Healthcare – Jul-Sep’25 Earnings Preview – Pharma: Another quarter of moderate EBITDA growth – Hospitals: Soft quarter led by weak occupancy YoY
Published on 08 Oct 2025
Pharma companies under our coverage are expected to report high-single-digit EBITDA growth in Q2FY26, due to a high base in the US market. The quarter is also likely to see some impact on domestic formulations for Sep due to the recent GST reforms, though the overall impact is expected to be transitory. However, our channel check suggests a strong acute season, which will aid the domestic formulations business. Overall, we expect 7-13% YoY growth across our coverage universe for domestic formulations. Currency tailwinds and stable raw material prices will continue to support gross margins. Top picks: Sun Pharma (SUNP), Lupin (LPC), Ajanta Pharma (AJP) and Eris Lifesciences (ERIS)
Hospitals sector is likely to post relatively soft performance in Q2FY26, despite it being a seasonally strong quarter. Lower incidences of dengue and impact of regional floods disrupted normal patient flow, leading to lower occupancy on YoY basis. Additionally, losses from new units have further moderated reported performance. We expect overall occupancy to remain lower by 200-1,000bps YoY. However, ARPOB growth is likely to remain strong in the range of 6-15% YoY, which should help negate lower occupancy.
