Fundamental and

Technical Analysis of
Sun Pharmaceuticals




2014
Shardul Chimote
itm-khr

Fundamental and Technical Analysis of
Sun Pharmaceuticals
About Sun Pharmaceuticals

Sun Pharmaceutical Industries Limited (NSE: SUNPHARMA, BSE: 524715) is an
multinational pharmaceutical company headquartered in Mumbai, Maharashtra that
manufactures and sells pharmaceutical formulations and active pharmaceutical ingredients
(APIs) primarily in India and the United States. The company offers formulations in various
therapeutic areas, such as cardiology, psychiatry, neurology, gastroenterology anddiabetology. It
also provides APIs such as warfarin, carbamazepine, etodolac, and clorazepate, as well as
anticancers, steroids, peptides, sex hormones, and controlled substances.
Sun Pharmaceuticals was established by Mr. Dilip Shanghvi in 1983 in Kolkata with five
products to treat psychiatry ailments. Cardiology products were introduced in 1987 followed
by gastroenterology products in 1989. Today it is the largest chronic prescription company in
India and a market leader in psychiatry, neurology, cardiology, orthopedics, ophthalmology,
gastroenterology and nephrology. Some of the top brands of the company include pantocid,
susten, aztor, gemer, repace, glucored, strocit, clopilet and cardivas. Over 57% of Sun Pharma
sales are from markets outside India, primarily in the US. Manufacturing is across 23 locations,
including the US, Canada, Brazil, Mexico and Israel. In the US, the company markets over 200
generics, with another 150 awaiting approval from the U.S. Food and Drug
Administration (FDA).
Sun Pharma was listed on the stock exchange in 1994 in an issue oversubscribed 55 times. The
founding family continues to hold a majority stake in the company. Today Sun Pharma is the
third largest and the most profitable pharmaceutical company in India as well as the largest
pharmaceutical company by market capitalisation on the Indian exchanges. The Indian
pharmaceutical industry has become the third largest producer in the world in terms of volumes
and is poised to grow into an industry of $20 billion in 2015 from the current turnover of $12
billion. In terms of value India still stands at number 14 in the world.


Share holding pattern

Share holding pattern as on : 31/12/2013 30/09/2013 16/08/2013
Face value 1 1 1

No. Of
Shares
%
Holding
No. Of
Shares
%
Holding
No. Of
Shares
%
Holding
Promoter's holding
Indian Promoters 1318341400 63.65 1318341400 63.65 1318341400 63.65
Sub total 1318341400 63.65 1318341400 63.65 1318341400 63.65
Non promoter's holding
Institutional investors
Banks Fin. Inst. and
Insurance 92256360 4.45 39767327 1.92 36240553 1.75
FII's 465899152 22.49 471782863 22.78 474131535 22.89
Sub total 583873599 28.19 536967294 25.93 537206784 25.94
Other investors
Private Corporate
Bodies 51087269 2.47 100472432 4.85 100761965 4.86
NRI's/OCB's/Foreign
Others 3033514 0.15 2938247 0.14 2980703 0.14
Direcctors/Employees 4869850 0.24 4869850 0.24 4869850 0.24
Govt 892512 0.04 525971 0.03 485496 0.02
Others 2511511 0.12 2929047 0.14 2079467 0.1
Sub total 62394656 3.01 111735547 5.39 111177481 5.37
General public 106554255 5.14 104089669 5.03 104406645 5.04
Grand total 2071163910 100 2071133910 100 2071132310 100




Interpretation from above data:-
1. Promoter holding, as seen is at 63.65%, which is greater than 50%. Hence the company is
stable.
2. It is also evident from the above data that the chances of Sun Pharma being acquired by
other company is very less as the promoter holding stands at 63.65%.


The following graph gives the share of promoter, non promoter and other investors
in share holding pattern.


Mutual Fund holdings


0
200000000
400000000
600000000
800000000
1000000000
1200000000
1400000000
JULY. 2013 SEPT. 2013 DEC. 2013
PROMOTER
NON PROMOTER
OTHER INVESTORS
DEC SEPT JUNE MAR
18,733,838 21,721,660 11,170,354 22,743,106

Interpretation from above data:-
As seen from above graph mutual fund holding is quite stable, hence the mutual fund is bullish
about this company.

