Sun Pharmaceutical Industries Ltd is Rated Hold

Current Rating and Its Significance

MarketsMOJO’s 'Hold' rating for Sun Pharmaceutical Industries Ltd indicates a neutral stance on the stock at present. This suggests that investors should neither aggressively buy nor sell the shares but rather maintain their existing positions while monitoring developments closely. The rating reflects a balanced assessment of the company’s quality, valuation, financial trends, and technical outlook, which collectively inform the investment recommendation.

Quality Assessment: Strong Fundamentals Underpin Stability

As of 31 January 2026, Sun Pharma maintains an excellent quality grade, underpinned by robust long-term fundamentals. The company has demonstrated healthy growth with net sales increasing at an annual rate of 11.10% and operating profit expanding at 21.96% over recent years. This growth trajectory highlights the firm’s ability to generate consistent revenue and earnings expansion in a competitive pharmaceutical sector.

Moreover, Sun Pharma’s financial strength is evident in its low debt profile, with an average debt-to-equity ratio of zero, signalling a conservative capital structure that reduces financial risk. The company’s return on equity (ROE) averages 15.21%, reflecting efficient utilisation of shareholders’ funds to generate profits. These factors contribute to the company’s strong quality rating and provide a solid foundation for future performance.

Valuation: Premium Pricing Reflects Market Expectations

Despite its strong fundamentals, the stock is currently considered expensive based on valuation metrics. As of 31 January 2026, Sun Pharma trades at a price-to-book (P/B) ratio of 4.9, which is elevated relative to historical averages and peer valuations. This premium pricing suggests that the market has high expectations for the company’s growth prospects and profitability.

However, the stock’s price appreciation has not kept pace with earnings growth recently. Over the past year, the stock has delivered a negative return of -8.61%, while profits have increased by approximately 3%. The company’s price-to-earnings-to-growth (PEG) ratio stands at 11, indicating that the stock may be overvalued relative to its earnings growth rate. Investors should weigh this premium valuation against the company’s quality and growth potential when considering their investment decisions.

Financial Trend: Positive Cash Flows and Profitability

The financial trend for Sun Pharma remains positive, supported by strong cash flow generation and profitability metrics. The latest data as of 31 January 2026 shows operating cash flow for the year reaching a peak of ₹4,198.77 crores, underscoring the company’s ability to convert earnings into cash effectively. Additionally, the company declared its highest dividend per share (DPS) of ₹16.00, signalling confidence in its cash reserves and commitment to shareholder returns.

Cash and cash equivalents at the half-year mark stood at an impressive ₹122,574.20 crores, providing ample liquidity to support ongoing operations and potential investments. These financial strengths contribute to the positive financial grade and offer reassurance to investors regarding the company’s stability and capacity to weather market fluctuations.

Technical Outlook: Mildly Bearish Momentum

From a technical perspective, the stock exhibits a mildly bearish trend as of 31 January 2026. Recent price movements show a decline of 7.25% year-to-date and a 6.37% drop over the past three months. The stock has underperformed the broader BSE500 index over one year, three years, and three months, indicating some near-term weakness in market sentiment.

Despite this, the stock’s large market capitalisation and high institutional ownership of 36.94% suggest that it remains a key holding for many sophisticated investors who may view current price levels as an opportunity for accumulation. The technical grade advises caution but does not signal a strong sell-off, aligning with the overall 'Hold' recommendation.

Investor Considerations and Market Position

Sun Pharmaceutical Industries Ltd is a large-cap player in the Pharmaceuticals & Biotechnology sector, known for its strong operational track record and conservative financial management. The company’s low debt and high return on equity provide a cushion against economic uncertainties, while its premium valuation reflects confidence in its future growth.

However, the recent underperformance relative to market indices and the mildly bearish technical signals suggest that investors should maintain a balanced approach. The 'Hold' rating encourages existing shareholders to retain their positions and prospective investors to await clearer signs of a sustained upward trend before committing fresh capital.

Summary of Key Metrics as of 31 January 2026

• Mojo Score: 57.0 (Hold grade)


• Market Capitalisation: Large Cap


• Debt to Equity Ratio (average): 0.0


• Return on Equity (average): 15.21%


• Operating Cash Flow (annual): ₹4,198.77 crores


• Dividend per Share (annual): ₹16.00


• Cash and Cash Equivalents (half-year): ₹122,574.20 crores


• Price to Book Value: 4.9


• PEG Ratio: 11


• Institutional Holdings: 36.94%


• Stock Returns: 1D +0.36%, 1W -2.25%, 1M -7.25%, 3M -6.37%, 6M -8.07%, YTD -7.25%, 1Y -8.61%

Conclusion: Balanced Outlook for Investors

In conclusion, Sun Pharmaceutical Industries Ltd’s current 'Hold' rating by MarketsMOJO reflects a nuanced view of the company’s prospects. The stock’s excellent quality and positive financial trends are tempered by an expensive valuation and mildly bearish technical signals. Investors should consider these factors carefully, recognising that while the company remains fundamentally strong, near-term price performance may be subdued.

Maintaining a 'Hold' stance allows investors to benefit from the company’s solid fundamentals while avoiding excessive risk associated with its current premium valuation and market momentum. Monitoring future earnings reports, sector developments, and broader market conditions will be essential for reassessing the stock’s attractiveness over time.

Unlock special upgrade rates for a limited period. Start Saving Now →