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Informist, Friday, Feb. 14, 2025

MUMBAI – Shares of most pharmaceutical companies are expected to rise next week as healthy earnings performance by most drugmakers in Oct-Dec has boosted sentiment for this defensive sector. However, a meaningful rise in these stocks may be unlikely until there is a turnaround in the overall market, some analysts said.

Most pharma companies reported healthy earnings for the December quarter along with strong expansion in margins. As a consequence, analysts have a positive outlook on most companies in the medium-term. This view has been cemented by earnings growth and positive management commentary of most companies. Most companies have projected strong growth in margins, and some have indicated they will foray in new therapies and launch new products in 2025-26 (Apr-Mar).

Mumbai-based drugmaker Lupin delivered a robust earnings performance in Oct-Dec, beating the Street's estimates on revenue as well as margin due to softening raw material prices and strong performance in the US market where sales grew due to increase in volume and new launches, analysts said. Meanwhile, Ipca Laboratories posted strong sales momentum in the domestic market. Robust sales contribution from the domestic market helped some companies offset the weakness in the US market, analysts said.

On the other hand, stocks of some drugmakers, such as Natco Pharma, are expected to see further selling as the company bucked the trend and posted a decline in quarterly earnings. Shares of Natco Pharma fell over 33% this week after the company posted an on-year fall of over 37% each in its consolidated net profit and revenue in the December quarter.

Natco Pharma's earnings for the December quarter were weighed down by tepid exports, which declined nearly 53% on year as it did not record sales of the Revlimid generic in the quarter, ICICI Securities said in a report. "While the next couple of quarters could witness robust growth due to Revlimid and interest income on the high cash balance, we believe this is not sustainable in the future," Nuvama Institutional Equities said in a post-earnings report.

Most companies have announced their earnings for the December quarter. Investors will react to the quarterly earnings of Glenmark Pharmaceuticals which are due after market hours Friday. Glenmark Pharma is expected to report a consolidated net profit for the December quarter against a net loss in the year-ago period.

The Nifty Pharma index Friday closed nearly 3% lower at 20811.55 points. It ended the week 5.7% lower. All other sectoral indices and the benchmark indices also closed the week in the red. The overall sentiment in the market was bearish this week due to concerns about tariffs by the US and slower growth in quarterly earnings across most sectors. This weakness in the overall market is expected to continue to rub off on the pharma sector, analysts said.

TOP HEADLINES

* US FDA ends inspection at Zydus Life's Ahmedabad unit with no observations
* Glenmark Pharma's US arm launches bioequivalent of Xalatan drug

* Aurobindo Pharma's arm gets marketing authorisation for Zefylti in EU
* Concord Biotech Oct-Dec consol PAT falls 2.1% on year to INR 759 million
* Zydus Life in pact with Netherlands firm to make cancer drug for US mkt
* Glenmark Pharma's US arm launches bioequivalent of Evoclin drug

* Mankind Pharma sells Rishikesh hotel arm to Chalet Hotels for INR 5.3 bln
* US FDA approves Lupin's ANDA for Ipratropium Bromide Nasal Solution
* Glenmark Pharma gets UK regulator's approval for acne treatment medicine
* Natco Pharma receives final approval for Bosentan tablets
* US FDA tags Cipla's Bengaluru unit as 'voluntary action indicated'
* Glenmark Pharma gets tax demand notice of INR 1.27 bln from GST official

* Earnings Review: Lupin's PAT, revenue for Oct-Dec exceed estimates
* Alkem Lab arm Alkem Medtech to buy 100% shr in Bombay Ortho for INR 1.47 bln
* Analyst Concall: High costs to drag Alkem Lab Jan-Mar margins; FY25 aim unch
* Earnings Review: Alkem Lab's PAT growth slowest in 7 qtrs on weak intl sales

* IPCA Labs Oct-Dec PAT surges 95.4% on year to INR 2.68 billion
* Suven Pharma Oct-Dec consol PAT rises over 77% YoY to INR 828.8 million
* Natco Pharma Oct-Dec consol PAT falls 37.5% YoY, sales fall 37.4%
* AstraZeneca Pharma's Oct-Dec PAT surges over 95% YoY to INR 308.5 million
* Caplin Point Oct-Dec consol PAT rises 18.6% YoY to INR 1.39 billion

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Alina Geogy

Edited by Ashish Shirke

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