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Informist, Wednesday, Jul. 30, 2025

 

By Sunil Raghu

 

AHMEDABAD – Growth in the specialty products business, steady domestic sales, and moderate performance in the US market is expected to see Sun Pharmaceutical Industries Ltd. post healthy year-on-year earnings for the June quarter, according to analysts.

 

Sun Pharma is expected to report a 4.5% on-year rise in its June quarter consolidated net profit to INR 29.6 billion, with the revenue likely to rise 7.7% year-on-year to INR 136.3 billion, based on the average of estimates from 11 brokerages. On a trailing basis, the company's net profit is estimated to jump 38% and revenue is expected to rise 5%.

 

Among the projections, YES Securities (India) Ltd. has the lowest net profit estimate of INR 25.5 billion, as it sees Sun Pharma's margins compress on additional spending in the run up to specialty product launch. Centrum Broking Ltd. has the highest estimate for consolidated net profit at INR 32 billion. For revenue, the lowest estimate is INR 133.8 billion by YES Securities and the highest is INR 139.9 billion by Systematix Shares and Stocks (India) Ltd.

 

YES Securities' revenue estimate is the lowest but it sees an uptick in Sun Pharma's US business as historically the company's privately held subsidiary Taro generally sees a bump up in the June quarter on a trailing basis.

 

Other than the ramp up in Sun Pharma's high value products, Systematix expects contribution from gRevlimid to surge sequentially and support the company's US generics business in the June quarter. It also expects Sun Pharma to outpace peers to record a double-digit growth in the domestic market and its specialty portfolio to record a high single-digit growth. It expects Sun Pharma's domestic sales rise 10% on year and 8% on quarter and US sales to rise 14% on year and 11% on quarter.

 

Over the past few years, Sun Pharma's dependency on generics has reduced and specialty products segment is contributing more to margins and overall profitability, apart from the continued strong growth in domestic pharma market.

 

Centrum Broking expects Sun Pharma's domestic formulations business to post a 11% on-year growth in revenue to INR 46 billion on the back of higher traction, productivity of medical representatives, and new launches. The brokerage sees Sun Pharma's US sales grow 1% on year to $471 million as the continued traction in the specialty portfolio gets offset due to a decline in its generics portfolio.

 

Kotak Institutional Equities projected US sales for the quarter to rise 4% on quarter and 7% on year to $476 million, with the specialty share at $300 million, up 2% on quarter and 13% on year. Sun Pharma has key products such as Ilumya, Cequa, Winlevi, and Odomzo in its specialty products portfolio. Ilumya is used to treat moderate-to-severe plaque psoriasis while Cequa addresses dry eye disease. Winlevi is a topical treatment for acne and Odomzo is prescribed for locally advanced basal cell carcinoma that cannot be treated with surgery or radiation. Sun Pharma has a significant market share in each of these products. Kotak Equities has factored in 8% growth in India business and similar on-year growth in rest of the world during the June quarter.

 

According to an average of estimates of 11 brokerages, the company's earnings before interest, tax, depreciation and amortisation for the June quarter is pegged at INR 37.7 billion with the lowest estimate being INR 33.2 billion and the highest being INR 39.7 billion.

 

The brokerages expect Sun Pharma's gross margins to fall 40 basis points on quarter to 79.2%. They see research and development spend at 7% of sales, up 70 basis points on quarter. The EBITDA margin is expected to rise 80 basis points on a trailing basis to 27.2%.

 

Market participants keenly await company commentary on the potential launch pipeline over the next 12-18 months and the outlook on supply chain issues. They are also watching the extent of decline in margin, as Sun Pharma intends to spend an additional $100 million in 2025-26 (Apr-Mar) in a run up to its product launches in the US.

 

The impact of potential US tariffs is also of interest to brokerages. Some analysts are focussed on wanting to keep a tab on the growth in specialty assets Leqselvi and Cosibelimab, whenever they are launched. Analysts are also keen to know whether the company would guide for a spend of 8% of sales on its R&D activities in FY26, looking at the possibility of multiple phase-3 clinical trials that could commence in the second half of FY26. The company will detail its quarterly results on Thursday.

 

On Wednesday, shares of the company ended at INR 1,733.80 on the National Stock Exchange, up 1.4%. The stock is up 3% since May 23, a day after the company announced its March quarter earnings post market hours.

 

Of the 19 research reports on the company available with Informist, 15 have a ‘buy' or equivalent rating on the stock with an average target price of INR 2,008. One of the 19 analysts polled has a 'Sell' on Sun Pharma with a target price of INR 1,742.

 

Following are the June quarter earnings estimates for Sun Pharmaceutical Industries based on reports from 11 brokerage firms in descending order by the estimate of net profit:

 

Brokerage	Net sales (in mln rupees)	Net profit (in mln rupees)	EBITDA (in mln rupees)
Centrum Broking Ltd.	137,000	32,000	38,000
Motilal Oswal Financial Services Ltd.	134,217	31,790	36,876
Nuvama Wealth Management Ltd.	136,619	30,587	39,647
HDFC Securities Ltd.	136,379	30,526	38,186
JM Financial Institutional Securities Pvt Ltd	136,242	30,342	39,192
Dolat Capital Market Pvt. Ltd.	135,899	29,728	37,508
Prabhudas Lilladher Pvt Ltd	135,131	29,691	38,126
Systematix Shares and Stocks (India) Ltd.	139,856	29,141	39,034
Nirmal Bang Equities Pvt. Ltd.	138,854	28,295	37,794
Kotak Institutional Equities	135,135	28,171	36,743
YES Securities (India) Ltd.	133,780	25,521	33.236
Average	136,282.91	29,617.45	37,667.45

 

End

 

Edited by Ashish Shirke

 

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