Sun Pharma among 20 most valued Indian companies after market cap crosses ₹3 lakh crore

Sun Pharma Ltd.'s overall market capitalisation crossed 3 lakh crore on Monday, making the Dilip Shangvi-owned firm the 20th most valued company in the country.

With Monday's surge, the shares of India's largest drugmaker are now up 26% in 2023. In comparison, the benchmark Nifty 50 index is up 19%. In fact, the stock has gained 15% since the start of November.

After negative annual returns for four years in a row between 2015 - 2018, the stock has delivered positive annual returns every year since, with average returns of 25%.

The latest rally in Sun Pharma's shares has been triggered by multiple positive newsflow. Last week, China's National Reimbursement Drug List had included Sun Pharma drug Ilumetri used to treat adults with moderate to severe Plaque Psoriasis in Category B.

Ilumetri received marketing approval in China in May 2023. The inclusion in the national reimbursement drug list is expected to enhance accessibility and affordability, benefiting a broader patient population.

Brokerage firm Bernstein believes that this news is incrementally positive for Sun Pharma, and that it opens up another large psoriasis market for the company. It has an outperform rating on Sun Pharma with a price target of ₹1,208.

Further, the company also signed licensing agreement with Aclaris for immune-inflammatory disease.

JPMorgan believes that Sun Pharma is best placed to transition into a specialty player in the US with large investments already in place. The company's specialty business contributed 16% to its financial year 2023 revenue and is likely to rise further aided by a ramp-up in its key products like Ilumya, Cequa and Winlevi.

“We see a structural improvement in Sun Pharma’s margin profile over the medium term with improved quality of earnings (less generics exposure, high specialty contribution), observed JPMorgan in an investor note last month.

Additionally, the company also launched 8 new products in Q2 including Tyvalzi, which is a first-in-class drug for the treatment of ischemic stroke. Moreover, the street believes Sun Pharma’s strong balance sheet provides flexibility to pursue inorganic growth opportunities which can act as an additional lever for growth.

Shares of Sun Pharma are trading 1.7% higher at ₹1,256.55.