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Informist, Friday, Oct. 18, 2024

HYDERABAD – Shares of pharmaceutical companies are likely to remain in positive territory in the coming week with Jul-Sept earnings of key companies in focus, analysts said. Major pharmaceutical companies are expected to post robust earnings for the September quarter, helping drive investor sentiment towards the sector. Moreover, geopolitical tensions in West Asia and rising crude oil prices have led to an increase in volatility in global markets, causing a defensive shift amongst investors. 

Meanwhile, while there is growing interest in China, Indian pharma stocks have seen renewed interest over the past 2-3 weeks as investors seek safer bets amid this uncertainty. Market share gains of some specialty drugs are also likely to help companies and their stocks. Sales figures of cancer drug generic Revlimid are key for companies like Dr Reddy's Laboratories Ltd, Natco Pharma Ltd, Sun Pharmaceutical Industries, and Cipla Ltd.

Despite concerns over slower growth in the US, several Indian pharmaceutical companies with broad geographic footprint and specialised product lines are expected to show strong performance in Jul-Sept. HDFC Securities said in its per-earnings note that Indian pharmaceutical companies may see an 11% year-on-year sales growth for Jul-Sept. This is likely to be driven by a 12% on-year increase in the India business, despite an estimated 5% quarter-on-quarter decline in the US market. Nomura expects sales to have grown 9% on year in Jul-Sept. Overall, the sector is poised to maintain its growth momentum in the September quarter.

"We believe the growth should be driven by steady growth across key markets and expansion in EBITDA margins year-on-year in most cases. On aggregate, our sales estimate is 1.3% behind consensus estimates and EBITDA/PAT are 4.3%/6.1% higher than consensus estimates," Nomura said.

Last week, the Nifty Pharma index settled 1% lower, while the broader Nifty 50 lost 0.40%. However, a few key players like Dr Reddy’s Laboratories, Sun Pharmaceutical Industries, Abbott India, and Laurus Labs closed in positive territory with gains between 0.20% and 2.20%, while other sector majors ended the week with losses.

TOP HEADLINES
* Akums Drugs signs MoU with Zambian govt to manufacture local medicine
* Granules India arm gets US FDA approval for bupropion hydrochloride drug
* Zydus Life gets US FDA's nod to manufacture fludrocortisone acetate tablets
* Delhi HC restores temporary ban on sale of Sigrima by Zydus Lifesciences
* Syngene Intl files writ petition in Karnataka HC against adjusted tax refund
* Akums Drugs in pact to develop, mkt some pdts of Canada-based Triple Hair
* Earnings Outlook: Low demand, inventory to hit Dabur's Jul-Sept consol PAT
* IPO Alert: Senores Pharma gets SEBI approval for fresh issue, OFS
* Earnings Outlook: Muted US sales may weigh on Dr Reddy's Jul-Sept show
* Lupin launches first generic version of Pred Forte in US
* Zydus Life to start phase 2 clinical trials of Desidustat drug
* IPO Alert: Anlon Health files papers for fresh issue of up to 14 mln shares
* Earnings Outlook: Zydus Lifesciences Jul-Sept consol PAT seen up 22% YoY
* HC restrains Sanshiv Health from selling product similar to Mankind Pharma's

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Narayana Krishna
Edited by Deepshikha Bhardwaj

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