>Sun Pharmaceutical Industries (BNP PARIBAS)

Protonix fading, focus back to core

* 3QFY09 results in line with expectation
Sun Pharma reported 3QFY09 earnings in line with our estimates but
below that of the Street’s. We believe Sun sacrificed its Protonix sales in
favor of margin preservation. The rupee depreciation and an evolving
product mix seems to have helped base business margins. We believe
rest of the world (ROW) markets and the impending Taro acquisition
would be the key to the stock’s continued out performance.

* Diversified revenue base to offset US market slowdown
Sun maintained it’s revenue guidance notwithstanding Caraco’s cautious
outlook on the U.S business.Sun’s base business growth remains on
track with domestic formulations increasing 14% y-y and bulk business
(both export and domestic) continuing to post strong growth. Branded
generics exports to the rest of the world market are likely to be the
incremental growth drivers. The company maintains its FY09 guidance
of 18-20% growth on consolidated basis, notwithstanding the cautious outlook issued by its US subsidiary Caraco.

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