INSUBCONTINENT EXCLUSIVE:
How is the health of your portfolio after the recent selloff in equities
If you are planning to give your portfolio a defensive tweak in
view of the multiple headwinds ahead, pharma is definitely one space to look at
Pharma is also in focus as a sharp drop in the rupee this year has turned investor focus on export-heavy businesses.
But one needs to be
Select names from this sector such as Merck, Valiant Organics, Albert David and Kilitch Drugs have rallied between 60 and 110 per cent so
far this year.
With a 0.74 per cent dip on a year-to-date (YTD) basis, the Nifty Pharma index outpaced the benchmark index which slipped
more than 1 per cent during this period
and Abbott India gained between 5 per cent and 33 per cent on a year-to-date basis.
But stocks like Orchid Pharma, Mangalam Drugs, Avon
Lifesciences, Wockhardt, Morepen Laboratories, Indoco Remedies, Ajanta Pharma, Laurus Labs and Cadila Healthcare fell between 12 per cent
and 75 per cent during the same period.
Most brokerages have since become cautious on the sector ahead of September quarter earnings
There are expectations that the pharma sector will report weak operating performance for Q2 on account of sustained pricing pressure in the
US and high base of US generics business, muted domestic business growth on account of high base led by GST-led channel refilling and
of the pharma companies under our coverage are still close to their long-term average multiples due to de-rating in the past two years
Though the risk of earnings downgrade still persists, given the near-term challenges, we see an opportunity to invest in select quality
During Q2 of FY18, after GST implementation, pharma companies had re-filled the channels via inventory push
margins of pharma companies are likely to be under pressure, as most of them import Chinese active pharmaceutical ingredient (API) and
currency across the emerging markets, including rupee, against the dollar QoQ, we expect moderate growth in exports
Most emerging market currencies had a weak performance against the US dollar, which appreciated 4.7 per cent QoQ in Q2FY19
said.
With the implementation of the goods and services tax (GST) during the first quarter of FY18, a large part of sales was reported in
Q2FY18 and that base effect will ensure lower-than-expected growth in Q2FY19 for India formulation businesses
We expect domestic formulation market to continue to be challenging, especially for the companies which are highly dependent on acute
It would be more challenging for large Indian pharma companies due to large base and strong restriction on churning out of new combination
