₹ 3,90,516 Crore market capitalization: Can the giant keep going

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ABOUT THE COMPANY

SUN PHARMACEUTICAL INDUSTRIES LIMITED is the India’s largest drugmaker and fourth globally, it has a presence in over 100+ countries and have 41 manufacturing facility. It derives 70% of the revenue from the global market. The company employs around 43,000 people worldwide and focuses on innovation through its research and development pipeline comprising of 3,000 professionals across multiple centers and continues to invest in expanding, it invests 6-8% of its global revenue into R&D, underscoring its focus on technology and differentiated products. Over the past 5 years, the stock had delivered a strong return rising from Rs 512.90 to Rs 1627.40, a compounded annual growth rate (CAGR) of approximately 25-30%. The company has a market capitalisation of ₹ 3,90,516 Crores which is more than combines market capitalization of Cipla, Dr Reddy’s Labs, Divi’s Lab.

Analysis of the Financial Statements

Revenue Growth Trend

Company sales have been increasing consistently over the past 5 years from Rs 32,838 Crores in March 2020 to Rs 52,578 Crores in March 2025, this increase in growth shows the geographic expansion undertaken by the company along with the investment made in the R&D wing. In March 2025 the company agreed to acquire Checkpoint Therapeutics Inc. showing capacity expansion which will eventually lead to hire revenue in the future.

March 2020March 2021March 2022March 2023March 2024March 2025
32,838 CRORES33,498 CRORES38,654 CRORES43,886 CRORES48,497 CRORES52,578 CRORES

Profitability & Margin Analysis

Operating profit margin of the company has grown from 21% to 29% in the past 5 years while its competitor Cipla Limited has an operating profit margin of 26% as of March 2025, which shows companies management has done a great job in decreasing the cost and increasing the OPM. This will generate more net profit when the company expands its operations and takes up larger orders.

March 2020March 2021March 2022March 2023March 2024March 2025
21%25%27%27%27%29%

Balance Sheet Strength

The total assets of the company have grown from Rs 68,194 Crores to Rs 91,908 Crores in the last 5 years, showing subsequent capital investment for future growth, The acquisitions and licensing contracts contributed to the rise in intangible assets, particularly from specialty product rights, patents, and brand acquisitions. Capital work in progress of the company is Rs 6,644 Crores which was Rs 1,220 Crores in March 2020 this increase is due to investment in research and development by the company.

Debt Profile

The borrowings of the company have decreased from RS 8,315 Crores in March 2020 to Rs 2,362 Crores in March 2025 indicating that the company is moving towards debt free structure which shows that the company is capable of meetings its own needs through its retained earnings. The reserves and surplus of the company have grown significantly to Rs 71,978 Crores in March 2025 which is good for the company’s future growth and expansion plans.

Cash Flow Health

Operating cash flow of the company has been positive over the years and increasing as the sales of the companies are increasing as of March 2025 the Cash from Operating Activity was Rs 14,072 Crores, this indicates that the company can convert its sales into cash. The cash conversion cycle of the company is 228 days while Cipla Limited has a cash conversion cycle of 188 days these questions the cash conversion from sales for the company. Here the investors should be cautious and must decide on the reliability of the Cash from Operating Activity of the company.

Analysis of the Company Management (Investors presentation/Disclosures-based view)

Recent conference calls highlighted:

  • Management emphasized on three growth pillars- Specialty (innovative products), India (branded), and Emerging markets and highlighted its investment in the acquisition in Checkpoint Therapeutics Inc., an immunotherapy and oncology firm, for up to $355 Mn.
  • Management highlighted 9% YoY revenue growth and 17% EBITDA expansion.
  • The U.S. Court of Appeals for the Federal Circuit ruled in favor of the Company regarding the launch of LEQSELVI™. The Company will disclose LEQSELVI™ launch plans in due course.

Disclaimer: The article is for informational purposes only and not investment advice. 

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