Motilal Oswal Financial Services has suggested BUY recommendation for Sun Pharmaceutical, targeting a 12-month price of Rs 1,960. The report has suggested BUY Call based on robust domestic formulation growth, a deep specialty franchise in developed markets, strategic new launches, and enhanced doctor engagement. Sun Pharma’s earnings trajectory is forecast to accelerate, buoyed by a 14% CAGR in profits over FY25-27, underpinned by specialty and branded generic expansions. The research highlights margin expansion potential, prudent capital allocation, and thoughtful risk management, solidifying Sun Pharma’s stance as a best-in-class play in Indian healthcare equities.

Motilal Oswal’s Rationale for BUY Call

Motilal Oswal affirms a BUY rating on Sun Pharma, valuing the stock at 32x forward earnings and establishing a target price of Rs 1,960 for the year ahead. This bullish stance is justified by Sun Pharma's relentless outperformance in domestic and international markets, coupled with a well-diversified product pipeline and increasing operational leverage that promises sustainable margin accretion.

Key Stock Levels and Investor Targets

The current market price (CMP) stands at Rs 1,631. The research house sets a target price of Rs 1,960, reflecting a potential upside of approximately 20%. Major technical levels to watch:

• Immediate Support: Rs 1,550
• First Resistance: Rs 1,800
• Breakout Level: Rs 1,960 (target)
• Next Psychological Barrier: Rs 2,100

Investors are advised to accumulate on dips, with a clear horizon of holding until the Rs 1,960 target materializes.

Domestic Formulations: Proving Market Leadership

Driven by a large base of Rs 175 billion in trailing 12-month sales, Sun Pharma’s domestic formulation segment is outpacing the broader industry. The management has aggressively expanded into Tier 2 cities, amplified its field force, and rolled out over 45 new products in FY25 alone. Continuous doctor engagement and promotional innovation are yielding strong prescription growth, with YoY expansion clocked at an impressive 13.7%. The company's sales and growth metrics are proving resilient against cyclical market swings.

Specialty Franchise: Stepping Into Global Dominance

Sun Pharma’s specialty franchise in developed markets is scaling rapidly. Strategic acquisitions at the late clinical trial stages ensure swift regulatory clearances and commercial deployments. Product launches within dermatology, ophthalmology, and onco-dermatology are supporting global growth, with marquee products like Leqselvi, Unloxcyt, and Winlevi driving prescription momentum. Management is earmarking USD 100 million for targeted specialty spending in FY26, particularly for scaling field operations and marketing intensity.

Financial Highlights and Valuations

The consistently improving EBITDA margin and strong capital efficiency ratios position Sun Pharma ahead of peers in the sector.

Emerging Growth Engines and Strategic Focus

Sun Pharma is unrelenting in its push towards new product launches and specialty asset acquisitions. The regulatory pipeline includes submissions for key products in the US, EU, and Asia-Pacific markets, with a strong focus on high-margin therapies. The company’s expanding global footprint is built upon in-licensing, phase III asset acquisitions, and an increasing presence in branded generics—particularly where proprietary brands demonstrate stronger economic returns than mere licensing strategies.

Risk Factors and Regulatory Watch

Regulatory issues, such as the ongoing USFDA review at the Halol facility, represent manageable risks. Calendar FY26 is expected to see R&D expenses between 6-8% of sales, with effective tax rates guided to 25%. Operational risks are mitigated through field force expansion, supply chain diversification, and an agile approach to market shocks.

Shareholding Pattern and Institutional Confidence

As of June 2025, promoters hold a substantial 54.5% stake. Domestic and foreign institutional investors continue to demonstrate robust confidence, with DIIs and FIIs owning 19.5% and 17.3%, respectively. The stability in ownership underpins analyst conviction in the stock’s long-term upside.

Conclusion: Sun Pharma is a Defensive Growth Play

Motilal Oswal’s research unequivocally places Sun Pharma as a premier defensive growth bet in Indian equities. The forward guidance indicates an earnings CAGR of 14% over the next two years, supported by a formidable pipeline and disciplined execution. Investors can anticipate not only capital appreciation up to Rs 1,960 but also sustained margin expansion and free cash flow growth. The strategic blueprint continues to affirm Sun Pharma’s reputation as an industry leader, reinforced by operational agility and institutional trust.

For Investors: Actionable Levels and Holding Range

• Recommended Buy: Rs 1,631 (CMP)
• Accumulation Zone: Rs 1,600 – Rs 1,650
• 12M Target: Rs 1,960
• Stop-Loss: Rs 1,550
• Review Range: Rs 2,100 upon breakout

Execute disciplined buy strategies and maintain holdings until the upward price target is attained, while remaining watchful of regulatory triggers and supply chain developments.