Sun Pharma Share Price Rises As Analysts Find Q2 Earnings More Resilient Than Peers

Sun Pharmaceutical Industries Ltd.'s share price gained on Tuesday after analysts said its July–September earnings were more resilient than its peers. Most brokerages maintained their rating and target price for Sun Pharmaceutical Industries, after the company's consolidated net profit exceeded street estimates.

Sun Pharmaceutical Industries' net profit rose 27.94% on the year to Rs 3,040 crore in the quarter ended Sept. 30, 2024, against Rs 2,932 crore projected by Bloomberg analysts.

The better than expected numbers for the second quarter were driven by gRevlimid and good traction in its speciality and India business segment, Citi Research said in a report. Moreover, the company reduced the guidance for spending on research and development to 7–8% from 8–9% of the sales in financial year 2025.

These factors helped Sun Pharmaceutical Industries to nullify the impact of Leqselvi-launch-related expenses and price cuts in Japan, Citi Research said. The brokerage maintained a 'buy' rating on the company's stock with a target price of Rs 2,080 apiece, which implied 9.4% upside from Monday's closing price.

Citi Research is constructive on Sun Pharmaceutical Industries, as two-thirds of its business is branded and growing steadily. The generic business appeared to have bottomed out and was expected to gain traction.

"Relative to the other major pharma names, Sun Pharma’s earnings are more resilient and don’t have any major contribution of non-recurring generic product."

Emkay Global Research's top pick in the segment is Sun Pharmaceutical. The brokerage has kept a 'buy' rating on the stock with a target price of Rs 2,350 apiece, implying 23.55% upside from Monday's closing price.

Double-digit domestic growth was better than Emkay Global Research's expectation, the brokerage said. The ramp-up in speciality chemicals is expected to remain on track, and generic business is continuing to post growth.

Sun Pharmaceutical Industries' branded portfolio continued to drive margin expansion, and the story is continuing to play out, the brokerage said.

Nuvama increased the earnings per share estimates for Sun Pharmaceutical Industries by 5% as a result of a reduction in research and development guidance. It hiked the target price to Rs 1,815 from Rs 1,636 per share, which implies a 4.57% downside from the current price. Nuvama has a 'hold' rating on the stock.