Public Share Holdings

No. Name of the Shareholder
Total Shares
held
Shares as % of Total
No. of Shares
1
Genesis Indian Investment Company Ltd
General Sub Fund
49,027,465 2.37
2 Lakshdeep Investments & Finance Pvt Ltd 22,226,000 1.07
3 Life Insurance Corporation of India 21,264,429 1.03

Total 92,517,894 4.47

The average public share holding is greater than 1 %.
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
MUTUAL FUND HOLDING
MUTUAL FUND HOLDING


Industry Analysis


53%
24%
23%
SHARES AS % OF TOTAL NO. OF SHARES
GENESIS INDIA INVESTMENT COMPANY LAKSHADWEEP INVESTMENTS LIC OF INDIA


SWOT Analysis for pharmaceuticals sector in India


Fundamental Analysis of Sun Pharma

Beta 0.539
Confidence in Beta 1.08%
Diluted Trailing Twelve Months (TTM)
Earnings Per Share (EPS)
Rs.12.42
TTM Price-to-Earnings (P/E) Ratio 49.3

Relative Strength Index

According to relative strength index, Sun pharma is at its support.

Sun pharma simple moving average


Sun pharma exponential moving average


Moving average convergence and divergence

Sun pharma Bollinger bands





Financial Ratios

Mar '13
Mar
'12
Mar '11 Mar '10 Mar '09

Investment Valuation Ratios

Face Value 1.00 1.00 1.00 5.00 5.00

Dividend Per Share -- -- -- -- --

Operating Profit Per Share (Rs) 47.28 30.94 19.04 56.55 90.02

Net Operating Profit Per Share (Rs) 109.12 77.44 55.25 188.46 206.62

Free Reserves Per Share (Rs) -- -- 87.66 356.10 306.91

Bonus in Equity Capital 78.03 78.03 78.03 78.03 78.03

Profitability Ratios

Operating Profit Margin(%) 43.33 39.95 34.27 30.00 43.56

Profit Before Interest And Tax Margin(%) 39.01 34.30 28.90 23.83 38.97

Gross Profit Margin(%) 40.35 36.32 30.69 26.07 40.68

Cash Profit Margin(%) 37.60 39.27 34.77 34.27 44.21

Adjusted Cash Margin(%) 37.60 39.27 34.02 34.27 44.21

Net Profit Margin(%) 25.52 31.28 30.43 31.64 40.69

Adjusted Net Profit Margin(%) 25.52 31.28 29.85 31.64 40.69

Return On Capital Employed(%) 32.57 27.07 21.45 17.30 26.69

Return On Net Worth(%) 19.90 21.71 19.15 17.25 25.80

Adjusted Return on Net Worth(%) 27.08 24.87 19.25 16.73 26.28

Return on Assets Excluding Revaluations 144.75 118.15 91.57 378.00 340.14

Return on Assets Including Revaluations 144.75 118.15 91.57 378.00 340.14

Return on Long Term Funds(%) 32.75 27.31 20.77 17.57 27.29

Liquidity And Solvency Ratios

Current Ratio 2.91 3.32 3.33 3.55 4.30

Quick Ratio 2.16 2.56 2.91 3.00 3.91

Debt Equity Ratio 0.01 0.02 0.04 0.02 0.03

Long Term Debt Equity Ratio 0.01 0.01 0.02 0.01 --

Debt Coverage Ratios

Interest Cover 114.65 120.02 28.60 225.07 329.67

Total Debt to Owners Fund 0.01 0.02 0.04 0.02 0.03

Financial Charges Coverage Ratio 122.44 130.35 38.39 250.00 350.75

Financial Charges Coverage Ratio Post Tax 77.91 105.53 35.99 245.62 332.80

Management Efficiency Ratios

Inventory Turnover Ratio 4.38 3.84 3.85 4.00 4.79

Debtors Turnover Ratio 4.87 4.97 4.93 3.80 3.72

Investments Turnover Ratio 4.38 3.84 4.37 4.00 4.79

Fixed Assets Turnover Ratio 2.02 1.72 1.46 1.87 2.24

Total Assets Turnover Ratio 0.79 0.65 0.59 0.51 0.62

Asset Turnover Ratio 0.74 0.66 0.60 1.87 2.24

Average Raw Material Holding -- -- 172.34 204.47 195.22

Average Finished Goods Held -- -- 40.90 23.86 24.40

Number of Days In Working Capital 239.40 296.45 312.02 280.68 304.22



Profit & Loss Account Ratios
Material Cost Composition 22.86 28.31 25.96 30.35 23.41

Imported Composition of Raw Materials
Consumed
-- -- -- -- --

Selling Distribution Cost Composition -- -- 8.28 7.99 7.43

Expenses as Composition of Total Sales -- -- -- -- --

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 20.30 19.25 23.19 24.57 18.33

Dividend Payout Ratio Cash Profit 18.25 17.35 20.85 22.07 17.16

Earning Retention Ratio 85.08 83.20 76.94 74.66 82.01

Cash Earning Retention Ratio 86.22 84.66 79.26 77.31 83.13

AdjustedCash Flow Times 0.05 0.08 0.21 0.12 0.09





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