July 31: Sun Pharmaceutical Industries Ltd. reported a strong performance for the first quarter of FY27, with sales broadly in line with expectations and profitability ahead of estimates. Consolidated sales stood at INR153 billion, registering 10percentage year-on-year and 5percentage quarter-on-quarter growth, compared with the estimated INR155.2 billion.
Domestic sales remained a key growth driver, rising 16 percentage year-on-year and 13% quarter-on-quarter to INR54.7 billion, ahead of the estimated INR 53.8 billion. According to the Pharmarack MAT June 2026 report, Sun Pharma's market share increased from 8.2% to 8.5%. The company continued to outperform Indian Pharmaceutical Market growth, led by the Cardio, Neuro, and Gastro segments.
US sales stood at US$427 million, declining US$32 million sequentially and falling below the estimated US$475 million. The US business continued to face pressure from declining generics due to price erosion, while the quarter saw six ANDA approvals without meaningful launches. Specialty segment revenues stood at US$351 million, down US$3 million quarter-on-quarter.
ROW and Emerging Markets sales increased 13% year-on-year and 4% quarter-on-quarter to ₹50.1 billion, marginally ahead of the estimated ₹49.6 billion. Growth in EM markets was supported by the company's innovative medicine portfolio. API and Others sales stood at ₹6.5 billion, growing 10% year-on-year while declining 8% sequentially, and remained 5% ahead of the estimated ₹6.2 billion.
EBITDA increased 5% year-on-year and 22% quarter-on-quarter to ₹43 billion, exceeding the estimated ₹40.8 billion by 5%. EBITDA margin stood at 28.1%, expanding 394 basis points sequentially, although declining 133 basis points year-on-year. The margin performance was 180 basis points ahead of the estimated 26.3%, with the sequential improvement supported by lower R&D expenses.
Gross margin stood at 80.6%, up 95 basis points year-on-year but down 20 basis points quarter-on-quarter, and was broadly in line with the estimated 80.5%. R&D expenses during the quarter stood at ₹8.1 billion, equivalent to 5.3% of sales, compared with 6.5% of sales in Q4 FY26 and 6.4% in Q1 FY26.
Profit After Tax (PAT) stood at ₹28.9 billion, increasing 27% year-on-year and 7% quarter-on-quarter, and was 5% ahead of the estimated ₹27.5 billion. Recurring PAT stood at ₹31 billion, compared with ₹27.1 billion in the previous quarter and ₹31 billion in Q1 FY26. PAT margin improved to 18.9%, compared with 18.6% in Q4 FY26 and 16.5% in Q1 FY26.
The company's net cash position stood at US$3.4 billion as of Q1 FY27, compared with US$3.2 billion as of FY26. The proposed Organon deal valued at US$11.8 billion is expected to negatively impact the net cash position.
For FY26E, sales are estimated at ₹650.7 billion, with EBITDA at ₹196.8 billion and PAT at ₹136.9 billion. For FY27E, sales are estimated at ₹730.5 billion, EBITDA at ₹233.9 billion, and PAT at ₹168 billion. EPS estimates stand at ₹57 for FY26E and ₹70 for FY27E.
At a CMP of INR1,990, the stock is trading at approximately 37x FY27E EPS and 30x FY28E EPS. The last target price stands at ₹2,142 for March 2027, while the relative rating remains Overweight and the absolute rating remains LONG, both under review.
The company is scheduled to hold its earnings call on July 31, 2026, at 18:30 hours.
