01 Feb , 2025 By : Debdeep Gupta
Sun Pharma delivered a strong Q3 performance, surpassing Street expectations. However, concerns over the uncertain launch timeline of its hair loss drug Leqselvi and a cut in R&D spending have led brokerages to maintain a cautiously optimistic stance on the stock.
Shares of Sun Pharma opened with 2 percent gains on February 1. At 09.25 am, shares of Sun Pharma were trading at Rs 1,780.25 on the NSE.
The drugmaker revised its FY25 R&D spending guidance to below 7 percent of sales, attributing the reduction to delays in clinical studies. While this move is expected to boost near-term earnings, analysts at Nuvama Institutional Equities cautioned that it could impact Sun Pharma’s product pipeline in the long run.
Providing an update on Leqselvi’s launch, the management stated that oral arguments in the patent infringement case are scheduled for April 2025. If the ruling is unfavorable, Sun Pharma may have to delay the drug’s launch until December 2026, when its patent expires. “While the specialty business is performing well, the delay in Leqselvi remains a concern,” Nuvama noted.
Given the softer R&D guidance and lingering uncertainty over Leqselvi, Nuvama retained its ‘hold’ rating on the stock with a price target of Rs 1,830.
CLSA also maintained a cautious outlook, highlighting a sequential revenue decline in the US market due to lower generic Revlimid sales. CLSA issued a ‘hold’ rating with a price target of Rs 1,880.
In contrast, Jefferies remained bullish, noting that Sun Pharma’s Q3 outperformance was driven by strong momentum in global specialty sales and mid-teens growth in its India business. The brokerage believes the company is well-positioned to secure more specialty deals, leveraging its robust infrastructure. Jefferies assigned a ‘buy’ rating with a price target of Rs 2,265.
HSBC echoed similar sentiments and remains optimistic about Sun Pharma’s specialty product sales. It also has a ‘buy’ rating, setting a price target of Rs 2,280.
Sun Pharma reported a 15 percent on-year growth in its consolidated net profit to Rs 2,903.4 crore for Q3 FY25. The company’s revenue rose 10 percent on-year to Rs 13,675.5 crore for the October-December period, driven by robust growth in its domestic and emerging markets businesses.
A Poll of 10 brokerages had pegged Sun Pharma's net profit at Rs 2,893 crore while revenue was seen at Rs 12,157 crore, meaning that the actual numbers topped the estimates on both counts.
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