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2026E563,667127,143.352.9932.7x 2027E622,341145,062.060.4628.6x 2028E687,960161,334.867.2425.8x Dhawal Khut * | Equity Associate91 22 42246134 | dkhut@jefferies.com The Long View: Sun Pharmaceutical IndustriesInvestment Thesis / Where We DifferWe expect Sun to have continued traction in specialty portfolio and above-industry growth in the domestic market.Base Case,INR2000, +16%Revenue growth at 9% CAGR over FY25-27EMar-27E EPS: Rs60.5; Target Multiple: 35x; PriceTarget Rs2,000Sustainability MattersTop Material Issue(s):Product Quality and Safety.Sun Pharma’s Ranbaxy division in the past wasflagged by the US regulator for quality slippage, which led to an import alert for some facilities.Compromise in quality can lead to a warning letter, import alert leading to disruption in supply ofmedicines to patients and company’s financials.Company Target(s):1)Keep increasing renewable source of energy procurement, which currently is38%.2)Waste minimisation, segregation, and safe disposal.Qs to Mgmt: 1)What is the largest source of emissions for you in the manufacturing process; whatare you doing to reduce the emissions?2)What are your targets for emission reduction in mediumand long term?ESG Sector Deep Dive: India PharmaPlease see important disclosure information on pages 9 - 14 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Risk/Reward - 12 Month View24002200200018001600140012001000800Upside Scenario,INR2350, +36%Revenue growth at 11% CAGR over FY25-27EMar-27E EPS: Rs63.5; Target Multiple: 37x; PriceTarget Rs2,350 20252024Downside Scenario,INR1530, -12%Revenue growth at 7% CAGR over FY25-27EMar-27E EPS: Rs54.4; Target Multiple: 28x; PriceTarget Rs1,530CatalystsNew additions in specialty portfolio can furtheraugment growth (like Deuruxolitinib)Pickup in approvals in US 2 Exhibit 2 - Sun Pharma: Quarterly Summary.INRm except EPS & MarginRevenue break-upUSIndiaEmerging MarketsRoWAPIsOthersTotal RevenueRaw material costsGross ProfitGross Margin (%)Employee costsR&D expensesManufacturing & other expensesEbitdaEbitda marginsDepreciation & AmortisationInterest & Finance chargesOther income & Other operating incomeExceptional itemsPBTTaxesTax rateMinority InterestPATDiluted shares outstandingDiluted EPSPAT excluding exceptionalsDiluted EPS excluding exceptionalsSource: Company data, Jefferies estimatesExhibit 3 - US & India accounted for 64% of revenue in 4QFY25.EmergingMarkets18%RoW14%APIs4%Revenue breakup 4QFY25Source: Company data, JefferiesExhibit 5 - US sales was down 2% QoQ, on lower specialty sales.4764660%-2%01002003004005006004QFY241QFY25US revenue (USDm)Source: Company data, JefferiesPlease see important disclosure information on pages 9 - 14 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Exhibit 7 - India sales was up 14% YoY.37.141.410%16%010203040504QFY241QFY25India revenue (INR bn)Source: Company data, JefferiesExhibit 9 - RoW revenue was modest due to currency headwinds.16.315.83%-1%05101520254QFY241QFY25RoW revenue (INR bn)Source: Company data, JefferiesExhibit 11 - We expect robust US growth to slowdown in FY26 due to lowerspecialty growth.1,6791,85510%10%05001,0001,5002,0002,5003,000FY23FY24US Revenue (USDm)Source: Company data, Jefferies estimatesPlease see important disclosure information on pages 9 - 14 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Exhibit 13 - We factor in low double-digit-growth for India business.1361497%9%050100150200250FY23FY24Sun Pharma India revenue (INR bn)Source: Company data, JefferiesExhibit 15 - Sun's R&D cost to increase as clinical trials pick up pace in comingyears.24327%34%0102030405060FY23FY24R&D expense (INR bn)Source: Company data, Jefferies estimatesExhibit 17 - Expect EPS growth to remain in double digit in near term.364210%16%01020304050607080FY23FY24Sun Pharma EPS ex-exceptionalSource: Company data, Jefferies estimatesExhibit 19 - We value Sun Pharma at 33x FY27 EPS with PT of INR2,000.Price Target calculationCore EPS Mar-27 (INR)Applied P/E (x)Target price of core business (INR)-ASoTP based price target (INR)-A+BSource: Jefferies estimatesPlease see important disclosure information on pages 9 - 14 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Exhibit 20 - Sun Pharma one year forward P/E.1015202530354045May-20Nov-20Sun Pharma 1yr fwd P/ESource: Bloomberg, JefferiesPlease see important disclosure information on pages 9 - 14 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Exhibit 21 - Sun Pharma: Key Metrics.Key Metrics (INRm unless otherwise stated)RevenueEBITDANet ProfitEPSEPS Growth (%)ROE (%)ROCE (%)ROA (%)Net debt/Equity (x)Shares outstanding (mn)DebtCashFCFEPS excl exceptionalBVPSDPSRoICSource: Company data, Jefferies estimatesExhibit 22 - Sun Pha