Pharma Q2 Results Preview - U.S. To Drive The Quarter; Weak Seasonality Drags India Growth: Nirmal Bang

Nirmal Bang Report

Our pharma coverage universe’s revenue is expected to grow by ~13% YoY, mainly driven by robust growth in the U.S. on the back of key products (including Revlimid) and favorable currency movement. However, Domestic growth is expected to be tepid owing to softer offtake in Acute therapies.

Among the large caps, all coverage companies are expected to report decent numbers. In terms of revenue, Zydus Lifesciences Ltd. and Torrent Pharmaceuticals Ltd. are expected to report more than 15% YoY growth among the large caps while Eris Lifesciences Ltd./JB Chemicals and Pharmaceuticals Ltd. (due to acquisitions) and Gland Pharma Ltd. (on a low base) are expected to report strong double digit YoY revenue growth in midcap/smallcap space.

Among the MNCs, Sanofi India Ltd. is expected to report decent revenue growth in spite of divestment of brands with YoY margin improvement while Pfizer Ltd. is expect to report a weak quarter owing to divestment of Upjohn business and slow growth in the Acute-heavy portfolio.

Margins are expected to improve YoY on the back of a better product mix, price hike benefits in branded markets and normalising cost inflation. Also, diminishing U.S. pricing pressure is supporting overall margins.

Our preferred picks are Cipla Ltd. and Sun Pharmaceutical Industries Ltd. in largecaps and JB Chemicals, Ajanta Pharma Ltd. and Eris Lifesciences in midcap/smallcap space.

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