Pharma, Healthcare Q1 Results Preview - Start The Year On A Strong Nod: HDFC Securities

HDFC Securities Institutional Equities

The India pharma and healthcare sector is expected to maintain the growth momentum in Q1 FY25E. We expect our coverage universe to see 11%/13% YoY sales/Ebitda growth. Our assumptions-

1. Pharma coverage to see 10% YoY sales growth, largely led by 12% YoY growth in India business and ~6% QoQ growth in the U.S. business, which will be driven by moderate price erosion, steady traction in gRevlimid/gSpiriva, new launches (gMyrbetriq), and steady traction in specialty business;

2. Ebitda margin for the pharma coverage to expand by 40 bps YoY on the back of growth in the key markets (India and U.S.) and lower input costs (expanding gross margin by ~250 basis points YoY), partly offset by higher costs (research and development spend and jump in freight costs: +123% YoY and +10% QoQ);

3. hospital business to see 17% YoY growth, led by steady occupancy, growth average revenue per occupied bed and merger and acquisitions (Max healthcare); Ebitda margin expansion for Apollo Hospital (lower Apollo 24/7 spend) but decline for Max (integration impact);

4. diagnostics to see 12% YoY sales growth led by patient/tests volume growth with steady margins;

5. Retail pharmacy business of Medplus to continue double-digit growth.

We expect a strong performance by Alkem, Aurobindo, Lupin, Mankind, Torrent, Zydus, and Apollo Hospital, while Dr Reddy’s, Sun Pharma, and Max Healthcare will see weak performance.

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