Buy Sun Pharma; target of Rs 2000: Emkay Global Financial

Emkay Global Financial is bullish on Sun Pharma has recommended buy rating on the stock with a target price of Rs 2000 in its research report dated November 06, 2025.

Broker Research

November 10, 2025 / 13:20 IST

buy

26 Aug, 2025 12:21

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Emkay Global Financial' research report on Sun Pharma

Sun’s 2QFY26 EBITDA was ahead of the street and our estimates (by ~12%), on the back of a marginally higher gross margin and lower R&D spend. The reported EBITDA margin was again at a multi-quarter high; excluding forex gain, EBITDA was marginally ahead of expectations. The topline surprise was primarily driven by a strong beat in EM + the RoW (no one-offs, per the management), with US and domestic sales being broadly in line. We believe that 2Q performance should put to rest concerns about sustainability of Sun’s double-digit domestic growth, given the scale of its domestic business (9th consecutive quarter of double-digit growth). While we admit that the lower R&D spend (which, in line with our earlier expectations, will be at the lower-end of the guidance for FY26) and forex gain have helped Sun well exceed the street’s margin expectations over the last 2 quarters, Sun equally deserves credit for gross margin defense at elevated levels (which, as we have been arguing in the past, is a structural driver, given that branded share in the overall mix will continue to increase). Pessimism around specialty ramp-up should get addressed as the base specialty business continues to scale up across markets (US and excl US); Leqselvi further widens access (refer to our note), Unloxcyt is launched in 2HFY26, and Ilumya receives an approval for Psoriatic Arthritis (2HFY27).

Outlook

Sun’s specialty portfolio will also benefit from favorable seasonality in 2HFY26. We broadly maintain our earnings estimates, and retain BUY with an unchanged TP of Rs2,000.

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