Pharma Stocks Outlook for the week – 02 to 06.11.2015
Seen
firm on defensive buy; Cipla results key
With
the broader market expected to be weak during the next seven days as the
National
Stock
Exchange's Nifty erased gains in the second half of the session yesterday,
frontline
pharmaceutical
stocks are seen firm on defensive buying. The key driver for the market
next
week would be exit polls of the Bihar elections on Thursday. A win for the
Bharatiya
Janata Party will boost sentiment as it will mean higher representation for the
party
in the Rajya Sabha, where key bills such as the constitutional amendment to
introduce
the Goods and Services Tax are stuck.
In
the pharmaceutical space, the Street expects positions to be taken in stocks of
Cipla
and
Sun Pharmaceutical Industries, which will report their Jul-Sep earnings on
Friday
and
Saturday, respectively. We sees Cipla reporting consolidated net profit for the
September
quarter at 5.04 bln rupees, up 69% on year.
After
a stellar 1Q16 (Apr-Jun), we expect Nexium sales to be lower at US$20 mln in
2Q16
(Jul-Sep). Overall 2Q16 sales growth should be strong at 20% (base business
growing
at 15%). The company is seen reporting consolidated net sales of 35.36 bln
rupees
during the quarter. For Sun Pharmaceutical Industries, the Street estimates a
consolidated
net profit of 13.01 bln rupees during the reporting quarter, 17% lower from
the
year ago period. Having an accumulate rating on Sun Pharma's counter and the
remediation
process at the company's Halol unit is expected to impact core sales growth
and
operating margin during Jul-Sep.