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Informist, Monday, Mar. 10, 2025

 

By Akshita Kumar

 

MUMBAI – For the December quarter, the 13 pharmaceutical and healthcare companies that are part of the Nifty 200 easily beat the consensus estimate for net profit for the sector, excluding exceptional items. These companies reported 11% growth in their Oct-Dec quarter net profit, against the 5% growth analysts had expected. These companies' top line growth was just above 11%, slightly more than the 10.8% expected. 

 

Healthy domestic demand and new product launches were the main drivers of the performance. Eight companies met the 5% average net profit growth estimate for the sector, while five failed to meet the estimate. In terms of revenue, seven companies met the estimate of 10.8% growth for the sector, while six did not. 

SECTOR OVERVIEW
Only five companies beat the Street's view on both their top line and net profit – Apollo Hospitals Enterprise., Divi's Laboratories, Lupin, Max Healthcare Institute, and Zydus Lifesciences. On the other hand, three companies reported revenue and bottom line numbers that were lower than the estimates for the sector - these were Alkem Laboratories, Aurobindo Pharma, and Biocon. 

 

At the company level, seven companies reported better-than-expected net profit for the December quarter and six failed to meet expectations. In terms of contribution to the total net profit for the sector, Sun Pharmaceutical Industries had the highest contribution with a profit after tax excluding exceptional items of INR 32.20 billion for the December quarter. This accounts for nearly 27% of the aggregate net profit for the sector for the December quarter.

 

Seven companies out of the total 13 reported double-digit growth in their net profit. Of the 13 companies, nine reported an on-year rise in net profit and four reported a decline.

 

On an individual basis, the revenue of eight companies for the December quarter was more than estimated, while five companies' top line did not meet company-level expectations. Eight companies out of the total 13 posted double-digit growth on the revenue front. On a sequential basis, the aggregate net profit of the pharmaceutical and healthcare companies rose 5.5%, while the revenue rose 2%.

 

The average net profit margin for the sector declined to 15.97% from 16.19% in the year-ago quarter. The net profit margin is also lower than 15.99% in the previous quarter. The average adjusted net profit margin for the sector was 15.78%, slightly lower than 16.43% a year ago.

 

The total expenses for pharmaceutical and healthcare companies in the Oct-Dec quarter rose nearly 11% on year to INR 578.65 billion. Sun Pharma contributed the highest towards the total expenses of the sector with the expenditure at INR 103.49 billion. This accounted for nearly 18% of the total expenses for the sector for the December quarter.

 

The cost of materials consumed and purchase of stock-in-trade, which together accounted for nearly 40% of the total expenses, rose 3% and 14%, respectively. The rise in total expenses for the sector was driven by a 10% rise in other expenses and a rise of almost 12% in employee benefit expenses, which together accounted for more than 49% of the total expenses. Depreciation and amortisation expenses for the sector rose 11% on year to INR 35.84 billion. Sequentially, the sector's total expenses rose 3%.

 

As of Sept. 30, the total debt for the sector was INR 449.85 billion, up 12% on year. Though Biocon's total debt fell 9% on year, its contribution towards the sector's total debt was the highest at 36%.

  

NET PROFIT OUTPERFORMERS

Max Healthcare Institute was the top outperformer among these companies on the back of a 40% on-year rise in revenue. Divi's Laboratories and Apollo Hospitals Enterprise beat the sectoral estimate for net profit, as their revenue grew 27% and 14% on year, respectively. 

 

Cipla's outperformance in terms of net profit was due to its total debt falling 76%. Sun Pharmaceutical Industries' and Lupin's outperformance on net profit was led by their India formulation sales, which rose 14% and 12% on year, respectively. Torrent Pharmaceutical's net profit beat the sectoral estimate as the company's raw material costs fell 3% on year, while Zydus Lifesciences beat the estimate for the sector as its US formulations business saw 31% on-year growth.

NET PROFIT UNDERPERFORMERS

Biocon was the biggest underperformer among these companies due to a 3?ll in its revenue. Dr. Reddy's Laboratories and Mankind Pharma both failed to meet the estimate as their total expenditure during the quarter rose 18% and 33% on year, respectively. Aurobindo Pharma's total expenses for the December quarter rose 11%, which was a drag on the company's net profit. Alkem Laboratories failed to meet the sector's growth estimate as its cost of materials, the largest part of total expenditure, rose over 10% on year.

 

REVENUE OUTPERFOMERS 

Max Healthcare Institute was the biggest outperformer in terms of revenue due to a 36% on-year increase in occupied bed-days and a 200-basis-point on-year expansion in bed occupancy. Divi's Laboratories beat the estimate due to robust growth across all business segments. Mankind Pharma outperformed as the company's revenue from the exports business rose 121% on year due to an increase in new product launches.

