Sun Pharma Q1 FY27 Results: Net Profit Rises 27%, US Formulation Sales Weigh on Revenue

Sun Pharmaceutical Industries Ltd. reported a mixed performance for the first quarter of FY27, with net profit rising sharply on a year-on-year basis but missing Street expectations due to weakness in its US formulations business. While revenue growth remained healthy, it also fell short of analysts' estimates. However, the company delivered better-than-expected operating margins despite margin pressure during the quarter.

The earnings highlight the contrasting trends in Sun Pharma's business, with robust growth in India offsetting softness in its key overseas market.

Net Profit Jumps 27%, Revenue Misses Estimates

Sun Pharma reported a consolidated net profit of ₹2,895 crore for the June quarter, up 27% from ₹2,279 crore in the corresponding quarter last year. However, the figure was below the Bloomberg consensus estimate of ₹2,974 crore.

Revenue from operations rose 10.5% year-on-year to ₹15,300 crore, missing analysts' expectations of ₹15,527 crore.

The company said the quarter included a one-time loss of ₹204 crore, while other income increased significantly to ₹724 crore, compared with ₹464 crore in the year-ago period.

India Business Drives Growth as US Sales Decline

India remained Sun Pharma's strongest market during the quarter, with domestic formulation sales increasing 16% year-on-year to ₹5,475 crore.

The emerging markets formulations business grew 4.2% to $311 million, while the Rest of the World business reported revenue of $218 million. The Active Pharmaceutical Ingredients (API) business also posted healthy growth, with revenue rising 10.5% to ₹597 crore.

However, the company's US formulations business continued to face headwinds. Sales from the segment declined 9.7% year-on-year to $427 million, reflecting ongoing pricing pressure and softer demand in its largest international market.

Operating Performance and Acquisition Update

Sun Pharma reported EBITDA of ₹4,419 crore, up 2.7% from a year ago and slightly ahead of market expectations. The EBITDA margin narrowed to 28.9% from 31.1% in the corresponding quarter last year but remained above analysts' estimates of 28.2%.

The company also said shareholders of Organon have approved the proposed acquisition, with the transaction expected to be completed in early 2027, subject to customary closing conditions.

Conclusion

Sun Pharma's June quarter reflected the resilience of its diversified business, with strong domestic growth helping offset weakness in the US formulations segment. Although both profit and revenue fell short of market expectations, the company delivered better-than-expected operating margins and continued to strengthen its global portfolio. Going forward, investors are likely to monitor the recovery in the US business, sustained momentum in India and the successful completion of the Organon acquisition, which could support the company's long-term growth strategy.

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