Buy Sun Pharmaceuticals; target of Rs 2264: Sharekhan

Sharekhan's research report on Sun Pharmaceuticals

Sun Pharmaceutical Industries reported a revenue of ₹13,291 crore for the quarter, reflecting a 9% year-over-year increase and a 5% rise quarter-over-quarter. This figure surpassed our estimates by 2%, despite experiencing price reductions in Taro’s portfolio and in Japan. The EBITDA for this period reached ₹3,939 crore, demonstrating a strong year-over-year growth of 24% and a sequential increase of 9%. This result exceeded our forecasts by 12%, primarily driven by higher sales volumes and lower raw material costs. The company’s margins stood at 30%, an increase of 356 basis points year-over-year and 112 basis points quarter-over-quarter, surpassing our expectations by 264 basis points, largely due to the exceptional performance of its specialty portfolio. Additionally, the PAT was reported at ₹3,031 crore, representing a 26% increase year-over-year and a 6% increase quarter-over-quarter.

Outlook

Sun’s India business is expected to outperform IPM through volume growth and new product launches followed by sustainable growth in the specialty business. Hence, we maintain a Buy on the stock. The Stock trades at 38x/~33x its FY2026E/FY2027E EPS. Due to higher margins driven by India and the specialty business, we would like to maintain our PT of Rs. 2264.