| Photo Credit:
FRANCIS MASCARENHAS/Reuters

Target: ₹1,978

CMP: ₹1,629.05

Sun Pharmaceuticals’ Q1-FY26 recurring PAT missed BBG consensus/BNPPEe by 6/2 per cent owing to higher taxes, while EBITDA beat 12/10 per cent on higher-than-expected gross margin and lower-than-expected operating expenses. US sales grew 2 per cent q-o-q to $473 million (BNPPEe: $460 million), led by speciality products ($311 million).

Sun Pharma’s Q1-FY26 revenue grew 9.5 per cent y-o-y, largely in line with our expectations, led by 14/19 per cent y-o-y growth in India/RoW, respectively. US revenue grew 2 per cent quarter-over-quarter to $473 million, driven largely by speciality and innovative products, while generics (excluding Revlimid) saw a decline. EBITDA margin was up 250bp y-o-y to 31.1 per cent, led by an improvement in gross margin and a reduction in other opex. During the quarter, Sun Pharma incurred an exceptional loss of ₹810 crore related to impairment costs for the discontinuation of SCD-044 and a settlement agreement with putative end-payer plaintiffs.

While Sun Pharma saw a 250 bps y-o-y EBITDA margin improvement this quarter, we expect margin pressure in the remaining quarters this fiscal, as the company has guided to an incremental spend of $100 million (relating to two speciality product launches. We expect Sun Pharma’s global specialty business, along with domestic business outperformance, to drive revenue growth and improve Sun Pharma’s EBITDA margin by 300 bps over FY25-28.

Published on August 1, 2025