NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
HDFC Securities Institutional Equities
The India pharma market has maintained a steady ~10% compound annual growth rate from FY12 to FY23, despite various disruptions, driven mainly by volume expansion ranging between 5-10% during FY12-18, which subsequently tapered to 2-3% from FY19-23, primarily due to generic competition (FY22 growth was on a low base due to the Covid-19 pandemic).
However, this deceleration in volume growth has been somewhat offset by 5-6% price growth annually, since FY19. We expect IPM growth to remain steady at 8-10% over the next few years, with companies boasting strong franchises and brands likely to see faster growth. This growth trajectory will be propelled by-
continued price growth of 4-5%,
gradual volume growth and recovery in the acute segment, and
launches of new products.
Similarly, leading companies are poised to surpass the IPM through strategies like mergers and acquisitions, expanding field forces, and new launches.
We like domestically-focused companies due to their strong pricing power, better margins, and healthy cash reserves/return on capital employed, which have led to a recent rerating among domestic peers.
We consider the volume recovery in the IPM as a crucial earnings driver, essential for sustaining a premium over the Nifty index. Without it, additional earnings upgrades are unlikely.
In light of these factors, we are initiating coverage with a 'Buy' rating for Eris Lifesciences Ltd. (target price of Rs 1,070) and an 'Add' rating for Alkem Laboratories Ltd. (target price of Rs 5,520), Mankind Pharma Ltd. (target price of Rs 2,360), and Torrent Pharma Ltd. (target price of Rs 2,970).
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
