Sunpharma vs Apollo Hospitals Enterprise Q2 FY26

Sun Pharma reported a solid Q2 FY26 with consolidated revenue of INR 14,405 crore (+8.6% YoY) and EBITDA of INR 4,527 crore (+14.9% YoY), with EBITDA margin expanding 170 bps YoY to 31.3%. Growth was driven by India formulations (+11% YoY) and global innovative medicines (+16.4% YoY), while US generics declined 4.1% due to competition and lower lenalidomide sales. PAT grew only 2.6% due to a higher tax rate (24.7% vs 15.8%). Management guided for R&D spend at the lower end of 6-8% of sales and expects continued investment in Leqselvi and Unloxcyt launches. Key risks include US tariff uncertainty and potential generic erosion of lenalidomide.

Guidance read

R&D spend at lower end of 6-8% of sales: Management expects full-year R&D spend to be at the lower end of the guided 6-8% range. Unloxcyt launch in H2 FY26: Unloxcyt remains on track for US launch in the second half of FY26, with sales force already in place. Ilumya psoriatic arthritis filing in H2 FY26: Sun Pharma plans to file Ilumya for psoriatic arthritis indication in the second half of FY26. Incremental specialty spend of ~$100M in FY26: The company expects to spend around $100M in FY26 to support Leqselvi and Unloxcyt launches, with increases in Q3 and Q4.

Risk read

Key risks include US tariff uncertainty on innovative medicines — Potential tariffs on patented drug imports into the US could impact Sun Pharma's innovative portfolio, though generics are expected to be excluded.; Lenalidomide revenue decline — Lenalidomide sales have dropped YoY and are expected to be minimal in the second half, impacting US generics revenue.; Higher effective tax rate normalization — ETR increased to 24.7% from 15.8% YoY due to expiry of tax benefits, expected to hover around 25%, pressuring net profit growth.; Competition in alopecia areata market — Stagnation in prescriptions for existing targeted treatments could hinder Leqselvi's uptake, though management expects market growth..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

Apollo Hospitals delivered a solid Q2 FY26 with consolidated revenue of INR 6,304 crore (+13% YoY) and EBITDA of INR 941 crore (+15% YoY). Healthcare services revenue grew 9% to INR 3,169 crore, driven by a 14% increase in high-complexity CONGO specialties, offsetting a 6% decline in medical admissions due to seasonality and a 1% impact from reduced Bangladesh patients. Apollo HealthCo revenue rose 17% to INR 2,661 crore, with digital losses narrowing to INR 71 crore from INR 101 crore. Management guided for organic hospital growth to return to 13% and expects six new hospitals to commission over the next four quarters, with aggregate EBITDA losses of ~INR 150 crore in FY27. A key risk is the potential margin drag from new hospital ramp-up costs, which management aims to mitigate through a INR 120 crore cost-saving program.

Guidance read

Organic hospital growth to return to 13%: Management expects healthcare services organic growth to revert to 13% as Bangladesh patients return (60% already back in October) and new markets are explored. Six new hospitals to commission by Q1 FY27: Pune and Defence Colony in Q3, Sarjapur and Kolkata in Q4, Hyderabad and Gurugram in Q1 FY27. Aggregate EBITDA losses from these hospitals expected at ~INR 150 crore in FY27. Apollo 24/7 break-even by Q4 FY26: Digital platform on course to break even by end of fiscal year, with all three lines (pharmacy, diagnostics, consults) already CM1 positive. HealthCo margin target of 7% by Q4 FY27: Apollo HealthCo targeting INR 25,000 crore revenue run rate with 7% EBITDA margin by Q4 FY27, supported by KEIMED integration and digital break-even.

Risk read

Key risks include New hospital ramp-up costs may pressure margins — EBITDA losses from six new hospitals could be ~INR 150 crore in FY27, potentially dragging consolidated margins if ramp-up is slower than expected.; Insurance pricing reset may limit ARPP growth — Insurance contracts are reset every two years; with some contracts up for renewal, pricing may not keep pace with inflation, impacting revenue per patient.; CGHS rate hike still at 65% discount to private tariffs — Despite recent CGHS rate increases, government business remains significantly less profitable than insurance or cash, limiting margin expansion from that segment..

Promise ledger

Scorecard data is being built as historical quarters are processed.