SUNPHARMA - Sun Pharmaceutical Industries Ltd. Share Price

In the Q2 FY26 earnings call for Sun Pharmaceutical Industries, management provided a positive outlook, highlighting continued growth across various business segments. Sales for Q2 FY26 reached INR 144,052 million, showing an 8.6% increase from the previous year. The gross margin stood at 79.3%, while EBITDA grew by 14.9% to INR 45,271 million. The net profit after tax for Q2 FY26 increased by 2.6% to INR 31,180 million, resulting in an EPS of INR 13 per share.

Key forward-looking points from management include:

1. Market Performance: The Global Innovative Medicines segment grew 16.4% to USD 313 million, and U.S. innovative sales surpassed generics for the first time. The company's largest brand, ILUMYA, is now commercialized in 35 markets.

2. Product Launches: Management highlighted plans for upcoming launches like UNLOXCYT in the U.S. in the second half of FY26 and the filing for ILUMYA psoriatic arthritis sBLA within the same timeframe.

3. Investments in R&D: Sun Pharma's R&D expenses for Q2 FY26 were INR 7,827 million, equating to 5.4% of sales, with a focus on innovative medicines.

4. Tax Rate: The effective tax rate (ETR) for the quarter rose to 24.7%, and management guided a normalized ETR of around 25% for the fiscal year.

5. Cash Position: The balance sheet remains robust, showing a net cash position of $2.9 billion, despite recent strategic acquisitions and settlements.

Overall, management is optimistic about Sun Pharma's growth trajectory, underpinned by innovative product launches and a robust market position in key segments.

Here are the major questions from the Q&A section of the Sun Pharmaceutical Q2 FY26 earnings call, along with detailed answers:

1. Kunal Dhamesha: "On the intangible assets, which seem to have moved sharply from the March '25 level, can you provide a broader explanation?"

   Jayashree Satagopan: "The increase in intangible assets is primarily due to the Checkpoint intangible which contributed about $471 million. Additionally, we made a milestone payment related to ODOMZO. The movement reflects not just Checkpoint, but also Leqselvi moving from development to active intangibles, contributing about $300 million."

2. Neha Manpuria: "When should we expect revenue contributions from Leqselvi?"

   Richard Ascroft: "We're already seeing paid prescriptions through commercial channels for Leqselvi, and we expect this revenue to continue growing throughout the year, especially in mid to late fiscal '26 as payer access improves."

3. Vishal Manchanda: "Could you clarify on the GxMDL case and its impact on current assets?"

   Jayashree Satagopan: "The significant increase in other current assets is due to the GxMDL settlement funds that have been placed in an escrow account. This has contributed to the doubled figure from March '25."

4. Damayanti Kerai: "Regarding the $100 million specialty spend for the two launches this fiscal, how will costs build up?"

   Richard Ascroft: "We've already incurred some costs in Q2 for the sales force for Leqselvi. Expenditures will continue into '27, primarily as fixed costs related to maintaining our sales force, marketing efforts, and patient support programs."

5. Surya Narayan Patra: "What is the expected effective tax rate for this year?"

   Jayashree Satagopan: "For FY26, we expect our effective tax rate to hover around 25%. This increase reflects the phasing out of previous benefits from carry-forward tax losses and facility incentives."

These encapsulate the key questions and detailed responses provided during the earnings call.