SUNPHARMA

Q1FY27: Premium Shift Offsets US Generic Decline

Consolidated revenue grew 10% year-on-year to ₹15,183 crore for Q1FY27, outpacing management’s full-year guidance of high single-digit growth, though full-year expectations remain unchanged. Domestic Market Dominance: India formulations led segment performance with a 16% YoY increase to ₹5,475 crore (36% of total revenue), bolstered by volume gains, new product launches, and strong market presence in generic injectable semaglutide. Innovative Portfolio Expansion: Global sales of innovative medicines increased by 12.8% YoY to $351 million—making up nearly 22% of total revenue—driven by strong performance from core products like Ilumya, Odomzo, and Cequa. US Generics Face Pressure: US formulation sales fell 9.7% YoY to $427 million due to ongoing price erosion in key generics like Lenalidomide and heightened market competition, though specialty drug Leqselvi showed encouraging physician adoption. Margin Compression & Acquisition Impact: Gross margins expanded by 95 bps to 80.5% on a richer product mix, but EBITDA margin contracted by 133 bps to 28.1% due to reduced forex gains, higher launching costs, and expenses linked to the upcoming Organon deal. Valuation & Outlook: Shares hit a fresh 52-week high of ₹2,046.90; however, trading at 35.5x FY27 estimated earnings, valuations appear fully priced while medium-term growth hinges on R&D pipeline progress and synergy realization from the Organon integration by FY29.