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Sun Pharma Faces Minor Setback Amidst Strong Market Position and Growth Prospects

As of 13 November 2024, Sun Pharma's share price is ₹1,779.30, reflecting a decline of 1.23% from the previous closing price of ₹1,800.85. This movement highlights the volatility in the pharmaceutical market and the company's strategic positioning. This article examines Sun Pharma's current share price, compares it with its peers, reviews the company's Q2 quarterly report, and offers insights into its future outlook.

Price Analysis

According to the latest trading session, the share price of Sun Pharma is trading at ₹1,779.30 and has declined by 1.23% from the previous close at ₹1,800.85. The stock opened at ₹1,802 and has gone as low as ₹1,771.15 while the highest has been ₹1,797.30. Over the last one year, the share had witnessed too much volatility as seen from a 52-week range of ₹1,171 to ₹1,960.

The share trades well below its 50-day DMA but remains about 10% above its 200-day DMA, indicating that it could recover if it breaks through the resistance levels. As of today, Sun Pharma's market capitalization is around ₹426,759 crore, making it one of the largest pharmaceutical companies in India.

Support and Resistance Levels

The immediate resistance comes at ₹1,818.87 with supporting levels tagged at ₹1,788.97 and ₹1,777.08. These technical levels are the necessities of the traders to decide on investment with the help of this market movement.

Comparison of Sun Pharma vs. Competitors

There is a comparative study of the following similarities and differences with the pharmaceutical sector, especially when comparing the Sun Pharma Industries with the peer.

Sun Pharma Industries seems to be showing good profitability with a market capitalization of ₹427,045.64 Cr. A profit growth of +27.86% and sales growth of +9.01%. Profitability can also be gauged from the ROCE - 17.32%, but a poor dividend yield at just 0.75% is a drawback.

Cipla, with a m-cap of ₹ 122,492.05 crore, indicates satisfactory growth in its profit by 15.18% and modest sales growth of +5.58%. Its ROCE stands at 22.80% with a dividend yield of 0.84%.

Dr. Reddy's Labs, with an m-cap of ₹ 104,452.46 crores, has seen a decline in profits at -15.28%, but healthy sales growth at +16.45%. ROCE is as high as 26.53%. The dividend yield here is also at 0.63%.

The company with a m-cap of ₹101,983.97 crore, has been showing pretty good growth in profit at +34.84% and sales at +11.91%, with a ROCE of 24.57%. There is no dividend yield.

Next is Zydus Lifesci, which has a m-cap of ₹96,029.95 crore with profit growth of +13.62% and a sales growth of +19.87% with a decent ROCE of 22.34 %. There is a dividend yield of 0.32%.

Lupin at ₹93,649.97 crores of m-cap has a profit growth of +74.12% with just ordinary sales growth of +12.59%. The corporation also reflects a ROCE of 15.72% and a dividend yield of 0.38%.

Aurobindo Pharma at ₹73,374.14 crores declares profit growth of +8.65% and sales growth of +7.99%, with ROCE of 14.10% and dividend yield of 0.36%.

Median: The seven companies have a median performance, in terms of market cap at ₹94,350.02 crore, profit growth of 15.92%, sale growth at +8.5%, and also a good ROCE of 14.66%.

Q2 Report

Q2 fiscal results were announced recently in September 2024 by Sun Pharma, and net sales for the previous year stood at around ₹13,291 crore with a growth of 9% as compared to the previous year's figures. This is mainly due to the strength seen across generic and speciality products.

The operating profit margin for the company stood at almost 23%, implying very effective operating efficiency in the face of competitive pressures in the pharmaceutical space. A return on equity (ROE) of 15% at Sun Pharma reflects effective management and capital utilisation.

The management also clarified that they remain focused on growing product offerings and operational efficiency while keeping debt at 2%, which is very low but yet an indicator of a well-balanced balance sheet when growth has to be sustained.

Conclusion

Sun Pharma's share price has faced a minor decline, reflecting the ongoing volatility in the pharmaceutical market. Despite this, the company maintains a strong position with a solid market capitalization and consistent profitability.

The latest Q2 results show healthy growth in sales and operating profit, highlighting effective management. While the stock trades below its 50-day DMA, it remains above its 200-day DMA, suggesting potential for recovery. When compared to its peers, Sun Pharma shows strong profitability but faces challenges with its low dividend yield. Overall, the company is well-positioned for steady growth in the future.