The pharma companies are expected to report a double digit growth, both in terms of revenue and profit, in the quarter ended June 2014, with domestic business also likely to show a decent uptick over the previous quarter, according to analysts.
Analysts are expecting strong US growth to boost earnings of Dr Reddy’s, Cadila, Lupin and Aurobindo Pharma, while higher base effect is likely to impact Sun Pharma’s ex?Taro growth in the US.
Nitin Agarwal, director – equity research, IDFC Institutional Equities, said, “The June quarter is likely to be a good quarter. Compared to last year currency situation, we still have a favourable base to grow up to.
Domestic market will bounce back a little and the US market also looks good, so overall a decent quarter. Domestic business has also showed signs of improvement. Pharma companies have also been able to take price hike on the products which came under price control last year. ”
Hitesh Mahida, pharma analyst of Antique Stock Broking, is also upbeat on the June quarter. “For companies under coverage, we are expecting nearly 27% profit growth and around 22% revenue growth on the back of strong US exports growth,” he said, adding that Dr Reddy's Laboratories, Lupin and Cadila Healthcare are expected to come out with good numbers.
Already, some of the select pharma companies, which announced their results in the current week, have posted impressive numbers.
Glenmark Pharmaceuticals reported a consolidated revenue of Rs 1,486.94 crore during the quarter ended June 30, up 20.08% over Rs 1,238.24 crore in the same quarter last year. Consolidated net profit during the quarter under review stood at Rs 184.86 crore, registering an increase of 43.65%.
On Wednesday, French multinational Sanofi's Indian business reported 12.3% increase in net profit at Rs 57.5 crore compared to Rs 51.2 crore during the same quarter a year ago. Net sales increased 18.7% on year to Rs 486.7 crore from Rs 410 crore.
According to brokerage firm Sharekhan, strong growth in pharma sector is likely to continue in the June quarter on the back of robust performance in US market.
However, Mahida of Antique Stock Broking expects domestic market to show some improvement on a sequential basis, while year-on-year numbers may not be that impressive.
Some analysts, however, are bullish that the opportunity arising from the hike of regulated drugs since July 2014 (in line with WPI in the last 12 months) could be a positive development for domestic formulation sales.
HDFC Securities in its pharma sector preview report, said, “Year?long effect of new drug price control order (DPCO) pricing regime could come to an end in the June quarter, while opportunity in price hike of regulated drugs since July 2014 (in line with WPI in the last 12 months) could be a positive development in domestic formulation sales.”
IDFC, in its first quarter pharma preview, however, expects Cipla's profit after tax to decline 32% year-on-year due to higher overheads. But strong revenue growth is expected as led by export formulations and Medpro consolidation. For Sun Pharma, it expects to report 18% y-o-y led by Taro and strong export formulations aided by Doxil sales, it added.
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