Sun Pharmaceutical Industries Ltd.'s June-quarter earnings drew a mixed brokerage verdict as stronger-than-expected operating profit and margins were offset by softer revenue and profit. Macquarie and HSBC retained positive ratings, citing the strength of the India business and a richer product mix, while BofA remained cautious on slowing US and specialty sales and execution risks around the Organon deal.
Brokerages said India's growth was supported by volumes and new launches, while the increasing contribution from branded generics and innovative medicines helped profitability. However, slowing innovative medicine sales, uncertainty around the pace of newer product uptake and continued spending behind launches remain key monitorables.
Sun Pharma's revenue and net profit fell short of Street estimates during the quarter, while EBITDA and operating margin exceeded expectations. Reported profit was also affected by a one-time loss of Rs. 204 crore.
Sun Pharma Q1 Highlights (Consolidated, YoY)
- Revenue rose 10.5% to Rs. 15,300 crore from Rs. 13,851 crore. (Bloomberg Estimate: Rs. 15,527 crore)
- EBITDA increased 2.7% to Rs. 4,419 crore from Rs. 4,301 crore. (Bloomberg Estimate: Rs. 4,372 crore)
- EBITDA margin stood at 28.9% versus 31.1% a year ago. (Bloomberg Estimate: 28.2%)
- Net profit increased 27% to Rs. 2,895 crore from Rs. 2,279 crore. (Bloomberg Estimate: Rs. 2,974 crore)
- The quarter included a one-time loss of Rs. 204 crore.
- Other income increased to Rs. 724 crore from Rs. 464 crore a year earlier.
- API formulations business revenue rose 10.5% year on year to Rs. 597 crore.
Management retained its FY27 guidance for high-single-digit consolidated revenue growth and research and development spending at 6%-7% of sales. Brokerages also highlighted Sun Pharma's product pipeline and the proposed Organon transaction as key factors that could shape the earnings trajectory.
Here's What Brokerages Are Saying After Sun Pharma Announced Q1 Results
Macquarie
- Maintained 'Outperform'; Target Price At Rs. 2,150
- Reported profit was affected by one-off legal, acquisition and new labour code-related costs.
- Margin performance benefited from a richer mix of branded generics and Innovative Medicines.
- Organon transaction remains on track for completion in Q4 FY27 or early CY27.
- Management retained FY27 guidance for high-single-digit revenue growth.
- R&D spending is expected at 6%-7% of sales.
Goldman Sachs
- India growth was driven more by volumes and new launches than pricing.
- Sun Pharma launched five new products during the quarter.
- Management retained guidance for high-single-digit consolidated revenue growth in FY27.
- R&D spending is expected at 6%-7% of sales.
- Spending on Leqselvi and Unloxcyt will now be treated as an ongoing cost rather than one-off launch expenditure.
- GL0034 topline data is expected in the second half of CY27.
- Fibromun is entering Phase 3 trials for soft tissue sarcoma.
- Management did not provide margin guidance despite commentary around continued launch spending.
BofA
- Reiterated 'Underperform'; Target Price Raised To Rs. 1,915 From Rs. 1,720
- Revenue missed its estimate following a 7% sequential decline in US sales and softer emerging-market growth.
- Specialty revenue has been moderating since Q3 FY26 despite momentum in Ilumya.
- Organon's revenue growth has also been moderating, while its EBITDA margin declined by more than 400 basis points year on year.
- Sees limited near-term catalysts.
- Traction from new launches and potential Ilumya approval for psoriatic arthritis remain key monitorables.
- Revised its target price while valuing Sun Pharma's base business at a lower multiple due to execution risks associated with the Organon transaction.
HSBC
- Maintained 'Buy'; Target Price Raised To Rs. 2,120 From Rs. 2,100
- Innovative medicine sales growth slowed compared with previous quarters, weighing on an otherwise mixed quarter.
- Improving payor access for Leqselvi and Unloxcyt has yet to translate into higher sales.
- Uptake of the two products remains a key swing factor for earnings.
- Organon transaction has received shareholder approval and is expected to close in Q4 FY27.
- Raised the valuation multiple to reflect the consistency of Sun Pharma's India business.
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