Pharma Sector - Growth Recovery In FY24 To Drive Valuations: Nirmal Bang's Thematic View

BQ Prime’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 BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Nirmal Bang Report.Almost all pharmaceuticals companies in our coverage universe are trading at deep discounts (average ~25% discount) versus the historical five-year average forward multiples - even excluding Covid-19 period valuations. FY23 has been a challenging year for the sector owing to slowdown in overall growth, margin contraction and enhanced regulatory concerns. Domestic growth has been impacted by a higher Covid base while U.S. generics business has been impacted by double-digit price erosion. Margins have also contracted due to U.S. price erosion, elevated cost inflation and a higher Covid base. Apart from these headwinds, enhanced regulatory concerns, which were absent during the Covid period, have also resurfaced, affecting sentiment for the sector. As the base normalises, we believe that domestic growth is expected to be back in double digits in FY24 while price erosion in the U.S. is expected to cool off from double-digit levels to single digit levels. On the margin front, cost inflation is normalising, and companies have to a great extent passed on the burden of additional costs, largely in branded markets. On the flip side, we believe that the U.S. Food and Drug Administration inspections are still on the lower side (330 in CY19 against 77 in CY22), but the same are expected to increase from here on. Hence, our focus remains on companies that are heavy on branded generics and have the least exposure to U.S. generics..Click on the attachment to read the full report:.GSK Pharma Analyst Meet Takeaways - A Mixed Bag: Motilal Oswal.DISCLAIMERThis report is authored by an external party. BQ Prime 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 BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Pharma Sector - Growth Recovery In FY24 To Drive Valuations: Nirmal Bang's Thematic View

Risk-reward favourable.

NDTV Profit

NDTV Profit

Follow Us

DISCOVER US FASTER

DOWNLOAD THE APP