Its shares are down 6% in the last month amid earnings disappointment, global trade concerns, and regulatory hurdles.
Sun Pharma shares have fallen 6% in the last month, following weak earnings, brokerage rating revisions, and the broader trade tariff overhang on the sector.
SEBI-registered analyst Deepak Pal believes that Sun Pharma remains a fundamentally strong company for long-term investors, but for short-term traders, he advised caution as there were no visible signs of a trend reversal yet.
On the technical charts, he noted that the Sun Pharma stock had broken down from higher levels. Its Relative Strength Index (RSI) was near 40, indicating weakness. And its Moving Average Convergence Divergence (MACD) was in deep negative. Pal said that if Sun Pharma breaks support at ₹1,600, it could fall to the ₹1,540-₹1,500 zone.
Why Is Sun Pharma Falling?
Earnings Disappointment: The pharma major reported a 20% drop in consolidated net profit for Q1 FY26, from ₹2,836 crore to ₹2,278 crore. While revenue rose 10%, concerns over lower other income and higher tax burden weighed on investor sentiment.
Regulatory Headwinds: Ongoing US FDA scrutiny at its Halol and Mohali facilities continues to worry the market. The Halol plant received eight Form‑483 observations, limiting potential upside. Resolution is expected to have only a marginal impact ($50 million) on revenue.
Global Trade Tensions: An unexpected announcement of a proposed 25% tariff on Indian exports to the U.S. sparked fears for pharma exporters like. Though exemptions exist, the uncertainty has pressured the broader pharma sentiment.
Weak Analyst Sentiment & Guidance: Broking firms reduced FY26/27 earnings estimates due to higher R&D expenditure, branded business costs, and tax rate increases. Despite retaining Buy ratings, target prices were adjusted lower.
Specialty Portfolio Under Pressure: Its advanced research arm SPARC saw a ~20% crash following the failure of a key psoriasis drug in Phase 2 trials, denting long-term growth visibility.
Sectoral Weakness: The broader pharma index declined sharply as Sun Pharma underperformed peers. On high-volume days, Sun Pharma has been a leading laggard, amplifying negative pressure.
On the other hand, Pal highlighted some positives for Sun Pharma, India’s largest pharma company, which has a diversified portfolio across generics, branded generics, and specialty (which is a long-term growth driver). Its strong balance sheet and cash flows, along with investments in research, support this outlook.
What Should Investors Do?
For long-term investors, Pal advised gradual accumulation during dips (₹1,500–₹1,550 zone) using a SIP approach. The focus should remain on its core strengths, such as R&D, global presence, and a strong balance sheet.
However, short-term traders are advised to stay cautious and avoid entering prematurely, as the stock is under technical pressure. Pal noted that a clear reversal with strong volume and price action is necessary before considering fresh positions for short-term trades.
Data on Stocktwits shows that retail sentiment is ‘bearish’ on this counter amid ‘high’ message volumes.
Sun Pharma shares have declined 16% so far this year.
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