HDFC Securities' guide to a healthy portfolio with pharma bets

HDFC Securities' guide to a healthy portfolio with pharma bets

The BSE Healthcare index gained around 6% during April-June 2024, while the benchmark BSE Sensex gained 7% during the same period

Neetu Chandra Sharma
Neetu Chandra Sharma
  • Updated Jul 16, 2024 12:37 PM IST
HDFC Securities' guide to a healthy portfolio with pharma betsBrokerage firm HDFC Securities believes the domestic pharma and healthcare industry is expected to maintain growth momentum in Q1FY25

Analysts on Dalal Street retained their bullish view on the pharma sector ahead of June quarter results. Brokerage firm HDFC Securities believes the domestic pharma and healthcare industry is expected to maintain growth momentum in Q1FY25. It sees double-digit year-on-year growth in sales and operating profit for pharmaceutical firms in Q1FY25.

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The BSE Healthcare index gained around 6% during April-June 2024, while the benchmark BSE Sensex gained 7% during the same period. With a gain of 72%, shares of Hester Biosciences gained the most to Rs 2386 on June 28, 2024. The scrip was at Rs 1,389.25 on March 28, 2024.

Solara Active Pharma Sciences, Aarti Pharmalabs, Indraprastha Medical Corporation, Glaxosmithkline Pharmaceuticals, Divi’s Laboratories, Biocon, Morepen Laboratories, and Jubilant Pharmova also gained somewhere between 30% and 60% during the same period. Pharmaceutical majors Cipla and Dr Reddy’s Laboratories will announce their June quarter results on July 26 and July 27, respectively.

“We expect our coverage universe to see 11% and 13% YoY sales and EBITDA growth, respectively,” HDFC Securities said while maintaining a bullish view on Sun Pharma with a target price of Rs 1,750. It is also positive on Eris Lifesciences (Target price: Rs 1,160), Torrent Pharma (Rs 3,010), Mankind Pharma (Rs 2,430), Apollo Hospitals (Rs 7,250), and Medplus Health Services (Rs 820).

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As per IQVIA, a data analytical company, the Indian Pharmaceutical Market (IPM) reported a 9% YoY growth for Q1FY25, primarily led by price increases. Acute therapies continued on the path to recovery, reporting 8% growth led by gastrointestinal, which grew 11% during the quarter due to seasonality benefits, coupled with Antiinfective being the largest acute therapy growing at 6% YoY for the quarter.

Considering the present market conditions, Antique Stock Broking prefers Mankind Pharma (Target price: Rs 2,438) and Torrent Pharma (Rs 3,337) for their healthy growth rates and therapy mix. Shares of Mankind Pharma settled at Rs 2,147 and Torrent Pharma at Rs 2,951 on July 15.  

“We expect IPM to grow at a healthy 8%-10% in FY25 supported by a recovery in volumes and new launches, whereas we expect limited price hikes on account of weak National List of Essential Medicines (NLEM). We believe the chronic segment would grow faster and drive IPM growth in FY25,” Antique Stock Broking said in a report. When the NLEM is described as “weak,” it implies that the price controls are not stringent or effective, limiting the scope for pharmaceutical companies to raise prices on these essential medicines.

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(With inputs from Rahul Oberoi)

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Jul 16, 2024 12:37 PM IST
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