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Stocks of major pharmaceutical companies may gain next week as investors are expected to bet more and more on defensive stocks such as pharma and fast moving-consumer goods. Though the broader market is also seen quite positive next week, focus on defensive stocks is seen stronger as investors would be a little cautious ahead of the economic data Consumer Price Index inflation for June and Index of Industrial Production for May to be released by the Central Statistics Office towards the end of the week. Also, ahead of the companies' Apr-Jun earnings set to start this week, pharmaceutical companies are seen reporting healthy numbers. We expect core earnings growth for the universe to remain healthy at 28% led by strong ramp-up in US base and continued upsides from limited competition products such as Reclast, Lipodox, Tricor and Absorica.
It, however, added that the companies are expected to report lower domestic sales due to inventory adjustment in the supply chain post price-ceiling notification under Drug Price Control Order 2013. We expect core EBITDA (earnings before interest, tax, depreciation, and amortisation) margins to remain steady on year. We expect MTM (marked to market) losses from foreign currency loans and hedges to hit Aurobindo, Ranbaxy and IPCA, while operating benefit from favourable currency would come with a lag.
Within large caps, its top picks are Lupin, Dr Reddy's Laboratories, Sun Pharmaceuticals Industries and Cadila Healthcare. From the mid-caps, upbeat on Ipca Laboratories, Glenmark Pharmaceuticals and Aurobindo Pharma.
Stocks of major pharmaceutical companies may gain next week as investors are expected to bet more and more on defensive stocks such as pharma and fast moving-consumer goods. Though the broader market is also seen quite positive next week, focus on defensive stocks is seen stronger as investors would be a little cautious ahead of the economic data Consumer Price Index inflation for June and Index of Industrial Production for May to be released by the Central Statistics Office towards the end of the week. Also, ahead of the companies' Apr-Jun earnings set to start this week, pharmaceutical companies are seen reporting healthy numbers. We expect core earnings growth for the universe to remain healthy at 28% led by strong ramp-up in US base and continued upsides from limited competition products such as Reclast, Lipodox, Tricor and Absorica.
It, however, added that the companies are expected to report lower domestic sales due to inventory adjustment in the supply chain post price-ceiling notification under Drug Price Control Order 2013. We expect core EBITDA (earnings before interest, tax, depreciation, and amortisation) margins to remain steady on year. We expect MTM (marked to market) losses from foreign currency loans and hedges to hit Aurobindo, Ranbaxy and IPCA, while operating benefit from favourable currency would come with a lag.
Within large caps, its top picks are Lupin, Dr Reddy's Laboratories, Sun Pharmaceuticals Industries and Cadila Healthcare. From the mid-caps, upbeat on Ipca Laboratories, Glenmark Pharmaceuticals and Aurobindo Pharma.
