At a Glance

Sun Pharma, India’s largest pharma player, just dropped its Q1 FY26 results: Revenue ₹13,851 Cr (+10% YoY) and PAT ₹2,293 Cr (+6% YoY). Margins held at a healthy 31% OPM, but the stock slipped 1.7% because investors hate lawsuits more than side effects. Oh, and there’s a $200 Mn US antitrust settlement lurking in the background. Yummy mix of growth and litigation!

Introduction

Big Pharma doesn’t cry, it litigates. Sun Pharma, the Murali Kartik of pharma—always delivering but under the radar—has a record of thriving in tough markets. With a portfolio ranging from dermatology to oncology, and a specialty focus in the US, the company stands tall. However, US litigations, pricing pressures, and slow domestic sales growth are rain clouds on its otherwise sunny horizon.

Business Model (WTF Do They Even Do?)

Sun Pharma makes branded generics, specialty pharma, and APIs. It sells in 100+ countries, with strong positions in the US and India. Specialty drugs like Ilumya (psoriasis) are its future growth engines, while generics keep the cash flowing. The company also owns Ranbaxy, because why not have some drama in your history? R&D is its secret sauce—₹2,000 Cr spent annually to keep competitors on their toes.

Financials Overview

Q1 FY26 Snapshot:

• Revenue: ₹13,851 Cr (+10% YoY)
• Net Profit: ₹2,293 Cr (+6% YoY)
• OPM: 31% (expanding)
• EPS: ₹9.50

FY25 Recap:

• Revenue: ₹52,578 Cr
• PAT: ₹10,965 Cr
• ROE: 16.9%
• ROCE: 20.2%

Auditor’s Mood: “Clean numbers, except for that pesky $200 Mn antitrust settlement.”

Valuation

• P/E: 35.7 (Market paying biotech prices for a generics player)
• P/B: 5.67
• ROE: 16.9%

Fair Value Estimate:

1. P/E Method: FY26E EPS ~₹46; fair P/E 28–30 → ₹1,290–₹1,380
2. P/B Method: Book ₹301; fair P/B 4.0–4.5 → ₹1,200–₹1,350
3. DCF: Conservative growth 9%, discount 11% → ₹1,400

Fair Value Range: ₹1,300–₹1,400 (Current ₹1,706 is pricey)

What’s Cooking – News, Triggers, Drama

• US Antitrust: $200 Mn settlement pending court approval.
• Pipeline: Phase 3 success for Ilumya in psoriatic arthritis—FDA filing soon.
• Acquisitions: Hunting for specialty assets in the US.
• Stock Mood: Investors jittery; legal overhang may cap near-term upside.

Balance Sheet

Commentary: Near debt-free, cash reserves stronger than most banks.

Cash Flow – Sab Number Game Hai

Takeaway: Cash gusher from operations; high dividend payouts and investments eating into reserves.

Ratios – Sexy or Stressy?

Verdict: Sexy on profitability, stressy on valuation.

P&L Breakdown – Show Me the Money

Roast: Growth is steady but not spectacular for the price tag.

Peer Comparison

Roast: Biggest in size, also in P/E arrogance.

Miscellaneous – Shareholding, Promoters

• Promoters: 54.5%
• FIIs: 17.3%
• DIIs: 19.4%
• Public: 8.8%
• Buzz: Stable hands, no dilution drama.

EduInvesting Verdict™

Sun Pharma remains India’s pharma crown jewel—dominant market share, strong cash flows, and a growing specialty pipeline. But at 36x earnings, the market expects blockbuster launches and zero litigation risk, which is fantasy.

SWOT

• Strengths: Market leader, strong US presence, specialty drug pipeline.
• Weaknesses: High valuation, legal risks.
• Opportunities: Specialty portfolio expansion, biosimilars.
• Threats: US price erosion, lawsuits, generic competition.

Final Take: Great company, stretched valuation. At ₹1,706, it’s priced for perfection—investors better hope the pipeline delivers or this could be a slow burn.

Written by EduInvesting Team | 31 July 2025
SEO Tags: Sun Pharma, Pharmaceuticals, Specialty Drugs