Sun Pharma Shares Jump 4% on Strong Q3 FY26 Results

Introduction

Shares of Sun Pharmaceutical Industries surged by nearly 4% following the announcement of its financial results for the third quarter of the fiscal year 2025-26. The company reported a significant 16% year-on-year increase in its consolidated net profit, driven by robust performance across its business segments. The positive earnings report was accompanied by the board's approval of an interim dividend, further boosting investor confidence.

Stellar Quarterly Performance

For the quarter ended December 31, 2025, Sun Pharma posted a consolidated net profit of ₹3,369 crore, a substantial rise from the ₹2,903 crore recorded in the corresponding period of the previous fiscal year. This growth highlights the company's strong operational execution and sustained demand for its products. Total revenue from operations also saw a healthy increase, climbing to ₹15,520 crore from ₹13,675 crore in the year-ago period, marking a growth of approximately 13.5%.

The company's operating performance surpassed market expectations. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at ₹4,948.4 crore, up 23.4% year-on-year. This improvement in profitability was reflected in the EBITDA margins, which expanded to 31.9% from 29.3% in the same quarter last year, indicating enhanced operational efficiency.

Dividend Announcement for Shareholders

In a move that rewards its shareholders, the Sun Pharma board declared an interim dividend of ₹11 per equity share of Re 1 each for the financial year 2025-26. The company has set February 5, 2026, as the record date to determine the eligibility of shareholders for the dividend payment. The payout is scheduled to be completed on or before February 16, 2026.

Segment-Wise Revenue Breakdown

The company's well-rounded growth was visible across its key markets. The India formulations business was a standout performer, with domestic sales rising by 16.2% to ₹4,998.6 crore. This segment contributed 32.3% to the company's total sales for the quarter. The US formulations segment, which accounts for 27.5% of total sales, reported revenue of $177 million, showing a modest growth of 0.6%. The growth in this segment was primarily driven by the company's portfolio of innovative medicines, which helped offset a decline in generic drug sales.

Key Financial Metrics

To provide a clear overview of the quarterly performance, the following table summarizes the key financial highlights.

Market Reaction and Stock Movement

The strong financial report triggered a positive reaction in the stock market. On the day of the announcement, Sun Pharma's stock climbed 3.81% to an intraday high of ₹1,655.80 on the BSE. Similarly, on the NSE, the stock gained 3.78% to touch ₹1,655.70. This surge reflects the market's positive reception of the company's performance and its future growth prospects.

Institutional Investor Sentiment

Despite the strong earnings, data on institutional holdings showed a slight note of caution. In the third quarter of FY26, Foreign Institutional Investors (FIIs) moderately reduced their stake in the company from 16.55% to 16.12%. Mutual funds also trimmed their holdings from 12.41% to 12.09%. This minor reduction suggests that some large investors may be booking profits or rebalancing their portfolios.

Analyst Outlook and Valuations

Brokerage firms remain largely positive on Sun Pharma's outlook. Emkay Global Financial has a 'buy' rating on the stock with a target price of ₹2,000. Motilal Oswal is also bullish, recommending a 'buy' with a target price of ₹1,960. These recommendations are based on the company's strong execution, expanding specialty pipeline, and potential for global growth. The company's valuation metrics, including a P/E ratio of 36.49, reflect investor expectations for continued growth.

Future Outlook

In a statement, Sun Pharma's Managing Director, Kirti Ganorkar, attributed the strong quarterly results to well-rounded growth across all businesses, particularly led by branded businesses in India, emerging markets, and global innovative medicines. The company continues to focus on expanding its specialty drug portfolio and investing in research and development to build a robust pipeline. With a strong financial position and strategic initiatives in place, Sun Pharma appears well-positioned to navigate the dynamic pharmaceutical landscape and sustain its growth trajectory.