Pharma Q3 Preview - Improved Margins, Product Launches To Drive The Show; Divis, Glenmark DRChoksey's Top Pick

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DRChoksey Report

In Q3 FY25E, we expect double-digit YoY revenue growth from the pharma companies in our coverage. The revenue is expected to grow 10.8% YoY (+1.1% sequentially), driven by growth in domestic business and expansion in the US business.

Ebitda is expected to grow at a robust rate of 20.4% YoY and 0.9% sequentially. Ebitda margin is expected to expand 198 bps YoY (flat QoQ), led by favorable product mix, increased focus on complex products. Adjusted PAT is expected to grow at 22.9% YoY and 1.3% sequentially. Adj. PAT margin is expected to expand 161 bps YoY and stay flat QoQ.

We expect positive YoY revenue growth across coverage companies notably Supriya Lifescience (expansion into regulated markets), Divis Laboratories (strong growth in the Custom Synthesis segment) and Glenmark Pharma (strengthening its market position in Europe).

Glenmark Pharma, Laurus Labs and Divis Laboratories are expected to post strong margin expansion among our coverage due to low base from the previous year, ramp-up of newly established facilities and price recovery in the Generic API segment respectively.

Aurobindo Pharma and Granules India are expected to post weak margin growth among our coverage due to increase in employee expenses, other expenses, and challenges in the API segment, led by price erosion and high customer inventory levels respectively.

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