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India narrative upbeat, US can spin positive surprise - Pharmaceuticals Preview
What’s Buzzing?
The I-direct pharma universe (13 coverage companies) is likely to witness a decent quarter with ~11% growth YoY. This could be on the back of strong YoY growth in domestic formulations as well as better traction in the US portfolio.
Context:
Strong growth in anti-infectives & respiratory therapies on the back of seasonality tailwinds is likely to support domestic formulations segment besides chronic traction whereas favourable currency movement and some key launches to aid growth for the US portfolio.
Our Perspective:
We believe our universe (13 coverage companies) will post YoY growth of ~11% to ~Rs 49,424 crore. The domestic formulations segment (select pack) is expected to post robust growth of ~13% YoY to Rs 13,869 crore. On the operational front, cost pressure is likely to ease out in the quarter as majority of the high price inventory was consumed till the previous quarter while performance will be supported by easing of freight costs. In addition to that, several new launches and ANDA approvals in the US will lead to decent topline growth during Q4FY23. US (select pack) portfolio is expected to grow ~16% YoY to Rs 14,747 crore. Besides currency movement and new launches, we expect growth to be driven by specialty business and volume gains. API segment (select pack) is expected to grow 17.4% YoY to Rs 5,097 crore. On the company’s front, Sun pharma, DRL and Cipla remain our top picks and are likely to see YoY revenue growth of 16.6%, 15.5%, 12.3% respectively.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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