What Are Analysts Saying About Sun Pharmaceutical Industries Limited’s (NSE:SUNPHARMA) Long Term Outlook?

Sun Pharmaceutical Industries Limited’s (NSE:SUNPHARMA) most recent earnings update in March 2018 showed that the company endured a significant headwind with earnings deteriorating by -68.96%. Below is a brief commentary on my key takeaways on how market analysts view Sun Pharmaceutical Industries’s earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for Sun Pharmaceutical Industries

Market analysts’ consensus outlook for the coming year seems optimistic, with earnings expanding by a significant 97.94%. This strong growth in earnings is expected to continue, bringing the bottom line up to ₹63.54b by 2021.

NSEI:SUNPHARMA Future Profit June 19th 18
NSEI:SUNPHARMA Future Profit June 19th 18

Even though it’s informative knowing the growth each year relative to today’s value, it may be more insightful estimating the rate at which the business is growing every year, on average. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Sun Pharmaceutical Industries’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 35.19%. This means that, we can assume Sun Pharmaceutical Industries will grow its earnings by 35.19% every year for the next couple of years.

Next Steps:

For Sun Pharmaceutical Industries, I’ve compiled three key factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is SUNPHARMA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SUNPHARMA is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SUNPHARMA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!