New launches to drive Sun Pharma's future growth; PAT may take a hit by tax surge

Time of India

2 days ago

Sun Pharmaceutical Industries
has underperformed the BSE Healthcare index over a one-month and three-month periods amid the likely pressure on profitability in the coming quarters. While the company expects to retain the revenue growth momentum for FY26 after clocking 8% growth in FY25, its plan to spend over $100 million in marketing and promotion of specialty products is expected to dent profitability for the current fiscal year. Analysts have slashed FY26 EPS targets by 3-8%.
The company's net profit fell by 19% year-on-year to Rs2,149.9 crore for the March quarter due to higher tax outgo. Revenue grew by 8% to Rs12,958.8 crore. The tax expense for the quarter was Rs1,093.7 crore compared to Rs148.9 crore a year ago. The company expects the tax expense to increase further in FY26, due to exhaustion of tax loss from previous accounting periods.
The operating margin before depreciation and amortisation (EBITDA margin) improved to 28.7% in the March 2025 quarter from 25.3% in the year-ago quarter. For the full year, the company's revenue and net profit grew by 9% and 14% to Rs52,041.3 crore and Rs10,929 crore respectively.
The research & development (R&D) expense was Rs3,248.4 crore for FY25, representing 6.4% of sales. It is expected to be 6-8% of sales for next fiscal year. The pharma company has guided for a mid-to-high single digit year-on-year revenue growth in FY26. The company expanded market share in the domestic formulations business to 8.3% in the March quarter from 8%a year ago.
In the September 2025 quarter, Sun Pharma is expected to launch Leqselvi (deuruxolitinib),which is used to treat severe alopecia areata, a type of hair loss. Elara Capital estimates the drug to be more than $200million product in three-four years. In FY26, the company also plans to launch Unloxcyt (cosibelimab), a drug developed by the US based Checkpoint Therapeutics, which it acquired in March 2025 for $355 million.
The company is seeking partners to further develop and commercialize MM-II (Large Liposomes of DPPC and DMPC) for select geographies. Phase 3 clinical trials are underway for this drug.
'It has been implementing efforts to not only expand offerings but also enhance marketing franchise in regulated markets for differentiated products,'
Motilal Oswal Financial Services
said in a report. The brokerage has reduced its earnings estimates by 3% and 1% for FY26 and FY27, considering the additional expense on
specialty products marketing
. It expects earnings to grow by 17% annually FY25-27. It has maintained 'BUY' with a target price of Rs2,000. On Friday, the stock was last traded at Rs1,678.3 on the BSE.