Sun Pharma Q4 Review: Strong Domestic Growth Offset By Weakness In US Generics; Systematix Maintains 'Buy'

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Systematix Report

Sun Pharmaceutical Industries Ltd.’s adjusted earnings stood at Rs 28,891 million which was below our expectations owing to weakness in US generics (as gRevlimid contribution was immaterial) and a higher effective tax rate (19.8% in Q4 FY25 vs 5.1% in Q4 FY24).

Going forward tax rate will remain at current levels/inch up higher as Sun Pharma has exhausted tax benefits on losses. For FY26 Sun Pharma is guiding for mid to high single digit revenue growth considering global uncertainties (currency volatility, US regulatory uncertainties) and the company would be in the midst of building multiple new launches on the speciality front (Nidlegy, Leqselvi and cosibelimab).

Sun Pharma has also guided for an investment of $100 million in new launches. During the year, besides new launches, Sun Pharma will also unveil important clinical data on its new chemical entity pipeline (Vibozilimod, Ilumya in psoriatic arthritis) and the clinical data should be important as it would shape sentiment around medium to long term growth.

We tweak our estimates to account for the updated tax guidance and contribution from new launches on the specialty front. Based on our revised estimates, we maintain Buy on Sun Pharma, retaining our target price of 2,206, based on 35x FY27E EPS.

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