Sun Pharma 4Q26 results were in line with expectations, with India and Emerging Markets continuing to support growth

Overview

This report is Goldman Sachs' commentary on Sun Pharmaceutical Industries (SUN.BO) 4Q26 results. The report notes that quarterly performance was largely in line with expectations, with growth mainly driven by the India business, Emerging Markets, and global innovative medicines, especially products such as Ilumya; meanwhile, the U.S. generics business remained weak, and operating expenses and launch investments pressured margins.

Core views

The core view is that revenue growth momentum remains relatively solid, with India formulations and Emerging Markets continuing to outperform, while both U.S. and ex-U.S. innovative medicines contributed; however, profits were affected by costs, seasonality, lower milestone income, and reduced lenalidomide contribution. Management expects high-single-digit revenue growth in FY27, with R&D investment maintained at 6%-7% of sales, and spending related to Leqselvi and Unloxcyt becoming part of the ongoing cost base.

Analysis framework

The report mainly uses a quarterly results comparison and management guidance interpretation approach, comparing 4Q26 sales, EBITDA, margins, India formulations sales, innovative medicines sales, and pipeline progress against Goldman Sachs expectations and YoY performance, and based on this makes modest adjustments to FY27-29E EPS estimates.

Methodology notes

• Factor frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs states that its Factor Profile compares a stock's growth, financial returns, valuation multiples, and other metrics against covered stocks and industry peers to provide investment context; this report discloses the framework methodology, but the main body is primarily focused on earnings commentary.

• M&A frameworkM&A Rank

  Probability ranking of being acquired

  Goldman Sachs discloses that its M&A Rank uses scores from 1 to 3 to assess the probability of a company becoming an acquisition target, where 1 indicates high probability, 2 medium probability, and 3 low probability; this content is part of the standard disclosure framework.

• Data platformQuantum

  Database of financial history, forecasts, and ratios

  Quantum is Goldman Sachs' proprietary database and can be used for deep single-company analysis or cross-company, cross-industry, and cross-market comparisons; this report does not disclose specific model details.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sun Pharmaceutical Industries (SUN.BO)

  Subject company and stock of the report

  Strengths

  Steady growth in the India formulations business, 20.1% YoY growth in global innovative medicines, continued contribution from Emerging Markets, and management guidance for high-single-digit FY27 revenue growth.

  Weaknesses

  The U.S. generics business remains weak, EBITDA margin declined both YoY and QoQ, and some product launch and regional investments have raised the cost base.

  Comparison

  India business volume growth was 6%, higher than IPM volume growth of 1.6%; overall 4Q26 results were broadly in line with Goldman Sachs expectations.

  Risks

  Slower-than-expected margin recovery, continued pressure in the U.S. business, R&D and launch investments above expectations, delays in pipeline or regulatory milestones, and potential impacts from U.S. tariffs.

• Global Innovative Medicines

  Core growth business segment

  Strengths

  Q4FY26 sales of US$354mn, up 20.1% YoY, driven by products such as Ilumya, Odomzo, Cequa, and Winlevi, helping offset the decline in U.S. generics.

  Weaknesses

  Leqselvi and Unloxcyt still require continued investment, and management views related expenses as part of the ongoing cost base.

  Comparison

  Accounts for 22.2% of company sales, with growth faster than the company's overall sales growth.

  Risks

  New product ramp-up may fall short of expectations, returns on launch investment may be slower, and regulatory approval timelines remain uncertain.

• India formulations

  Regional business segment

  Strengths

  Q4FY26 sales of Rs48.4bn, up 14.8% YoY, with growth driven by volume and new products; the company said growth outpaced the Indian market.

  Weaknesses

  The report did not disclose margins for this segment, and pricing contribution was relatively limited.

  Comparison

  The company's India volume growth of 6% was higher than IPM volume growth of 1.6%.

  Risks

  Competition in the Indian market, price controls, and product ramp-up falling short of expectations.

Key data

• 4Q26 sales growth+13% yoyThe company's 4Q26 sales grew 13% YoY, in line with Goldman Sachs expectations.
• 4Q26 EBITDA growth+6% yoyEBITDA grew 6% YoY, but margins were below Goldman Sachs expectations.
• Global innovative medicines salesUS$354mnUp 20.1% YoY in Q4FY26, accounting for 22.2% of sales.
• EBITDA marginabout 27.1%Declined both YoY and QoQ, affected by lower milestone income, reduced lenalidomide contribution, and rising expenses.
• India formulations salesRs48.4bnUp 14.8% YoY in Q4FY26; the company said growth outpaced the Indian market.
• India quarterly volume growth6%IPM volume growth over the same period was 1.6%.
• Number of new products in India11The company launched 11 new products in India during the quarter, including semaglutide injections under the Noveltreat and Sematrinity brands.
• FY27 revenue guidancehigh-single-digit growthBased on management's current understanding of the regulatory and macro environment.
• FY27 R&D spending6%-7% of salesManagement expects FY27 R&D investment to remain within this range.
• FY27-29E EPS adjustmentup to about 3%Goldman Sachs modestly adjusted estimates based on 4Q results and management commentary.

Impact & implications

From an investment perspective, Sun Pharma's growth quality continues to be supported by the India business, innovative medicines, and Emerging Markets, indicating resilience in its core businesses outside U.S. generics; however, whether margins can recover, whether pressure on U.S. generics can ease, and the return on investment for products such as Leqselvi and Unloxcyt are key variables for subsequent valuation and earnings expectations. As Goldman Sachs maintains a Not Rated stance, the report provides more of an update on results and guidance rather than a clear investment rating recommendation.

Risks

• The U.S. generics business continues to be weak and may keep weighing on U.S. market performance.
• EBITDA margin is affected by lower milestone income, lower lenalidomide contribution, seasonality, and rising expenses.
• Spending related to Leqselvi and Unloxcyt will become part of the ongoing cost base; if revenue ramp-up is slower than expected, profitability may be pressured.
• Pipeline assets such as Ilumya for PsA, GL0034, and MM-II face uncertainty around regulation, clinical data, and commercialization partnerships.
• Management believes the potential impact of U.S. tariffs is marginally small, but external policy and the macro environment may still change.

What to watch

• The U.S. FDA regulatory action date for Ilumya in active psoriatic arthritis, expected in late October 2026.
• Phase II topline data for GL0034 in type 2 diabetes, expected in 2HCY27.
• Progress in finding a commercialization partner for MM-II in the U.S.
• Physician adoption, sales ramp, and investment intensity after the launches of Leqselvi and Unloxcyt.
• Whether FY27 revenue achieves high-single-digit growth and whether R&D spending remains at 6%-7% of sales.
• Whether volume growth and new product contribution in the India formulations business can continue to lead the market.
• The impact of changes in the U.S. generics business and lenalidomide contribution on margins.