Pharma Q3 Results Preview - Streaming To New Highs: ICICI Securities

ICICI Securities Report

Pharma companies under our coverage are likely to report revenue/Ebitda/profit after tax compound annual growth rate of 11%/21%/33%, respectively, in Q3 FY24E.

U.S. sales may grow 12% YoY driven by drug shortages and better demand for acute products. We have built in $30 million from gRevlimid for Aurobindo in Q3 FY24E.

India growth has bounced back, with market growing at 9% YoY in Q3 (as per AIOCD); we expect our coverage companies to grow faster at 10%.

Easing of raw material cost could drive ~120 basis points YoY expansion in gross margin to 65.4%; coupled with operating leverage, the companies may report 200 bps YoY rise in Ebitda margin to 23.9%.

While the tailwinds in the U.S. may be short-lived, the initial signs of volume revival in domestic market are encouraging.

Cipla, Aurobindo, Ajanta Pharma, Piramal Pharma and Abbott India are our top picks in the space.

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