Sun Pharmaceutical Industries shares are in the spotlight following strong Q3FY25 results, with Jefferies and HSBC maintaining bullish views, while CLSA remains cautious. The stock, currently trading at ₹1,752.85, could see an upside of up to 30% based on the highest target price projections.
Jefferies has reiterated a Buy rating on Sun Pharma with a target price of ₹2,265, implying a potential 29% upside from current levels. The brokerage noted that Q3 results exceeded estimates even after adjusting for a $45 million milestone income. Sun Pharma’s India business delivered 14% year-on-year growth, primarily driven by strong volume growth. However, US sales declined 8% quarter-on-quarter due to weaker performance in generic drugs. Despite this, global specialty sales maintained momentum, signaling robust demand in high-value therapeutic areas. Jefferies emphasized that with a strong infrastructure in place and a $3 billion war chest, Sun Pharma is well-positioned to pursue additional deals in the specialty segment, which could drive future growth.
HSBC is similarly optimistic, maintaining a Buy rating with a target price of ₹2,280, indicating a 30% upside. The brokerage highlighted that lower R&D spending led to an EBITDA margin beat in Q3. Sun Pharma has also revised its R&D guidance downward to below 7% of sales (from 7-8%) for FY25, reflecting improved cost efficiency. HSBC remains positive about the outlook for specialty product sales, and the market is closely watching the next update on Leqselvi, an alopecia drug, with litigation developments expected in April 2025.
On the other hand, CLSA has maintained a Hold rating with a target price of ₹1,880, implying a modest 7% upside. The brokerage noted that while revenues were in line, the company reported an EBITDA margin beat due to lower R&D expenses. However, this was offset by an exceptional loss, leading to an in-line PAT. While Sun Pharma showed robust growth in India, Emerging Markets (EM), and Rest of the World (RoW) markets, its US market declined year-on-year in USD terms due to lower gRevlimid sales in Q3. Like HSBC, CLSA noted that Sun expects R&D spending to be under 7% of sales, compared to the previous range of 7-8%.
With bullish outlooks from Jefferies and HSBC, Sun Pharma’s focus on specialty products and cost efficiency could drive long-term growth. However, challenges in the US generic market and exceptional costs may temper near-term gains.
(Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making any investment decisions.)
