Nifty Pharma Hits Record High: Pharma Stocks in Spotlight
Nifty Pharma Hits Record High: Pharma Stocks in Spotlight
Nifty Pharma Hits RecordNifty Pharma Hits Record High: Pharma Stocks in SpotlightNifty Pharma Hits Record High: Pharma Stocks in SpotlightNifty Pharma Hits Record High: Pharma Stocks in Spotlight High: Pharma Stocks in Spotlight
The Nifty Pharma index reached a record high level of 15,950.80, showing an increase of 0.9% during Monday’s trading session. This surge was led by notable gains in individual pharma stocks. Torrent Pharmaceuticals rose by 0.58%, GlaxoSmithKline Pharmaceuticals by 4.65%, and Aurobindo Pharma marginally by 0.02%, touching 52-week high levels. Meanwhile, shares of Sanofi India and Cipla also showed significant movements, with Sanofi India up by 0.57% and Cipla down by 0.12%. Zydus Lifesciences remained flat at 0.05%, hovering near its 52-week high levels.
Sector’s Performance and Analysts’ Views
Technical analysts note that there isn’t a major reason for the Pharma sector’s record high, but point out that the sector has shown signs of outperformance in the past few weeks, breaking multiple month highs. Analysts maintain a positive outlook, expecting this performance to continue and advising traders to maintain a positive bias and use dips in stock prices to make long-term investments. The Nifty Pharma index’s recent uptrend and breach of previous highs suggest a continuation of this positive trend, offering stock-specific buying opportunities.
Pharmaceutical Industry’s Q2FY24 Performance
In its Q2FY24 review, brokerage Axis Securities highlighted the Pharma Coverage universe’s strong revenue growth of 14.3%/1.7% YoY/QoQ in Q2FY24. This growth is attributed to volume ramping, new launches (particularly gRevlimid, gSpiriva, and gPrezista), and stabilizing pricing pressure in the US base business. The report also notes that EBITDA margins improved due to stabilizing prices, normalized cost inflation, and the launch of new products.
Brokerage’s Top Picks in Pharma Sector
Brokerage house Axis Securities has identified Aurobindo Pharma, Cipla, and Lupin as its top picks in the Pharma space, with a ‘buy’ call on all three stocks. The brokerage has set a target price for Lupin at ₹1,325, Cipla at ₹1,350, and Aurobindo Pharma at ₹1,080, indicating potential gains from the current market prices. The report anticipates strong single-digit domestic growth in FY24 and continued strong growth in the US market due to the normalization of base business prices, the acceleration of gRevlimid, and the launch of new products.
Expectations and Market Projections
The report suggests that margins are likely to improve as raw material and freight costs normalize, US price erosion eases, and a better product mix is achieved. However, the USFDA inspections and potential price erosion in the US remain concerns. The brokerage recommends focusing on companies that are launching niche products in the US market and have a strong product mix in the Indian market. Lupin, Cipla, and Aurobindo remain their top picks in the Pharma universe.
