Sun Pharma jumps up

Sun Pharma is showing some traction in this overall lackluster market. The stock, opened some Rs.10 higher at Rs.956, going up to Rs.960 levels and with profit booking coming at these levels, it has now slipped back to Rs.956, up over 1%. Volumes remain muted. Its 52-weke high is at Rs.1200.70.

The stock is in news today that its Israeli generic company, Taro Pharmaceutical has hiked prices on couple of products over the past few days. This price hike, almost all across the board is expected to push up Sun’s EBITDA by around 4%, which is pretty huge.

There is also news that it is planning to spend up to $7 billion on another acquisition, notwithstanding the big ticket buy of Ranbaxy. Rumour mills have it that Sun is eyeing companies in the U.S. and the Europe, with a focus on companies that manufacture biosimilars, the low cost products similar to biotech drugs, which are seeing a fast pickup in sales. The company is sitting on a huge pile of cash of around $1.5 billion and debt-to-equity ratio is just 0.13. Thus with so much cash generation, in order to shareholder value, it needs to acquire more to grow further.

As a part of its aggressive acquisition plans, Sun Pharma appointed Arvind Kumar in April, to oversee its acquisitions. Kumar has worked as M&A executive at Reliance Industries Ltd and JSW Steel Ltd.