Brokerage house Axis Securities expects pharma companies to report high single-digit growth (6.2% YoY) in Q4FY22 under their pharma coverage, primarily driven by injectables and generic segments.
With higher prices of organic chemicals and solvents due to Russia-Ukraine conflict, persistently high API/KSM cost from China which has increased by around 7-8% QoQ in Q4FY22, and near normal A&P expenses for India market, the brokerage has to Expected India’s fourth quarter EBITDA margin pharma The pressure on companies will continue.
“We expect EBITDA in 4QFY22E to be sequentially lower for majority of Indian generic pharma companies on account of lower gross margins due to increase in raw material cost and sustained price decline in US during the quarter. Sales growth in India The trend is expected to remain in the high single digits for most of the firms in the last quarter,” Axis Securities said.
Axis Securities top stock picks The pharma sector has Cipla, Abbott India, Krishna Institute of Medical Science (KIMS) and Healthcare Global Enterprises (HCG).
The hospital sector has performed relatively stronger than the overall industry due to its lower base due to the advent of COVID-19 and significant consumer preference given the integrated platform from unorganized to organized healthcare.
The brokerage and research firm remains selective on strong domestic plays such as HCG and KIMS, which have strong balance sheets as well as leadership in their respective remedies.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.