Investors in Sun Pharmaceutical Industries Limited (NSE:SUNPHARMA) had a good week, as its shares rose 2.2% to close at ₹1,778 following the release of its second-quarter results. Results were roughly in line with estimates, with revenues of ₹162b and statutory earnings per share of ₹47.80. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from Sun Pharmaceutical Industries' 34 analysts is for revenues of ₹651.0b in 2027. This reflects a reasonable 5.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 8.6% to ₹49.64. Before this earnings report, the analysts had been forecasting revenues of ₹651.0b and earnings per share (EPS) of ₹53.86 in 2027. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
See our latest analysis for Sun Pharmaceutical Industries
It might be a surprise to learn that the consensus price target was broadly unchanged at ₹2,167, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Sun Pharmaceutical Industries analyst has a price target of ₹2,400 per share, while the most pessimistic values it at ₹1,830. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2027 brings more of the same, according to the analysts, with revenue forecast to display 12% growth on an annualised basis. That is in line with its 10.0% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 12% per year. So although Sun Pharmaceutical Industries is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sun Pharmaceutical Industries. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at ₹2,167, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Sun Pharmaceutical Industries analysts - going out to 2029, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for Sun Pharmaceutical Industries you should be aware of.
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