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Informist, Friday, Oct. 24, 2025

 

By Sunil Raghu

 

MUMBAI – Continued growth in the specialty products business, steady growth in domestic sales, and moderate performance in the US market are expected to help Sun Pharmaceutical Industries Ltd. post healthy year-on-year revenue growth for the September quarter, according to analysts. The brokerages expect the company's margins to fall due to the decline in sales of cancer drug Revlimid and higher spend on new drug launches in the US market.

 

Sun Pharma is expected to report a 3% on-year fall in its September quarter consolidated net profit to INR 29.4 billion, with revenue likely to rise 7% year-on-year to INR 142.5 billion, based on the average of estimates from 11 brokerages. On a trailing basis, the company's net profit is estimated to fall 5% and revenue is expected to rise 3%. The September quarter may be the third successive quarter the company would report a year-on-year fall in its net profit, after six quarters of double-digit growth.

 

Among the projections, YES Securities (India) Ltd. has the lowest net profit estimate of INR 26.7 billion whereas Nirmal Bang Equities Pvt. Ltd. has the highest estimate for net profit at INR 31.2 billion. For revenue, the highest estimate is INR 146.9 billion by Nirmal Bang Equities and lowest is INR 140.2 billion by YES Securities (India) Ltd. India's biggest pharmaceuticals company is slated to announce its September quarter earnings on Nov. 5.

 

The September quarter is typically weak for Sun Pharma's Israeli subsidiary Taro Pharmaceutical Industries Ltd., YES Securities said and added that the high base of last year due to Revlimid sales would also affect revenues in the reporting quarter. Revlimid is used in the treatment of blood cancer and some bone marrow disorders. However, YES Securities sees a modest uptick in Sun Pharma's US business sequentially, driven primarily by Leqselvi, a drug used to treat severe scalp hair loss.

 

Over the past few years, Sun Pharma has gradually reduced its dependency on generics and focussed on growing its specialty products segment. Other than the continued strong growth in domestic pharma market, this focus on specialty products helps it improve margins and overall profitability.

 

Sun Pharma's US sales for the quarter are expected to rise 3% on quarter to $486 million, with the share of specialty products seen at $330 million, up 6% on quarter, Kotak Securities Ltd. said. Nirmal Bang Equities Pvt. Ltd. also expects a 3% on-year rise in Sun Pharma's US sales for the quarter in constant currency terms.

 

Both Kotak Securities and Nirmal Bang attribute this growth to the continuous growth in Sun Pharma's 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.

 

The brokerages believe that other than the rise in prescription of these drugs, launch of Leqselvi would also help company's specialty drug business in the September quarter. Brokerages expect the company's India business will grow around 10% on year while its business in the rest of the world will grow around 12% on year.

 

According to an average of estimates of 11 brokerages, the company's earnings before interest, tax, depreciation and amortisation for the September quarter is pegged at INR 41 billion with the highest estimate being around INR 45 billion by Nirmal Bang Equities and the lowest being around INR 39 billion by Kotak Securities.

 

Brokerages expect Sun Pharma's gross margin to fall up to 90 basis points on quarter to a tad below 79%, owing to lower Revlimid sales. The company's research and development spend in the September quarter is seen around 7% of sales, up 100 bps on quarter. The EBITDA margin is expected to fall around 200 bps on a trailing basis to 27.4% owing to higher commercialization spends for Leqselvi.

 

Market participants keenly await the company management's commentary on the potential launch pipeline over the next 12-18 months and the outlook on supply chain issues. They are also watching the prescription growth in the specialty portfolio.

 

Brokerages are also keen on management commentary on the likely impact of proposed 100% US tariffs on branded and patented products. These tariffs were to come into force from Oct. 1 but are yet to be imposed nor has the policy been formally revoked. If implemented, Sun Pharma could feel the heat as its exports of such products account for nearly 17% of total revenue. It had reported global sales of $1.22 billion from patented products in FY25. Of this, the US market had accounted for nearly $1.1 billion. While the brokerages believe the final impact of the US tariffs depends on risk mitigation efforts by the company, they are keen to hear the management on the issue.

 

On Friday, shares of the company ended at INR 1,699 on the National Stock Exchange, up 0.5%. The stock is down nearly 0.5% from Jul. 31, the day the company announced its June quarter earnings.

 

Of the 20 research reports on the company available with Informist, 16 brokerage firms have a 'Buy' or equivalent rating on the stock with an average target price of INR 1,954. Three analysts have 'Hold' rating, while one has a 'Sell' on Sun Pharma stock with a target price of INR 1,742.

 

The following are the Jul-Sept earnings estimates for Sun Pharmaceutical Industries from 11 brokerages in descending order by the estimate of net profit in INR million:

 

Brokerage	Net sales (in mln rupees)	Net profit (in mln rupees)	EBITDA (in mln rupees)
Nirmal Bang Equities Pvt. Ltd.	146,902	31,196	44,874
Nuvama Wealth Management Ltd.	141,934	31,037	43,105
JM Financial Institutional Securities Pvt Ltd	141,368	30,568	41,318
Motilal Oswal Financial Services Ltd.	140,428	30,287	39,741
Systematix Shares and Stocks (India) Ltd.	144,530	30,247	43,758
Emkay Global Financial Services Ltd.	144,147	30,125	41,831
HDFC Securities Ltd.	142,791	30,005	39,553
Prabhudas Lilladher Pvt Ltd	142,568	28,392	40,450
Kotak Securities Ltd.	142,352	28,067	39,022
ICICI Securities Ltd.	140,405	27,231	39,454
YES Securities (India) Ltd.	140,157	26,712	39,220
Average	142,507	29,442	41,120

 

End

 

Edited by Ashish Shirke

 

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