Large-cap Pharma stock jumps nearly 2% after it acquires 60% stake in Animal Healthcare firm 

Sun Pharmaceuticals (NS: SUN ) Industries Ltd, in a recent filing with the exchange on Friday, announced that it has entered into an agreement to acquire 60% shareholding in ‘Vivaldis Health And Foods Private Limited’ from its existing shareholders for ₹143.30 crores. The remaining 40% shareholding is to be acquired in the future as per certain terms & conditions. The acquisition process is estimated to be completed by the end of May 2023.

The company’s stock opened today at Rs 980 and is currently trading at Rs 990. The scrip is up around 2 percent as compared to the previous closing price of Rs 972.85. Within a timeframe of one month, the stock has given returns of around 3 percent ranging from Rs 965 to the current levels.

Sun Pharmaceuticals Industries Ltd is India’s largest generic pharmaceutical manufacturer and the fourth largest in the world. Majority of its revenue comes from large US markets and domestic operations within the country. In addition to the above, the company is also a producer and distributor of name-brand formulas to specific geographies. It maintains manufacturing and R&D facilities globally to serve its markets but the same is primarily based in India.

Having a quick overview of the financials, it is observed that the revenues and net profits reported by the company are contrasting in nature. Revenues moved up from Rs 10,952 crores in Q2 to Rs 11,241 crores in Q3. Whereas, the net profit figures moved down from Rs 2,260 crores in Q2 to Rs 2,188 crores in Q3.

The profitability ratios of the company show congruence and an increasing trend rather as far as the basic ratios are concerned. ROE showed an improvement from 4.98 percent in FY20-21 to 7.21 percent in FY21-22. Moreover, ROCE shifted from 5.66 percent in FY20-21 to 9.25 percent in FY21-22.

Another positive scenario for the company is pertaining to its continuously decreasing debt to equity ratio over the past five financial years. The most recent shift being from 0.08 in FY20-21 to 0.03 in FY21-22.

As per the latest quarter ending December 2022, promoters of the company hold a constant 54.48 percent stake. On the other hand, FIIs have increased their stake from 15.99 percent in Q2 to 16.87 percent in Q3.

Written by Amit Madnani

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