 

Apollo Hospitals beat the estimate for the sector on revenue as the company's healthcare services segment registered 13% on-year growth, led by improved occupancy across hospitals. Dr. Reddy's Laboratories' outperformance was driven by revenue from the recently acquired nicotine replacement therapy portfolio and higher sales in India and emerging markets. Other companies that outperformed the sectoral estimate on revenue were Lupin and Zydus Lifesciences. 

REVENUE UNDEPERFORMERS

Biocon was the biggest underperformer as its revenue fell 3%. It was the only company to report a fall in revenue. The company's revenue fell as its sales from the generics business fell 2.4% on year. Alkem Laboratories failed to meet the sector's growth estimate as its revenue from international markets fell 6.2% on year.

 

Torrent Pharmaceuticals failed to beat the revenue estimate for the sector as the company's revenue from its Brazil and US operations fell 7% and 1% on year, respectively. Cipla failed to meet the revenue estimate for the sector as its revenue from North America, which contributes almost 27% to the company's overall revenue, fell 2% on year. 

 

Aurobindo Pharma was not able to meet the sectoral revenue estimate as its revenue from the US, which accounts for 46% of the total sales, declined 2.3% on year. Sun Pharmaceutical Industries could not beat expectations as its US formulations business declined almost 1% on year. 

 

The following table shows the performance of the 13 companies in the pharmaceutical and healthcare sector vis-a-vis the consensus estimate for each company, as well as against the consensus estimate for the pharmaceutical and healthcare sector and the Nifty 200 index:
 

			Nifty 200 Oct-Dec PAT growth 8.8%	Nifty 200 Oct-Dec PAT growth consensus estimate 10%				Nifty 200 Oct-Dec revenue growth 5.5%	Nifty 200 Oct-Dec revenue growth consenus estimate 4%
Company	PAT beat analysts' estimate	Adjusted PAT growth %	Adjusted PAT growth estimate %	PAT beat sector estimate	PAT beat Nifty 200 estimate		Revenue beat analysts' estimate	Revenue growth %	Revenue	Revenue beat sector estimate	Revenue beat Nifty 200 estimate
									growth
									estimate
Pharma sector		11.11%	5.27%					11.3%	10.8%
Alkem Laboratories	YES	(-)3.16	(-)8.35	NO	NO		NO	1.50	3.39	NO	NO
Apollo Hospitals Enterprise	YES	51.77	40.40	YES	YES		YES	13.94	13.78	YES	YES
Aurobindo Pharma	NO	(-)9.66	(-)0.73	NO	NO		YES	8.53	7.36	NO	YES
Biocon	NO	(-)98.90	(-)83.27	NO	NO		NO	(-)3.35	(-)3.40	NO	NO
Cipla	YES	25.57	(-)2.78	YES	YES		YES	7.10	6.01	NO	YES
Divi's Laboratories	YES	65.92	(-)16.91	YES	YES		YES	27.05	24.38	YES	YES
Dr. Reddy's Laboratories	NO	2.38	6.66	NO	NO		YES	15.81	12.60	YES	YES
Lupin	YES	39.48	28.18	YES	YES		YES	10.97	9.36	YES	YES
Mankind Pharma	NO	(-)16.20	3.40	NO	NO		NO	23.90	24.37	YES	YES
Max Healthcare Institute	NO	7.98	24.84	YES	NO		NO	39.95	59.99	YES	YES
Sun Pharmaceutical Industries	YES	24.14	11.75	YES	YES		YES	10.46	8.48	NO	YES
Torrent Pharmaceuticals	NO	41.69	43.49	YES	YES		NO	2.82	8.98	NO	NO
Zydus Lifesciences	YES	29.62	16.88	YES	YES		YES	16.96	16.17	YES	YES

 

 

The following table shows the profit margins of the 13 companies in the pharmaceutical and healthcare sector that are a part of the Nifty 200:

 

	PAT margin for Dec- 24	PAT margin for Dec-23	PAT margin for Sept-24
Nifty 200	15.78%	16.43%	15.51%
Pharma sector	11.87%	11.51%	11.37%
Company	PAT margin for Dec-24	PAT margin for Dec-23	PAT margin for Sept-24
Alkem Laboratories	18.55%	19.44%	20.17%
Apollo Hospitals Enterprise	6.74%	5.06%	6.78%
Aurobindo Pharma	10.60%	12.74%	10.48%
Biocon	0.18%	16.16%	(-)1.17%
Cipla	22.20%	18.94%	18.47%
Divi's Laboratories	25.86%	19.80%	22.50%
Dr. Reddy's Laboratories	16.87%	19.08%	15.62%
Lupin	14.83%	11.80%	15.03%
Mankind Pharma	11.77%	17.41%	21.24%
Max Heathcare Institute	16.72%	21.67%	16.50%
Sun Pharmaceutical Industries	23.54%	20.95%	22.87%
Torrent Pharmaceuticals	17.91%	12.99%	15.68%
Zydus Lifesciences	19.42%	17.53%	17.40%

 

End

 

Edited by Avishek Dutta

 

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