Sun Pharma shares fall 3% after Q2 profit plunges 36%; brokerages bullish but slash target prices

However, most brokerages have reduced their target price on the company's stock by 2-5 percent. At around 1.50 pm, Sun Pharma shares traded at Rs 1,751.50 apiece, 1.47 percent lower from the previous close of Rs 1,777. Over one million shares of the company have changed hands on the exchange so far, which is nearly 1 percent lower than the three-month average daily volume traded but over two times the volume traded until the same time Friday, reported Informist.

Sun Pharma Q2 results Sun Pharmaceutical Industries reported a 36.36 percent decline in consolidated net profit to Rs 1,988.53 crore for the September quarter. The net profit was impacted by a one-time expenditure related to the proposed acquisition of Organon and litigation expenses in the US. The company announced its quarterly results on Friday. The pharma major’s revenues for the quarter were at Rs 16,198.71 crore, up nearly 24 percent year-on-year as compared to Rs 14,478.31 crore in the year-ago period.

The rise in revenues was driven by an increase in formulation sales in India -- up 17.3 per cent to Rs 5,552.3 crore -- accounting for 34.5 per cent of the total consolidated sales for the quarter. Global innovative medicines sales, which increased 6.9 per cent to approximately USD 356 million, were also a key factor behind the rising revenues, accounting for 21.1 per cent of sales. The company's management reiterated "high single-digit" revenue guidance for the financial year 2026-27 (Apr-Mar).

Nirmal Bang Institutional Equities on Sun Pharma share: Buy, Target price reduced to Rs 2,254 Brokerage Nirmal Bang Institutional Equities reduced its target price on the company's stock by nearly 8 percent to Rs 2,254 from Rs 2,437. It maintained its ‘Buy’ recommendation on the stock as the company's India franchise and speciality pipeline provide sustained growth visibility, according to the brokerage.

Though Organon is excluded from Nirmal Bang's estimates, it believes the acquisition offers long-term growth and portfolio diversification for the company. The company noted the near-term US generics pressure and Ilumya's execution challenges as key factors to be tracked. The company's India business is expected to remain the key growth driver, supported by volume growth, broad-based therapy performance and new launches, according to Nirmal Bang.

"In the US, lenalidomide erosion will weigh on generics, partly offset by new launches," the brokerage said. Nuvama on Sun Pharma share: Buy, Target price cut to Rs 2,320 Brokerage firm Nuvama Institutional Equities reduced its target price on the company's stock by nearly 2 per cent to Rs 2,320 from Rs 2,360, while it retained its ‘buy’ recommendation. The brokerage maintained its estimates for FY27 and FY28 without integrating the numbers from its wholly-owned subsidiary, Organon, even though its closure remains on track in the March quarter.

Improving business mix and operating leverage is expected to drive margin expansion despite higher research and development investments. Emkay on Sun Pharma share: Add, Target price reduced to Rs 2,000 Emkay Global Financial Services reduced its target price on the company's stock by nearly 5 percent to Rs 2,000 from Rs 2,100 earlier. The brokerage retained its ‘Add’ recommendation on the stock but cut its estimates on the company by 3 percent.

"As of now, we will refrain from jumping the gun based on the slowdown seen in Ilumya this quarter, given that the street has mostly gone wrong with its alarmism on Ilumya in the past," the brokerage said in its report. Prabhudas Lilladher on Sun Pharma share: Buy, Target price Rs 2150 Another brokerage firm Prabhudas Lilladher maintained its ‘Buy’ rating on the pharma stock with a target price of Rs 2,150.

The brokerage believes that the US approval received by its product ILUMYA for active psoriatic arthritis and the growth potential of EQSELVI and UNLOXCYT provide further growth opportunities for the company. The successful integration and growth acceleration of Organon will be a key factor driving further stock re-rating of the company's stock, the brokerage mentioned in its report. “While the acquisition offers significant growth and earnings potential, successful integration and growth acceleration of the acquired portfolio will be key to driving further stock rerating.

Our FY28E/FY29E EPS broadly remains unchanged,” it said. JM Financial on Sun Pharma: Add, target price cut to Rs 2,020 JM Financial maintained ‘Add’ rating for the stock and cut the target price to Rs 2,020 from Rs 2,150 earlier. The brokerage said the company reported a steady Q2 FY27 with revenue and EBITDA growing 12% and 14% YoY, in line with the expectations. It further stated that even though the business delivered double-digit revenue growth in H1 FY27, management retained their high-single-digit full-year growth guidance, while expecting product launches, India business momentum and recovery in innovative medicines to aid performance.

The Organon merger is on track for completion by Q4FY27, it said. The brokerage expects the combined entity to deliver low-single-digit growth initially, reflecting the mature nature of Organon's portfolio. “Beyond the integration, we believe the company's strategy is to increasingly focus on inorganic growth as both businesses have limited organic growth drivers at their combined scale,” it added.

Given Sun Pharma’s slower-than-expected growth in speciality business and the anticipated moderation in growth following the merger, JM Financial said it now value it at 20x EPS (earlier 22x).