Pharma stock jumps after announcing ₹3,000 Cr capex to set up greenfield formulations plant

Synopsis:
Sun Pharmaceutical Industries is in focus after the company announced a latest capex plan worth Rs 3,000 crore from one of its subsidiaries.

The shares of this leading pharma company engaged in the business of manufacturing, developing and marketing a wide range of branded and generic formulations and Active Pharma Ingredients (APIs) are in focus after announcing a significant capex. In this article, we will dive more into the details of it.

With a market capitalisation of Rs 4,29,409 crore, the shares of Sun Pharmaceutical Industries Ltd made a day high of Rs 1,815.95 per share, up 1 percent from its previous day’s closing price of Rs 1,798.05 per share. Over the past five years, the stock has delivered a return of 214 percent, outperforming NIFTY 50’s return of 96 percent.

About the Announcement 

Sun​‍​‌‍​‍‌​‍​‌‍​‍‌ Pharma, through a stock exchange filing, announced that its wholly owned subsidiary has given the green light for an investment of Rs 3,000 crore to set up a new greenfield formulations manufacturing facility in Madhya Pradesh. This significant extension marks the company’s move to enhance its production capacity and back up the growth that is expected to continue in the pharma ​‍​‌‍​‍‌​‍​‌‍​‍‌sector.

However, it is to be noted that no such further information was provided by the company regarding this expansion, like capacity, the formulation/product for which the capex is announced or so on. Until then, we have to wait for further clarification from the management.

Financial and Other Highlights

Sun Pharmaceutical Industries reported a core revenue of Rs 14,478 crore in Q2 FY26, a growth of 9 percent as compared to Rs 13,291 crore in Q2 FY25. Additionally, it grew by 4.5 percent from Rs 13,851 crore in Q1 FY26. 

Regarding its profitability, it reported a net profit of Rs 3,125 crore in Q2 FY26, a growth of 3 percent as compared to Rs 3,037 crore in Q2 FY25. Additionally, it recorded a robust growth of 36 percent from Rs 2,293 crore in Q1 FY26.

Sun​‍​‌‍​‍‌​‍​‌‍​‍‌ Pharma’s leadership appeared very confident about the company’s expansion perspective, particularly in the Indian business. CFO Jayashree Satagopan pointed out that the company is looking forward to keeping the pace of outperformance versus the domestic pharma market, a feat that will be facilitated by a more focused approach to priority therapies, intensified brand building, and a larger field force that is enabling a deeper engagement with doctors.

The domestic segment recorded an 11 percent growth in Q2. As for the global situation, the firm is quite optimistic about the demand for its specialty and innovative medicines portfolio, which grew 16.5 percent and currently makes up nearly one-fifth of the total revenue.

It is expected that new products like LEQSELVI and the forthcoming UNLOXCYT will be the main growth drivers in this segment, contributing to the mid-teen growth rate. LEQSELVI is an oral medication recently launched for treating severe alopecia areata, an autoimmune disease that causes hair loss, and UNLOXCYT is an advanced anti-cancer drug.

In addition, Sun Pharma is observing good demand for its products in such emerging markets as Brazil, Russia, Romania, and South Africa, where the newly launched innovative drugs are gaining popularity among users. Regarding the margins, the company is betting on research and development expenses being at the lower end of their 6 percent guidance range as the clinical trials are progressing ​‍​‌‍​‍‌​‍​‌‍​‍‌smoothly.

Written by Satyajeet Mukherjee

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