Sun Pharma Q3 Preview: Profits may jump 13%, revenues to rise 10% YoY

Sun Pharma Q3 Preview: India’s largest pharmaceutical company, Sun Pharmaceuticals, is scheduled to deliver its October-December quarterly earnings for the financial year 2024-25 (Q3FY25) on Friday, January 31, 2025. 

 

The pharma major is expected to log a double digit rise in profits on a year-on-year basis, while recording a mid digit fall sequentially. According to analysts, higher costs, including a rise in R&D expenses, are likely to limit margin expansion.

 

According to brokerage estimates compiled by Business Standard, Sun Pharma may see its average revenue rise by 9.51 per cent year-on-year (Y-o-Y) to Rs 13,313 crore as against Rs 12,156 crore in the third quarter of FY24. However, on a quarter on quarter basis, the topline may increase by 0.36 per cent compared to Rs 13,264 crore in Q2FY25.

 

Moreover, the pharma major may register an average net profit of Rs 2,791 crore for the December quarter, against Rs 2,476 crore in Q3FY24, which translates to an increase of 12.7 per cent Y-o-Y for Q3FY25. 

 

However, on a quarterly basis, profits could fall by 4.80 per cent. The company reported a profit after tax (PAT) of Rs 2,932 crore in the September quarter of FY25.   ALSO READ: Vedanta Q3 Results Preview: Here's what to expect from mining major in December qtr

 

Here's what key brokerages anticipate for Sun Pharma’s Q3 FY25 results:

 

HDFC Securities: HDFC Securities anticipates a quarter-on-quarter decline in the US generics business due to minimal Revlimid sales, while Taro sales are expected to remain steady. Specialty sales are projected to show strong growth of approximately 11 per cent year-on-year.  The Indian market is expected to witness a 12 per cent year-on-year increase. Although gross margin expansion of 131 basis points Y-o-Y is expected, higher costs, including a rise in R&D expenses, are likely to limit Ebitda margin expansion.

 

PL Capital: PL Capital expects year-on-year growth to be driven by the specialty product portfolio, stable Revlimid sales, and strong performance in the domestic business. Margins are projected to remain stable, supported by double-digit growth in the domestic formulations segment. Key factors to monitor include the outlook on R&D expenditure and overall margin trends.

 

Centrum Broking: Centrum Broking forecasts domestic formulations (DF) sales to grow 10 per cent Y-o-Y, reaching Rs 42 billion. US sales are expected to increase by 15 per cent Y-o-Y in constant currency (CC) terms, reaching USD 551 million, primarily driven by sustained momentum in the specialty portfolio.  Key areas of focus include the ramp-up in R&D spending in the second half of FY25, further developments on LEQSELVI, progress on regulatory issues at the Dadra facility, and updates on the specialty drug pipeline.  ALSO READ: Nestle Q3 Results preview: Analysts expect profit to slip 5% YoY, margins contract

 

Nuvama Institutional Equities: Nuvama Institutional Equities projects Sun Pharma’s revenue to grow by 6.8 per cent Y-o-Y, supported by a strong domestic business, which is expected to expand by 12.5 per cent. US revenue is estimated at $503 million, while the specialty business is projected to generate $254 million.  R&D expenses are expected to rise slightly, accounting for 8 per cent of sales. A potential positive surprise may come from Ilumetri license fees. Ebitda and PAT are expected to grow by 3 per cent and 2 per cent Y-o-Y, respectively, with an Ebitda margin of 27.1 per cent for Q3FY25.