Sun Pharma profit drops 36.16% as tax and other income weigh
Revenue rose 11.88% YoY, but expenses grew 15.11% and operating margin fell 1.98 percentage points.
Filed 30 Oct 2026, 19:34 IST · after market close · Sun Pharmaceutical Industries Ltd (SUNPHARMA)
Key takeaways
- Consolidated net profit fell 36.16% YoY as the tax rate rose 11.92 percentage points and other income turned negative.
- Revenue grew 11.88% YoY, but expenses grew 15.11%, narrowing operating margin by 1.98 percentage points.
- Operating margin improved 0.42 percentage points QoQ to 29.29%, still 7.54 percentage points above the 21.75% Healthcare peer median.
Price around the results
Revenue growth did not translate into profit growth
On a consolidated basis, revenue increased 11.88% YoY and operating profit rose 4.79%, but net profit declined 36.16%. The main drag below operating profit was other income, which moved from Rs 457.78 cr in Q2FY26 to negative Rs 758.02 cr this quarter. Pre-tax profit therefore fell 24.13% despite the higher operating profit.
Cost growth narrowed margins year on year
Expenses grew 15.11% YoY against 11.88% revenue growth, reducing operating margin by 1.98 percentage points. Sequentially, revenue grew 5.87% while expenses rose 5.26%, allowing operating margin to improve 0.42 percentage points. Profit quality was also weaker: the tax rate rose to 36.72% from 24.80% YoY and 29.05% QoQ, while negative other income represented -24.04% of pre-tax profit.
Margin recovered from Q4 but remains below earlier levels
Operating margin rose from 27.06% in Q4FY26 to 28.87% in Q1FY27 and 29.29% now, reversing part of the earlier decline but remaining below 31.88% in Q3FY26. Sun Pharma's margin was 7.54 percentage points above the 21.75% median for the 37 Healthcare peers that have reported the same quarter.
Presentation points to a broader product and global platform
The investor presentation said Sun announced the acquisition of Organon & Co. to expand global scale and add women's health and biosimilars. It also said Taro is now a wholly owned subsidiary after Sun acquired its outstanding shares. The presentation identified five New Active Substances in the development pipeline.
No immediate market reaction after the late filing
The results were filed after market close, so no post-results reaction is available yet. In the eight recent result reactions, the stock fell seven times, with a median absolute move of 1.64%, giving the eventual response a predominantly negative historical backdrop.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹16,199 cr | ₹15,300 cr | +5.87% | +11.88% |
| Other income | ₹-758 cr | ₹510 cr | — | — |
| Expenses | ₹11,455 cr | ₹10,882 cr | +5.26% | +15.11% |
| Operating profit | ₹4,744 cr | ₹4,418 cr | +7.38% | +4.79% |
| Operating margin (%) | 29.29% | 28.87% | — | — |
| Interest | ₹75 cr | ₹100 cr | -25.08% | -25.23% |
| Depreciation | ₹758 cr | ₹739 cr | +2.66% | +3.95% |
| Profit before tax | ₹3,153 cr | ₹4,089 cr | -22.90% | -24.13% |
| Tax | ₹1,158 cr | ₹1,188 cr | -2.54% | +12.35% |
| Net profit | ₹1,995 cr | ₹2,901 cr | -31.23% | -36.16% |
| EPS (₹) | ₹8.30 | ₹12.10 | -31.40% | -36.15% |
Operating margin of 29.29% compares with a Healthcare sector median of 21.75% across 37 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Expansion
- Sun Pharma announced the acquisition of Organon & Co. to enhance global scale and add women’s health and biosimilars.
- Taro became a wholly owned subsidiary of Sun after Sun acquired its outstanding shares.
New products
- Sun Pharma launched Leqselvi and Unloxcyt in FY26.
- Sun Pharma launched Sezaby in the US in FY23.
New initiatives
- Sun Pharma has five New Active Substances in its development pipeline.
Problems & risks
- Sun Pharma recorded a Rs 9.2 billion FY26 provision including GxMDL, wage code and SCD 044 impairment costs.
- Sun Pharma recorded a Rs 10.6 billion FY25 provision including an opioid settlement and Concert restructuring.
- Sun Pharma recorded a Rs 4.9 billion FY24 provision including an Ache Labs impairment and Nigeria forex loss.
- Sun Pharma recorded a Rs 43.9 billion FY22 provision largely related to US litigation involving Ranbaxy, Meijer and others.
What to watch
- Whether operating margin remains above 29.29%.
- Whether the tax rate moves below 36.72%.
- Whether other income recovers from negative Rs 758.02 cr.