Choice Institutional Equities has retained a 'Buy' rating on Sun Pharmaceutical Industries with a price target of ₹2,300. While the brokerage remains positive on the company’s domestic growth, investors are monitoring recent quarterly profit declines caused by one-time legal and acquisition-related costs.
Choice Institutional Equities has maintained its 'Buy' rating on Sun Pharmaceutical Industries with a target price of ₹2,300, following the release of the company's Q2 FY27 earnings. The brokerage remains confident in the company's long-term potential, driven by its leadership in the Indian market and a growing specialty product portfolio.
However, the recent financial results highlight the challenges the company is facing. For the second quarter of the 2027 fiscal year, Sun Pharma reported revenue of ₹16,198.7 crore, reflecting a 11.9% increase compared to the same period last year. Despite this growth, net profit fell by 36% to ₹1,989 crore. This sharp drop was primarily due to one-time exceptional costs amounting to ₹1,269 crore, which included charges for anti-trust legal settlements and expenses related to the recent Organon acquisition.
The brokerage has slightly lowered its earnings estimates for the 2027 and 2028 fiscal years. This adjustment reflects a more cautious outlook on the United States market, where the company faces specific pressure. U.S. sales stood at $455 million in the second quarter, struggling with the loss of exclusivity for the drug lenalidomide and execution challenges regarding Ilumya, a key specialty product.
Sun Pharma management has reiterated its guidance for high single-digit revenue growth for the full 2027 fiscal year. The company is counting on its specialty pipeline and a planned soft launch of Ilumya for treating psoriatic arthritis to offset current international headwinds. Additionally, the company recently concluded a postal ballot on October 31, 2026, which approved updates to its corporate borrowing limits and a new employee stock option plan, indicating a focus on long-term structural changes.
For investors, the key area to watch remains the company’s ability to manage its international cost structure and navigate legal and regulatory risks. While the domestic business provides a stable foundation, the near-term focus for the market will be on how effectively Sun Pharma integrates recent acquisitions and manages the impact of its one-time legal expenses on overall profitability. The pace of specialty product performance in the U.S. will also be a critical factor in determining whether the company can meet its growth targets.