Sun Pharmaceutical Share Price Target at Rs 2,000: Motilal Oswal Research
Motilal Oswal has reiterated a BUY recommendation on Sun Pharma, assigning a target price of Rs 2,000, implying a 16% upside from its current market price of Rs 1,719. Despite a mixed Q4 FY25 performance, marked by a 4% revenue miss and higher exceptional costs, the company’s robust domestic formulations, a solid global specialty portfolio, and steady expansion in emerging markets provide long-term growth visibility. With launches lined up and strategic partnerships in place, the firm is poised for an earnings CAGR of 17% over FY25–27. The stock remains an attractive pharmaceutical bet in India’s healthcare sector.
Strong Domestic Formulations Drive Core Growth
Sun Pharma’s domestic formulations (DF) segment delivered an impressive 14% year-over-year (YoY) growth in FY25, closing the year at Rs 170 billion. The fourth quarter alone witnessed a 13.6% YoY uptick, supported by broad-based performance across therapeutic categories including pain management, anti-diabetics, gastrointestinal, CNS, and cardiology.
The company launched 10 new products during Q4 FY25, reinforcing its innovation-led approach and helping it outperform industry growth rates. With a fortified medical representative (MR) force and differentiated offerings, Sun Pharma is projected to achieve an 11% CAGR in DF sales, targeting Rs 208 billion by FY27.
Specialty Business Gains Momentum Globally
Global specialty sales grew 17% YoY in FY25, reaching USD 1.2 billion, backed by consistent demand in flagship products such as Cequa, Illumya, Winlevi, and Odomzo. The company expects this division to clock a 23% CAGR over FY25–27, taking the segment to nearly USD 1.8 billion by FY27.
Multiple milestones are slated for FY26, including the launch of Leqselvi in Q2FY26, potential commercialization of MM-II via partnerships, and regulatory filings for products such as Fibromun and Ilumya (for psoriatic arthritis). The strong pipeline suggests that Sun Pharma will remain a leader in the global specialty space.
US Sales Face Temporary Headwinds
In FY25, the U.S. segment—accounting for 31% of revenues—saw only a 1.7% YoY growth in constant currency terms, totaling USD 464 million in Q4. Although the base business remained steady, lower generics performance slightly muted overall traction.
Exceptional costs of USD 30 million for Lyndra Therapeutics impairment, litigation settlements, and restructuring charges temporarily impacted profitability. Nevertheless, U.S. revenue is forecasted to witness a moderate 8% CAGR through FY27, supported by new product rollouts and pipeline conversions.
Emerging and ROW Markets Show Steady Gains
Emerging markets posted a 10.9% YoY growth in Q4, taking annual revenues to Rs 22.6 billion. Countries like Russia, Brazil, and Romania emerged as bright spots, contributing to resilient growth across the EM portfolio.
The rest-of-world (ROW) markets expanded by 6.4% in Q4, though growth remained relatively subdued. Together, the EM+ROW revenues are projected to reach Rs 192 billion by FY27, translating into a 9% CAGR over the next two years.
Margins and Profitability: Robust Despite Exceptional Costs
Q4FY25 revenue stood at Rs 128.2 billion, marking an 8.5% YoY increase, albeit 4% below analyst estimates. Gross margins held strong at 79.4%, while EBITDA margins improved by 90 basis points to 25.6%.
The adjusted profit after tax (PAT) came in at Rs 29 billion for Q4, up 3% YoY. For FY25, PAT stood at Rs 110 billion, up 10% YoY. Notably, the company has guided for mid-to-high single-digit revenue growth for FY26, supported by increasing investments in marketing and field expansion.
Key Financial Metrics and Valuations
Below is a summary of Sun Pharma’s key financial metrics and estimates:
| Metric | FY25 | FY26E | FY27E |
|---|---|---|---|
| Revenue (Rs billion) | 516.6 | 564.3 | 620.2 |
| EBITDA (Rs billion) | 141.7 | 158.6 | 179.8 |
| Adj. PAT (Rs billion) | 113.0 | 138.6 | 159.0 |
| EPS (Rs) | 47.1 | 57.8 | 66.3 |
| P/E (x) | 36.6 | 29.8 | 26.0 |
| EV/EBITDA (x) | 28.5 | 24.9 | 21.3 |
Management Outlook: Expansion and Innovation
Management has emphasized increased promotional spending and field-force expansion to support upcoming specialty launches. The company is also seeking partners for products in late-stage clinical development.
A noteworthy development is the corporate branding initiative, launched for the first time in Sun Pharma’s history, signaling its intent to elevate global recognition in the branded generics and specialty pharmaceutical space.
Target Price and Investment Levels
Motilal Oswal values the stock at 30x 12-month forward earnings, revising its target price to Rs 2,000, indicating a 16% potential upside. Given the healthy fundamentals, strong specialty outlook, and consistent domestic growth, investors may consider accumulating the stock at levels near Rs 1,700.
Support level: Rs 1,620
Resistance level: Rs 1,900
Buy zone: Rs 1,680 – Rs 1,730 for long-term investors.
Bottomline: High-Conviction Pharma Pick
Sun Pharma continues to distinguish itself as India’s most strategically diversified pharmaceutical major. With a clear specialty vision, resilient branded generics franchise, and consistent financial delivery, the company is on a multi-year growth trajectory. While near-term cost pressures may weigh slightly on margins, the overall outlook remains strong.
Motilal Oswal’s endorsement underscores Sun Pharma as a compelling opportunity for investors seeking both stability and innovation-driven upside in the healthcare space.
