Sun Pharma Q2 Preview: Stable Revenue Growth Expected, Profitability Muted by Higher Costs

Sun Pharmaceutical Industries is expected to post stable revenue growth of approximately 7% for the July-September 2025 quarter (Q2FY26), reaching about ₹14,257 crore. This growth is primarily fueled by robust performance in its Indian operations and its specialized drug portfolio. However, profitability is likely to be muted, with net profit potentially declining by around 3% year-on-year to ₹2,843 crore. This dip is attributed to elevated expenses for its US speciality business, including higher promotional activities and research and development (R&D) costs. Brokerage firms like Kotak Institutional Equities, HDFC Securities, and Nuvama Institutional Equities highlight strong growth in India and emerging markets, alongside steady contributions from speciality drugs like Ilumya and Cequa, and new launches such as Leqselvi. Despite revenue forecasts pointing upwards, increased spending on commercialization and R&D is projected to weigh on profit margins. Impact The news provides investors with an earnings preview for a major pharmaceutical player. Investors will focus on the divergence between revenue growth and profit, scrutinizing the impact of rising costs on margins. Strong domestic and speciality segment performance is positive, but management commentary on cost control and the future trajectory of the US speciality business will be key for stock valuation. The stock could react based on how actual results compare to these estimates, particularly concerning the profit margin pressure. The overall impact on the Indian stock market would be moderate, primarily affecting the healthcare sector. Rating: 7/10 Definitions: * **Revenue**: Total income from sales. * **Net Profit (PAT)**: Profit after deducting all expenses and taxes. * **Q2 FY26**: July-September 2025 quarter. * **YoY (Year-on-Year)**: Comparison with the same period last year. * **QoQ (Quarter-on-Quarter)**: Comparison with the previous quarter. * **US Speciality Portfolio**: High-value drugs for specific conditions in the US market. * **Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortisation)**: A measure of operational profit. * **Promotional Expenses**: Costs for marketing and advertising. * **R&D Expenses**: Costs for research and development. * **Brokerages**: Financial firms providing investment advice. * **Basis Points (bps)**: A unit of measure used in finance, equal to one-hundredth of a percentage point (0.01%). * **Gross Margins**: Revenue minus cost of goods sold, as a percentage of revenue.