According to an average of brokerage estimates, revenue is expected to rise around 7% year-on-year (YoY), while EBITDA may increase by about 9%, supported by strength in the domestic and specialty segments. Profit after tax (PAT) is projected to grow only about 2% YoY, as higher marketing and R&D expenses weigh on margins.
Weak Taro quarter, limited boost from Leqselvi
Analysts expect a soft quarter for Taro, Sun’s US-based subsidiary, as it faces pricing pressure and a strong base from last year, which included significant Revlimid contributions. Sequential growth in the US market is likely to remain modest at about 3%.
Brokerage YES Securities noted that investors should focus on the company’s spending on Leqselvi and the extent of the margin impact this quarter. Since the product was only recently launched in the US, its revenue contribution is expected to remain small for now.
Specialty and domestic segments to lead growth
Brokerages agree that Sun Pharma’s global specialty business will remain a bright spot this quarter. Kotak Institutional Equities expects the specialty portfolio to record 15% YoY growth to around USD 330 million, driven by key products such as Ilumya, Cequa, Winlevi, and Odomzo.
Similarly, Motilal Oswal estimates specialty revenue at USD 326 million, up 14% YoY, with healthy prescription growth and early traction in new launches. The brokerage also expects progress on Unloxcyt, another pipeline specialty drug under preparation.
Domestically, growth is expected to stay robust, with Sun’s India formulations (DF) business likely to post a 9–12% YoY increase, aided by new product launches, improved field force productivity, and higher prescription demand.Nuvama Equities projects 10% YoY growth in the domestic business, noting that Sun continues to outperform the broader Indian pharma market.
Margins to face near-term pressure
While revenue growth appears steady, profitability could see mild compression due to elevated R&D and commercialisation expenses. Kotak Equities expects EBITDA margins at 27.4%, down 130 basis points (bps) YoY and 200 bps sequentially, as the company invests heavily in Leqselvi’s US rollout and other specialty marketing efforts.
Gross margins are estimated to decline by 90 bps quarter-on-quarter to 78.8%, while R&D spend could rise to 6.5% of sales, up from 5.5% last quarter.
However, Nuvama takes a slightly more positive view, projecting EBITDA margin expansion of 70 bps YoY to 30.4%, supported by a strong product mix, stable pricing, and operating leverage from higher domestic volumes.
Overall, analysts agree that the near-term pressure on margins is a trade-off for long-term value creation, as Sun continues to invest in scaling its global specialty pipeline.
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Key monitorables
Investors will be watching closely for updates on Leqselvi’s commercial performance, prescription growth for Ilumya and Cequa, and any commentary on US pricing dynamics following the latest tariff announcements. Another area to track will be progress in the company’s specialty R&D pipeline, particularly the Unloxcyt launch preparation and expansion in newer therapeutic areas.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)