Synopsis:
Sun Pharma shares are in focus post Q2, where growth remained steady with 9% revenue rise and 3% PAT YoY, while sequential profit improved meaningfully. Brokerages remain cautious with muted PAT visibility ahead, despite strong India and EM traction and the US innovative mix shift.
This company is engaged in the business of manufacturing, developing and marketing a wide range of branded and generic formulations and Active Pharma Ingredients (APIs) is now in the focus after reporting Q2 results with net profit increasing by 3% year on year.
With market capitalization of Rs. 4,05,488 cr, the shares of Sun Pharmaceutical Industries Ltd are currently trading at Rs. 1,685 per share, increasing 2% in today’s market session making a high of Rs. 1,720.45, from its previous close of Rs. 1,692.75 per share.
YoY performance
Sun Pharma reported a steady YoY improvement in Q2. Sales grew 9% to Rs. 14,478 crore from Rs. 13,291 crore in Q2FY25. EBITDA rose 15% YoY to Rs. 4,527 crore from Rs. 3,939 crore. Net profit increased 3% YoY to Rs. 3,125 crore compared to Rs. 3,037 crore last year, while EPS also inched higher by 3% YoY to Rs. 13.00 from Rs. 12.67.
QoQ performance
On a QoQ basis, the company maintained growth momentum with sales up from Rs. 13,851 crore to Rs. 14,478 crore. EBITDA also improved to Rs. 4,527 crore from Rs. 4,302 crore in Q1FY26. Net profit expanded sharply QoQ from Rs. 2,293 crore to Rs. 3,125 crore and EPS rose to Rs. 13.00 from Rs. 9.50 in the previous quarter, indicating sequential margin improvement and stronger profitability.
Nuvama continues to keep a ‘HOLD’ rating on Sun Pharma, assigning a target of Rs. 1,800, which indicates a potential upside of more than 7% from current levels. The brokerage believes PAT growth is likely to remain in single digits due to intensifying competition in Alopecia Areata and Plaque Psoriasis, along with possible U.S. policy headwinds including MFN pricing and tariff risks.
Management commentary
Sun Pharma MD Kirti Ganorkar mentioned that growth during the quarter was driven mainly by India, Emerging Markets and Rest of World markets. He highlighted that in the U.S., sales of Innovative Medicines have crossed their Generics segment for the first time. The company continues to focus on strengthening its product pipeline, internal capabilities and execution strength.
U.S. formulation sales came in at $496 million, lower by 4.1% YoY, as generic softness was counterbalanced by stronger traction in Innovative Medicines. The U.S. accounted for 30.1% of total consolidated revenue. Emerging Markets delivered $325 million in formulation sales, rising 10.9% YoY and contributing 19.7% of consolidated sales. In H1 FY26, U.S. sales reached $968 million while Emerging Markets stood at $623 million, up 8% YoY.
About the company
Sun Pharmaceutical Industries Ltd is India’s largest pharmaceutical company, engaged in manufacturing and marketing branded generics, specialty products and active pharmaceutical ingredients across domestic and global markets. The company has a strong presence in chronic therapies, a growing specialty portfolio in regulated markets like the US, and continues to scale profitably with consistent leadership in the pharma space.
The return ratios remain healthy with ROCE at 20.2% and ROE at 16.9%. Sun Pharma has delivered strong profit growth of 23.8% CAGR over the last five years and continues to maintain a healthy dividend payout ratio of 33.8%
FII’s holding has declined from 17.26% in Q1FY26 to 16.55% in Q2FY26. DII’s increased their stake to 20.12% from 19.38%. Government holdings stand flat at 0.11%. Public shareholding slightly fell to 8.72% from 8.76% over the same period.
Written by Manideep Appana
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