Pharma Stocks
Outlook for the week – 13 to 17.10.2014
( www.rupeedesk.in )
Stocks of major pharmaceutical
stocks are seen gaining next week as the broad market is
expected to trade negatively due
to downward bias. Pharma stocks are defensive in nature and
act as safe havens for market
players during a negative trade.
However, there could be
stock-specific movement considering companies will report their
quarterly earnings. Among the
major players, Ranbaxy Laboratories Ltd will report its Jul-Sep
earnings on Oct 28, Dr Reddy's
Laboratories Ltd on Oct 29 and GlaxoSmithKline
Pharmaceuticals Ltd on Nov 6.
We remain bullish on
pharmaceutical sector and expect roaring growth would continue in
Q2FY15 (Jul-Sep) on the back of
robust US sales. Also, growth revival in domestic market and
strong RoW (Return on Wealth)
growth will expand revenue and profitability.
Dr Reddy's US sales are likely to
moderate on quarter in Jul-Sep due to additional competition in
key products. India and Russia
will continue to grow at above industry growth rates. Expect
some revival in PSAI
(Pharmaceutical Services and Active Ingredients) as well as on both
revenues and margin front.
GSK Pharma to report much
healthier operational performance due to price increase taken for
several vital products under
price control and increase in volume for drugs like Augmentin and
Calpol. Prefer Lupin as the top
large cap pharma pick while IPCA, Biocon, Strides and Alembic Pharma present better risk reward
opportunity in the midcap space.
