ICICIdirect has upgraded to 'Buy' on Sun Pharmaceutical Industries.

Revenues grew 12.4% YoY to Rs 39.53 billion due to lower growth of 14.4% in the US formulations business to Rs 23.23 billion. The dip of 15% in Taro sales to USD 130 million was due to a one-time charge related to price adjustments on contractual obligations.

Commenting on the investment rationale, the stock broker said, ''The dent in Taro sales in Q1 was on account of one-off price protection charges to comply with contractual obligations. But for this, growth would have been 18% YoY. The US base business remains in a high growth trajectory, thanks to the robust ANDA pipeline and continuing quest for niche and limited competition launches.

Our revised target price stands at Rs 888, which includes - Rs 850 for base business Rs 38 cash a share (FY14). Upgrade to Buy.''

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