Sun Pharma seeks to tap overseas debt market to raise upto $1 billion

Sun Pharmaceuticals Industries controlled by Sanghvi issued a profit warning last week is in news for tapping global markets to raise funds . According to reports the company is looking to tap the global debt markets to raise as much as $ 1 billion. The funds to be raised via debt markets is expected to be done by selling offshore bonds. As per media reports the size of the bond issuance is expected to be in the range of $500- $ 1000 million with five to 10 year maturities. The funds may be used for refinancing and capital expenditure plans.

The debt issue may be launched in the month of September which will allow the country’s largest pharmaceutical company to raise money at a cheaper cost.

Investment bankers are roped in by the Mumbai based Sun Pharmaceuticals Industries. Sun Pharma is triple –A rated domestically and is likely to get an investment grade for itself in its overseas debt issuance. The rating i.e investment grade expected by Sun Pharma is equal to India’s sovereign rating.

According to ET’s ETIG , the company’s debt almost tripled to Rs 7,596.34 crore as of March 31 from Rs 2,560.86 crore a year ago.

The company while announcing its quarterly results told investors that revenue and profits will be adversely impacted on increasing costs related to the Ranbaxy acquisition. The profits and revenues are also expected to be adversely impacted due to manufacturing problems at its plants which are expected to get resolved.

Sun Pharma announced the acquisition of Ranbaxy Laboratories early last year. Sun pharma had earlier announced Ranbaxy acquisition from Japan’s Daiichi Sankyo for $ 3.2 billion. Sun Pharma in its statement has said that it needs to fix the manufacturing difficulties at Ranbaxy’s India plants including lifting of a US regulatory ban.

Sun Pharmaceuticals Industries is trading at a 44.29. The dividend yield for the stock stands at 0.18 percent. The stock trades at a premium to its peers like Dr. Reddy’s Lab and Lupin which are trading at a PE of 28.52 & 32.65 respectively. On YTD basis the stock has given 1.17 percent returns only.On 1 year basis the stock has generated 5.6 percent and on a 3 year period the annualised returns for the stock has been 40 percent approximately. On a 5 year period basis the stock has given 36.83 percent returns.