Sun Pharmaceuticals (SUN.BO): Soft Specialty, US Gx Weakness Drives Miss; Organon Trends Though Encouraging

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Sun Pharmaceuticals (SUN.BO): Soft Specialty, US Gx Weakness Drives Miss; Organon Trends Though Encouraging

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02 Aug 2026 19:58:59 ET │ 13 pages

Sun Pharmaceuticals (SUN.BO)

Soft Specialty, US Gx Weakness Drives Miss; Organon Trends Though

Encouraging

CITI'S TAKE Buy

Price (31 Jul 26 15:30) Rs1,989.35 SUN reported a soft 1QFY27, as robust India growth (+16% YoY) and

Target price Rs2,280.00 underlying margin improvement were offset by weakness in US generics,

seasonal softness in Specialty, and geopolitical disruption in emerging Expected share price return 14.6%

markets. We view these headwinds as temporary, with healthy specialty Expected dividend yield 0.6%

product trends, improving payer access and favourable prescriber Expected total return 15.2%

feedback for Leqselvi and Unloxcyt supporting the outlook. Ilumya’s Market Cap Rs4,773,117M

potential PsA approval and the Organon acquisition provide additional US$50,038M

medium-term growth levers. Encouragingly, Organon delivered a

sequential recovery during the quarter (Fig 1), led by Nexplanon, while adj.

EBITDA rebounded to ~30%. Maintain Buy.

Vivek Agrawal, CFAAC

Soft 1QFY27 — Revenues (+10.5% YoY) were largely driven by strong domestic +91-22-6175-9875

(+16% YoY), while Specialty (US$351mn; ~13% cc growth) was a bit soft. US Gx vivek1.agrawal@citi.com

declined ~35-40% YoY due to lower Lenalidomide and erosion in the base business,

reducing its contribution to 8-9% of revenue. EM / RoW growth (+15% / 10% YoY)

was mainly currency led. Favourable mix supported GMs (80.6%, +100bps YoY),

however, EBITDA margin (28.1%, -130bps YoY) appeared soft due to the high

Lenalidomide base and investments behind new launches (Leqselvi and Unloxcyt).

Mgmt. noted that underlying EBITDA margins improved YoY after adjusting for