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Sun Pharma (SUNP) Q1FY27 EBIDTA growth of 5% YoY was in line with our estimates. Key markets like India and specialty continue to report strong growth. Over last few years SUNP dependency on US generics has reduced and company’s growth is more functional on specialty, RoW and domestic pharma that has strong growth visibility. Its recent acquisition of Organon in all cash deal provides an entry into biosimilars and diversify its branded generics portfolio. The deal is EPS accretive from Year 1 and will see significant EPS accretion. Company has managed to enjoy higher multiple compared to peers given its exposure to high growth branded generics portfolio; key will be to grow acquired portfolio than its historical run-rate for stock to outperform. Our FY27E/FY28E EPS broadly remains unchanged. We maintain ‘BUY’ rating with TP of INR 2,150 based on 25x FY28E combined entity EPS.

Domestic business and Specialty business aids growth YoY:

Revenues came in at INR 153bn up 10% YoY vs our estimate of INR 151bn. Domestic formulation growth was strong at 16% YoY. US sales came in lower at USD 427mn (USD 459mn in Q4FY26). We estimated USD 458. Global specialty sales were up 13% YoY (down 1% QoQ) to USD 351mn. RoW markets remained healthy up 10% YoY while EMs growth was at 15% YoY. API sales increased by 11% YoY

EBITDA in line, OPM at 28%:

Reported EBIDTA came in at INR 43bn up 5% YoY, in line with our est. OPM came in at 28.1%, down 70bps YoY. GMs came at 80.5%, up 90bps YoY. Other expenses ex R&D were up 16% YoY and 4% QoQ at INR 40bn. R&D spend stood at 8.3bn (5.4% of revenues) down 8% YoY. Tax rate higher at 28.4.% Forex gain stood at INR 1.2bn. Adj for forex gain. PAT came in at INR 30bn. Adj EPS at INR 12.4/share.

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SEBI Registration number is INH000000933