Sun Pharmaceutical Industries Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹1,758.80−₹5.20 (−0.29%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by high debt relative to equity.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:48 pm

Understanding the Business

Company site ↗

The 60-second version of Sun Pharmaceutical Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sun Pharmaceutical Industries Limited, a generic pharmaceutical company, develops, manufactures, and markets branded and generic formulations, and active pharmaceutical ingredients (APIs) in India, the United States, and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees47,000

Annual revenue₹58,220 Cr

How does it make money?

Turns over ₹58,220 Cr a year. Of every ₹100 of sales, about ₹20 reaches shareholders as profit, with ₹32 left at the operating level before interest, tax and depreciation. Each of its 47,000 employees supports ₹1.24 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.24 Cr

Who are its competitors?

The closest listed comparisons in its industry are DR. REDDY S LABORATORIES, CIPLA LTD, DIVI S LABORATORIES LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 17.9% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE9.8%

What is the outlook?

29 analysts covering the stock expect revenue to grow about 12.0% and earnings to grow about 18.5% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+12.0%

Est. earnings growth+18.5%

Analysts29

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +35% while net margin moved +1% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+35%

Margin effect+1%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

• P/E of 34.9x already prices in growth
• P/E is close to its own historical median of 40.8x
✗ P/B of 5.05x is a steep premium to book

Quality vs. Valuation

Company Quality

73/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

47/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

34.9x

3Y Median

40.8x

40 monthly readings · mean 40.4x · range 30.8x–48.7x

Sector Median

31.8x

median of 3 sector peers

🟢Current valuation is approximately 15% below its 3y median of 40.8x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟡Against its sector it is priced broadly in line with the peer median of 31.8x.

vs. its own history

Fair

40.8x median over 40 months · -15%

vs. sector peers

Fair

31.8x median of 3 peers · +10%

vs. generic bands

Fair

15x–35x

EV/EBITDA

22.1x

PEG

3.28

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 28.4% to 32.4% over 3 years.
Debt is being paid down
Total debt is down 33% over 3 years.
Cash generation is improving
Free cash flow is up 207% over 3 years.
Return on capital is rising
ROCE has improved from 15.7% to 17.9%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 2 high

🔴High leverageFinancial
Debt/Equity of 5.52x — earnings must service borrowings before shareholders see anything.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 28.4% to 32.4%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 33% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 5.52x. Interest is payable whether or not the business has a good year.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 8% a year✓ 10.4% CAGR
Latest reported year was 10.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 30%✓ 32.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹8,810 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 15%✓ 17.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 3 neutral · 2 weak

Market Cap

₹4.22 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

34.9x

Fair

Fairly valued against the generic band

P/B Ratio

5.05x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹50.4

Profitable

Profitable on a per-share basis

ROE

13.7%

Moderate

Moderate capital efficiency

ROCE

17.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

5.52x

High

High leverage

Revenue Growth (YoY)

10.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

27.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.91%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹8,810 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

27.1x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

23.2%

Good

Healthy core-business profitability

Net Margin

20.2%

Good

Strong bottom-line conversion

Current Ratio

2.82

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.14

Defensive

Steadier than the market

52W Range Position

38%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1806.2 / 1866.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

31.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹43,279 Cr	₹47,758 Cr	₹52,041 Cr	₹58,220 Cr	+10.4%
EBITDA	₹12,292 Cr	₹14,294 Cr	₹16,725 Cr	₹18,848 Cr	+15.3%
EBITDA Margin	28.4%	29.9%	32.1%	32.4%	—
PAT (Net Profit)	₹8,474 Cr	₹9,576 Cr	₹10,929 Cr	₹11,479 Cr	+10.6%
EPS	₹35.3	₹39.9	₹45.6	₹47.8	+10.6%
ROE	15.1%	15.0%	15.1%	13.7%	—
ROCE	15.7%	16.5%	18.9%	17.9%	—
Total Debt	₹6,886 Cr	₹3,274 Cr	₹2,362 Cr	₹4,627 Cr	-12.4%
Free Cash Flow	₹2,874 Cr	₹9,933 Cr	₹11,944 Cr	₹8,810 Cr	+45.3%

🟢 Revenue has grown at 10.4% a year over 3 years.

🟢 EBITDA has grown at 15.3% a year over 3 years.

🟢 EBITDA Margin has risen from 28.4% to 32.4% over 3 years (+4.0 pts).

🟢 PAT (Net Profit) has grown at 10.6% a year over 3 years.

🟢 EPS has grown at 10.6% a year over 3 years.

🔴 ROE has fallen from 15.1% to 13.7% over 3 years (-1.4 pts).

🟢 ROCE has risen from 15.7% to 17.9% over 3 years (+2.2 pts).

🟢 Total Debt has shrunk at 12.4% a year over 3 years.

🟢 Free Cash Flow has grown at 45.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1.09 L Cr

Total Liabilities

₹24,905 Cr

Cash & Equivalents

₹9,771 Cr

Operating Cash Flow

₹12,419 Cr

Capex

-₹3,609 Cr

Shareholding (proxy)

Institutional Holding

29.2%

Insider Holding

55.6%

Corporate Actions

Next Earnings

30 Oct 2026

Dividend Rate

₹16

Ex-Dividend Date

07 Jul 2026

Analyst Consensus

Recommendations

28 Buy · 1 Hold · 4 Sell

Target Price (Mean)

₹2,174.34

+23.6% vs CMP

Target Range

₹1,830 – ₹2,400

Peer Comparison

Company	P/E	ROE
DR. REDDY S LABORATORIES	31.0x	8.8%
CIPLA LTD	31.8x	9.8%
DIVI S LABORATORIES LTD	83.0x	17.5%

Recent News

3 mixed3 general

Sun Pharma down 2%, stock hits over 5-month low

Business Standard, 14 Oct

The Specialty Medicines Mix That Changes Earnings: What the Specialty Sales Test Really Reveals

Kalkine India, 16 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Sun Pharma Board Approves Plan To Raise Up to Rs 10,000 Cr via NCDs

HDFC Sky, 13 OctFunding

🟡Mixed / dependsNew funding changes the capital structure. Debt raises leverage; an equity raise dilutes existing holders.

Sun Pharma schedules June investor meetings in Mumbai

scanx.trade, 14 Oct

Sun Pharma stock: Results are due October 29 for Sun Pharma stock

ad-hoc-news.de, 16 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Sun Pharma’s Biggest Global Bet, Buys Organon in $11.75 Billion Deal; Pharma Stock Surge 7% - Time to Buy?

Goodreturns, 09 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Risk

WeakValuation

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 2 high-severity red flags sit above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