Fundamental analysis (FA) measures a security's intrinsic value by examining related economic and financial factors. Intrinsic value is the value of an investment based on the issuing company's financial situation and current market and economic conditions. Fundamental analysis is really a logical and systematic approach to estimating the future dividends and share price. When the market price of a share is higher than its intrinsic value, it is perceived to be overpriced.
2. What is Fundamental Analysis
Fundamental analysis (FA) measures a security's intrinsic value by
examining related economic and financial factors. Intrinsic value is
the value of an investment based on the issuing company's
financial situation and current market and economic conditions.
Fundamental analysis is really a logical and systematic approach to
estimating the future dividends and share price. When the market
price of a share is higher than its intrinsic value, it is perceived to
be overpriced.
3. Fundamental analysis are classified Into three analysis
1.Economy analysis
2.Industry analysis
3.Company analysis
4. Indian economy:-
The performance of a company depends on the performance of the economy. If the economy grows rapidly,
the industry can also be expected to show rapid growth and vice versa. When the level of economic activity
is low, stock prices are low, and when the level of economic activity is high, stock prices are high reflecting
the prosperous outlook for sales and profits of the firms.
interest-free loan in FY24. From April to November 2023, the states utilized more than ₹97,000 crore out of
the ₹1.3 lakh crore of interest-free loans under the Special Assistance to states for Capital Investment that
the Centre budgeted for FY24. Resultingly, the states are improving their infrastructure, like schools, rural
roads, electricity provision, etc. States’ capital expenditure was up more than 47 per cent in the six months
between April-September 2023 compared to April-September 2022.
1. GDP Growth:- Sun Pharma's performance can be influenced by the overall economic environment
in India. A growing economy tends to correlate with increased healthcare spending. As the GDP of a
country expands, there is usually a greater ability for consumers to spend on healthcare products and
services.
2. Interest Rates:- Interest rates play a crucial role in determining the cost of borrowing for
companies. Low-interest rates are generally favorable for business expansion as they reduce borrowing
costs, enabling companies to invest in research, development, and expansion.
5. Industry analysis
Industry analysis refers to an evaluation of the
relative strengths and weaknesses of particular
industries. An industry is generally described as a
homogenous group of companies. An industry is a
group of firms that have similar technological
structure of production and produce similar products.
Indian Pharmaceutical Industry Size & Share
Analysis - Growth Trends & Forecasts (2024 - 2029)
The Indian Pharmaceutical Market, Shaped by
Government Initiatives, Focuses On Affordable, Top-
Tier Medications, Including Generic Drugs, Over-
The-Counter Remedies, Vaccines, and More. Despite
Potential Obstacles Like Unstable Pricing and Lack
of Innovative Drug Development, the Market is
Expected To Grow Robustly Due To Increased
Demand and Digitalization. Segmentation Includes
Therapeutic Category and Pill Type, With Respiratory
and Generic Drugs Showing Strong Growth. Key
Players Include Cipla Inc. , Dr. Reddy's Laboratories
Ltd. , Lupin, and Sun Pharmaceutical Industries Ltd.
6. Company Analysis
SUN PHARMA Income Statement Analysis
•Operating income during the year rose 13.5% on a year-on-year (YoY) basis.
•The company's operating profit increased by 112.4% YoY during the fiscal. Operating profit margins
witnessed a fall and down at 25.7% in FY23 as against 13.7% in FY22.
•Depreciation charges increased by 18.0% and finance costs increased by 35.1% YoY, respectively.
•Other income declined by 43.0% YoY.
•Net profit for the year grew by 151.4% YoY.
•Net profit margins during the year grew from 8.8% in FY22 to 19.5% in FY23.
SUN PHARMA Balance Sheet Analysis
•The company's current liabilities during FY23 stood at Rs 199 billion as compared to Rs 172 billion in
FY22, thereby witnessing an increase of 15.7%.
•Current assets rose 14% and stood at Rs 399 billion, while fixed assets rose 17% and stood at Rs 377
billion in FY23.
•Overall, the total assets and liabilities for FY23 stood at Rs 776 billion as against Rs 670 billion during
FY22, there by witnessing a growth of 16%.
7. Ratio Analysis for SUN PHARMA
•Solvency Ratios
Current Ratio: The company's current ratio deteriorated and stood at 2.0x during FY23, from 2.0x during FY22.
The current ratio measures the company's ability to pay short-term and long-term obligations.
Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 55.7x during FY23, from
36.2x during FY22. The interest coverage ratio of a company states how easily a company can pay its interest
expense on outstanding debt. A higher ratio is preferable.
•Profitability Ratios
Return on Equity (ROE): The ROE for the company improved and stood at 15.3% during FY23, from 7.1%
during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the
company.
Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 17.1% during
FY23, from 9.6% during FY22. The ROCE measures the ability of a firm to generate profits from its total capital
(shareholder capital plus debt capital) employed in the company.
Return on Assets (ROA): The ROA of the company improved and stood at 11.3% during FY23, from 5.3%
during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.
