Sun Pharma Brokerage Review: Citi, HSBC Maintain Buy; BofA Retains Underperform

Sun Pharma’s second-quarter results have gathered mixed response from brokerages. Revenue and EBITDA beat market estimates, but analysts flagged concerns over the company’s US specialty business, higher R&D spending and the growth of newer drugs. While most brokerages maintained their ratings, HSBC and BofA cut their price targets.

Sun Pharma Q2 Results: Key Highlights

• Net profit declined 36.2% year-on-year to Rs 1,989 crore from Rs 3,118 crore.
• The company reported a one-time loss of Rs 1,269 crore during the quarter.
• Revenue increased 11.9% to Rs 16,199 crore from Rs 14,478 crore.
• Ebitda rose 4.8% to Rs 4,744 crore from Rs 4,527 crore.
• Ebitda margin stood at 29.3%, against the street estimate of 27.9%.

Also Read: Sun Pharma Q2 Results: Net Profit Drops 36% To Rs 1,989 Crore On One-Time Loss, Revenue Rises 12% YoY

Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay

What Brokerages Said

Citi: Buy

• Maintained its Buy rating and target price of Rs 2,280.
• Citi expects Sun Pharma to need a few more quarters to address the execution problems affecting Ilumya sales in the US. The planned November launch for psoriatic arthritis could provide an additional growth opportunity.
• The Organon acquisition is expected to close in the fourth quarter of fiscal 2027.
• Higher research and development spending in the second half could weigh on earnings. Citi has consequently reduced its Ebitda estimates for fiscal 2027-29 by 8% to 12%.
• The brokerage sees Leqselvi and Unloxcyt as important drivers of future growth.

HSBC: Buy

• Maintained its Buy rating but reduced the target price to Rs 2,050 from Rs 2,100, a cut of Rs 50.
• HSBC sees the US FDA approval of Ilumya for psoriatic arthritis as an opportunity to expand the drug’s market. The launch is planned for November.
• The brokerage has lowered its earnings per share estimates for fiscal 2027-29 by 2.5% to 3.1%.
• Global innovative medicine sales grew 6.9% year-on-year to $356 million, providing support to the business.

BofA: Underperform

• Maintained its Underperform rating but lowered the target price to Rs 1,850 from Rs 1,915 earlier.
• BofA remains cautious about the company’s higher research and development spending and its concentration in specialty medicines.
• Despite 17% growth in India sales, specialty sales increased by only 7%, highlighting the uneven growth across businesses.
• The brokerage highlighted Ebitda of Rs 46.6 billion and a margin of 28.8% in its assessment.

Kotak Institutional Equities: Add

• Maintained its Add rating and target price of Rs 2,060.
• Kotak said Ebitda beat expectations, largely because research and development spending was lower than anticipated.
• Growth in India continued to benefit from higher volumes and new product launches.
• Ilumya sales in the US remain under pressure due to execution difficulties and slower market growth. However, the approval for psoriatic arthritis could help improve its prospects.
• Leqselvi and Unloxcyt are expected to contribute to specialty growth as their sales gain momentum.
• Kotak remains cautious about Organon’s medium-term growth prospects.

Also Read: Sun Pharma To Bank of Baroda Q2 Review: HDFC Securities Revises Target Prices, Retains Buy, Add Ratings On Eight Stocks; Details Inside

Essential Business Intelligence,
Sharp Market Insights,
Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.