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Sun Pharma In The News

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Sun Pharma Cos M-cap Crosses 1-lakh Crore

CHART OF THE DAY Sun Pharma Cos M-cap Crosses 1-lakh Crore

Jwalit Vyas

On Thursday,drug maker Sun Pharma joined the league of companies with a market capitalisation of over 1 lakh crore after it gained 3.1%.Sun Pharma has gained 20% in the last two weeks,and it is now three times bigger than the countrys second-largest pharma company Dr Reddys Lab.Industry analysts are clueless about the reason for the recent run-up in the stock,since there is no fundamental triggers to support this rally.What is even more puzzling is that the buying has come despite the companys management consistently saying it will not be able to sustain the kind of performance it has delivered over the last one year.Besides,the companys current P/E value is 32,the highest in fi ve years.Analysts say a possible trigger for the upswing could be a potential acquisition by the company.Sun Pharma has obtained the boards approval to raise up to 8,000 crore,although it has a net cash of over 3,200 crore and strong cashflows from operations.Does this mean that the company is targeting another buyout Sun Pharmas ability to acquire,and then turn around,loss-making companies Taro being the latest one has helped its market capitalisation grow five-fold in fi ve years.Investors may be betting on a similar acquisition.