Kotak cuts Sun Pharma stock target to INR 1,875, retains Add rating

Published 23/05/2025, 08:30
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On Friday, Kotak analyst Alankar Garude revised the price target for Sun Pharmaceutical (TADAWUL:2070) Industries Ltd. (SUNP:IN) to INR 1,875 from the previous INR 1,900. The firm maintained its Add rating on the stock. Garude provided insights into the company’s financial performance, noting that Sun Pharma’s operating results for the fourth quarter of the fiscal year 2025 aligned with expectations, despite global specialty sales being slightly lower than anticipated at $295 million.

The analyst remains optimistic about the company’s specialty segment, predicting a compounded annual growth rate (CAGR) of 13% for global specialty sales from FY2025 to FY2028E. This forecast is supported by strong prescription trends, which are expected to contribute to the segment’s recovery. However, Sun Pharma’s guidance for the fiscal year 2026 indicates a cautious outlook, projecting mid-to-high single-digit growth in overall sales due to macroeconomic uncertainties.

Despite the modest sales growth forecast for FY2026, Kotak anticipates robust growth in Sun Pharma’s non-US markets. The company is expected to achieve double-digit sales CAGRs in these regions, which may be slightly tempered by increased commercialization expenses for its products Leqselvi and Unloxcyt. Based on these factors, the analyst projects a healthy 13% EPS CAGR for Sun Pharma over the period from FY2025 to FY2028E.

In his comments, Garude emphasized the company’s potential for growth, stating, "With healthy Rx trends, we expect specialty to bounce back and bake in a 13% global specialty sales CAGR over FY2025-28E." He also acknowledged the challenges posed by the uncertain macro environment but concluded that the company’s strengths, particularly in its specialty segment, justify retaining the Add rating with a fair value of Rs 1,875.

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