Sun Pharma may be around 840 (current) and 1000-1150 (projected FY:16-17).
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| SUNPHARMA | 21.93 | 89.44 | 35 | 826.71 | 850.98 | 838.84 | 890.43 | 943.47 |
| SUNPHARMA | 30.9 | 106 | 35 | 981.33 | 1010.13 | 995.73 | 890.43 | 943.47 |
| SUNPHARMA | 40.62 | 125.5 | 35 | 1125.13 | 1158.16 | 1141.65 | 890.43 | 943.47 |
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