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Q1FY25 Pharma earnings trend- decent numbers driven by India and the US

ICICIdirect Research 02 Aug 2024 DISCLAIMER
  • The trend emerging from Pharma Q1FY25 numbers indicates decent performance by US and India. Sales of the sample group (Sun, DRL, Cipla, Torrent) have increased 8% YoY to ₹ 29751 crore, driven by India branded business growth and the US.
  • India branded formulations grew 12% YoY to ₹ 10003 crore, driven by volume growth and price hikes.
  • US growth of ~10% YoY to ₹ crore was driven by niche launches in the US such as anti-cancer / hormonal injections, respiratory and Specialty products. Note that this was on a higher base of Q1FY24.
  • EBITDA of the sample grew 9% YoY to ₹ 8358 crore and the margins stood at 28.1%. The margins held firm YoY despite higher R&D and SG&A expenses and the firmness was driven by higher contribution from India which is a high margin business and niche launches in the US which face lower competition.
  • The margin expansion trend is continuing over the last two years which has helped these companies to generate significant free cash flows. With the capex phase is more or less completed for these players, we may witness incremental M&A activities involving companies or a portfolio of niche products.
  • We have a BUY rating on CIPLA with a target ₹ 1840. For Sun, DRL and Torrent we have HOLD rating.
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