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ICICI Securities Report
Q4 has historically been a weak quarter for pharma companies; however, with exclusivities in the U.S. and softening of raw material prices in Q4 FY24, we expect our coverage universe to report revenue/Ebitda/profit after tax compound annual growth rate of 10%/20%/34%, respectively.
U.S. is likely to be the primary growth driver, with sales propping 12% YoY. We have built $112/55/52/32/30/25 million from gRevlimid for Dr. Reddy's/Zydus/ Natco/Cipla/Sun/Aurobindo and $30 million of revenue from gSprivia for Lupin in Q4 FY24E.
Drag in acute therapies could keep a check on India growth, likely at ~8% for our coverage universe. Easing of raw material cost and better sales of exclusive products for U.S. tdrive ~130 bps/190 bps YoY expansion in gross/Ebitda margins to 65.7%/23%, respectively.
Cipla, Aurobindo, Ajanta Pharma, Piramal Pharma and Abbott India are our top picks.
Key risks:
Adverse outcome of U.S. Food and Drug Administration inspections, currency volatility and inclusion of more products under National List of Essential Medicine in India.
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