Sun Pharma Q4 FY25 Results: Revenue Growth Amid Net Profit Decline

Sun Pharmaceutical Industries reported robust revenue growth in Q4 FY25 but saw a sharp dip in reported net profit due to exceptional charges related to its US operations restructuring. Shares dropped nearly 5% in early trade on May 23, reflecting investor caution despite underlying operational strength.

Strong Revenue and EBITDA Growth in Q4 FY25

For the quarter ended March 31, 2025, Sun Pharma’s consolidated gross sales rose 8.5% year-on-year to ₹12,815.6 crore. Total revenue from operations reached ₹12,958.8 crore, marking an 8.1% increase compared to Q4 FY24.

The company’s India formulation sales grew 13.6% to ₹4,213 crore, reflecting robust domestic market demand. However, US formulation sales declined 2.5% to US$464 million, impacted by competitive pressures.

Global Specialty sales showed healthy momentum, increasing 8.6% to US$295 million and accounting for nearly 20% of total revenues. Emerging Markets and Rest of World formulation sales also rose 6.3% and 2.0%, respectively.

Sun Pharma’s EBITDA for Q4 surged 22.4% year-on-year to ₹3,716 crore, driven by operational efficiencies and other operating revenues. EBITDA margin expanded to 28.7% from 25.3% in the year-ago period, underscoring improved profitability.

Net Profit Falls on One-Time Charges Despite Adjusted Growth

Despite strong top-line performance, reported net profit for Q4 FY25 declined 19% year-on-year to ₹2,150 crore. This drop was primarily due to exceptional tax expenses and one-time restructuring charges linked to the company’s US operations.

On an adjusted basis, excluding these exceptional items, net profit increased 4.8% to ₹2,889 crore, signaling steady underlying earnings growth.

Full Year FY25 Financial Highlights

For the full fiscal year 2024-25, Sun Pharma’s gross sales grew 9% to ₹52,041 crore, supported by a 13.7% rise in India formulation sales to ₹16,923 crore. EBITDA for the year climbed 17.3% to ₹15,272 crore, with margins steady at 29%.

Adjusted net profit for FY25 increased 19% to ₹11,984 crore, while reported net profit stood at ₹10,929 crore compared to ₹9,576 crore in FY24. External Active Pharmaceutical Ingredients (API) sales rose 11% to ₹2,129 crore, with a strong 28.2% growth in Q4 alone, supporting both internal formulation and external customer demand.

Dividend Declaration and Record Date Announcement

Sun Pharma’s board has recommended a final dividend of ₹5.50 per equity share, subject to shareholder approval at the upcoming Annual General Meeting (AGM). The record date for dividend eligibility is set for July 7, 2025, with dividend payments expected by August 8, 2025.

Management Commentary and Future Outlook

Chairman and Managing Director Dilip Shanghvi highlighted the company’s strong performance, attributing gains to increased market share in India and robust growth in Global Specialty segments. He emphasized the near-term potential of the specialty pipeline, spotlighting products such as Leqselvi (dermatology) and Unloxcyt (oncology), the latter bolstered by the recent acquisition of Checkpoint.

Sun Pharma plans a strategic US investment of $100 million in FY26 to support the launch of these specialty products. This investment will focus on optimizing field force effectiveness and engaging healthcare professionals and advocacy groups, deliberately excluding traditional media advertising.

R&D and Pipeline Developments

R&D expenditure for Q4 stood at ₹816.6 crore (approximately 6.4% of sales), with over one-third allocated to specialty pipeline development. The company’s FY26 guidance anticipates R&D spend of 6-8% of sales, excluding future acquisitions currently under evaluation.

Sun Pharma’s specialty pipeline includes several promising candidates such as SCD-044, GL0034, MM-II (seeking regional partners), Fibromun (timeline uncertain),
Nidlegy (under regulatory review in US and EU) and a Semaglutide product  targeting select emerging markets.

Revlimid sales remained stable during the quarter and have been factored into FY26 guidance. Moreover, the Halol manufacturing facility also awaits an FDA audit.

Challenges and Risks: Regulatory, Pricing, and Currency Volatility

Despite a cautiously optimistic outlook, Sun Pharma flagged several risks that may impact growth in FY26. These include currency fluctuations, potential US pharmaceutical tariffs, and uncertainty surrounding Most Favored Nation (MFN) pricing policies, which could affect key assets such as Ilumya.

The company also noted that relocating biologics manufacturing to the US may take up to three years and require significant capital expenditure.

Market Reaction and Share Performance

Following the earnings announcement and disclosure of one-time restructuring expenses, Sun Pharma shares declined nearly 5% in early trade on May 23. Investors appeared concerned about short-term profitability pressures despite the company’s strong underlying fundamentals and strategic initiatives. As of 10.48AM, the shares of SunPharma are trading at 1670.10, reflecting a decline of 2.83%. 

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