Sun Pharma Q1 Review — Dolat Capital Maintains 'Reduce', Sees Current Valuations To Limit Upside

Sun Pharma's India revenues demonstrated strong growth of 13.9% YoY in Q1 FY26, driven by volume and new introductions. The company launched five new products in the Indian market during Q1 FY26 and holds the No. 1 position for prescriptions in 13 different doctor categories.

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Dolat Capital Report

We expect Sun Pharmaceutical Industries Ltd.'s revenue/PAT CAGR of 9%/7% over FY25-27E. With limited upside from current levels, we maintain ‘Reduce' rating, with a revised target price of Rs 1,696 at 30x FY27E P/E.

Key upside will be higher-than-expected traction in specialty sales and US growth.

Key downside will be further escalation of regulatory issues on plants and price erosion in base generics.

Sun Pharma's Q1 FY26 sales came in line with estimates, while Ebitda (exforex) came above due to lower-than-expected research and development and other expenses. PAT, adjusted for the exceptional items, fell in line.

Adj PAT fell in line despite higher operating performance due to higher-than-expected tax rate, lower-than-expected other income and higher-than-expected interest cost. The tax rate guidance for FY26 is around 25% higher than FY25.

We downgrade our FY26E/FY27E EPS estimate by -4.4%/-4.1%, assuming higher tax rate. Maintain ‘Reduce' rating with a revised TP of Rs 1,696 at 30x FY27E P/E.

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