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Informist, Thursday, Jan. 29, 2026

 

By Narayana Krishna

 

HYDERABAD - Sun Pharmaceutical Industries Ltd. is expected to report a moderate decline in its consolidated net profit for the December quarter, with earnings seen under pressure on both a year-on-year and sequential basis, despite steady revenue growth. Analysts expect the top line to be driven by India formulations, emerging markets, and the global specialty portfolio, while the US generics business is likely to remain subdued due to the continued impact of decline in Revlimid sales. Contributions from the specialty products portfolio and new launches are also expected to lend support to revenues for the quarter.

 

The country's largest pharmaceutical company in terms of sales is expected to report an over 7% on-year fall in consolidated net profit for the December quarter to nearly INR 30 billion, according to the average of estimates from 14 brokerages. The company's revenue is expected to rise nearly 8% on year to nearly INR 148 billion, the estimates show. On a trailing basis, the net profit is likely to fall a little over 4%, while revenue is expected to rise nearly 2%, the estimates show. Sun Pharma will announce its December-quarter earnings Saturday.

 

The highest estimate for the company's net profit is nearly INR 33 billion from Nuvama Wealth Management Ltd., while the lowest estimate of over INR 28 billion is from Nirmal Bang Equities Pvt. Ltd. The highest revenue estimate is by Mirae Asset Sharekhan Ltd. at INR 155 billion, and the lowest is by Kotak Securities Ltd. at nearly INR 144 billion.

 

UPS AND DOWNS

Analyst projections for Sun Pharma's December-quarter consolidated revenue indicate a broad range of around 5% to 16% year-on-year growth, led by traction in the specialty business and milestone income. Kotak Securities is at the lower end, and forecasts around 5% on-year revenue growth citing a sequential decline in US sales due to the continued decline in sales of cancer drug generic Revlimid, which is expected to partly offset steady growth in India and emerging markets. At the upper end, Mirae Asset expects around 16% on-year revenue growth, despite the drag effect of Revlimid.

 

Analysts expect Sun Pharma's revenue growth to be driven by strong performance in domestic formulations and emerging markets and support from new product launches despite weakness in the US generics business. US sales growth is seen boosted by product launches such as skin cancer drug Unloxcyt and psoriasis drug Ilumya.

 

Nuvama Wealth projects a 7% on-year growth in revenue, led by the India formulations business, and estimates a potential upside that could take sales growth to 10% on year if milestone income from the global innovative portfolio is booked during the quarter.

 

Nirmal Bang expects about 7.5% on-year revenue growth, supported by strong India formulations and specialty products, though partially offset by weakness in US generics on a constant currency basis due to the fall in Revlimid sales. SMIFFS Ltd. expects around 6% on-year growth, driven by domestic and emerging markets, with US growth remaining in single digits. Sun Pharma's December quarter US sales are likely to go up 4% on year but fall 0.6% on quarter, according to ICICI Securities.

 

Emerging markets and rest-of-the-world markets are expected to post high-single-digit to low-double-digit growth, according to brokerages JM Financial, Motilal Oswal, and Nirmal Bang, and this is expected to help offset weakness in the US market.

 

MARGIN STRESS

Stable gross margin and a favourable product mix are likely to support Sun Pharma's December quarter margin, but these factors will be partly offset by higher operating expenses, according to analysts. Increased spending on research and development and higher tax incidence are expected to impact overall margins for the quarter. 

 

Sun Pharma's December-quarter earnings before interest, tax, depreciation, and amortisation margin is expected to remain range-bound, with analyst estimates spanning from around 27% to just over 30%.

 

At the lower end, Motilal Oswal, Kotak Securities and Nirmal Bang peg the margin in the 27–28% range, reflecting pressure from higher R&D spend, specialty-related investments and operating deleverage from lower Revlimid contribution in the US.

 

On the higher end, Nuvama Wealth sees EBITDA margin expanding to around 30%, assuming the booking of milestone income from the global innovative portfolio, which would lift operating leverage despite elevated costs.

 

Analysts will look forward to the company's commentary on launch timelines of specialty products and the quantum of milestone payments received during the quarter.

 

The stock has fallen nearly 6% since the announcement of its September quarter earnings. On Thursday, the company's shares ended at INR 1,589.30 on the National Stock Exchange, down 1.3% from the previous close.

 

Of the 15 research reports on the company available with Informist, 13 have a 'buy' or equivalent recommendation on the stock with an average target price of INR 1,972. This is 24% higher than the current market price. One brokerage has a 'hold' rating on the stock with a target price of INR 1,800 and one has a 'sell' rating with an average price target of INR 1,747. 

 

Following are the Oct-Dec earnings estimates for Sun Pharmaceutical Industries Ltd. based on reports from 14 brokerage firms in descending order by the estimate of net profit in INR billion:

 

Brokerage name	Net Sales	Net Profit	EBITDA
Nuvama Wealth Management Ltd	151.01	32.63	45.71
Mirae Asset Sharekhan Ltd	155.30	31.28	40.93
ICICI Securities Ltd	150.30	30.89	42.38
HDFC Securities Ltd	148.05	30.72	41.90
Kotak Securities Ltd	143.90	30.35	39.94
Systematix Shares and Stocks (India) Ltd	147.36	30.31	44.26
Motilal Oswal Financial Services Ltd	146.49	30.12	39.99
JM Financial Institutional Securities Pvt Ltd	148.01	29.51	40.81
YES Securities (India) Ltd	146.33	28.98	42.71
Elara Securities (India) Pvt Ltd	146.76	28.78	42.05
Prabhudas Lilladher Pvt Ltd	146.00	28.59	41.63
SMIFS Ltd	145.39	28.53	40.13
Emkay Global Financial Services Ltd	145.39	28.37	41.05
Nirmal Bang Equities Pvt Ltd	146.89	28.34	40.84
Average	147.66	29.81	41.74

End

 

US$1 = INR 91.96

 

Edited by Tanima Banerjee

 

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