Pharma Q3 Results Preview - Better Performance Led By New Launches, Profitability: Axis Securities

Axis Securities Report

In Q3 FY24, the pharma sector is expected to benefit from positive attributes such as approval for niche drugs in the U.S. market, fall in raw material prices, low crude prices, and correction in shipping prices which would aid in revenue growth and improvement in gross margins.

We expect the pharma universe under our coverage to report healthy aggregate revenue/Ebitda/profit after tax growth of 13.5%/24.6%/30.3% YoY.

The major growth will be driven by generic products such as gRevlimid, gSpiriva, gAlbuterol, gPrezista, gLenotirade, Biosimilars etc. The U.S. market is expected to witness a mid-teen growth with stable pricing and the India business has now stabilised after Covid-19 business with low double-digit growth.

Single-digit revenue growth may be observed in Europe and the International market in Q3 FY24.

We recommend 'Buy' on Lupin, Aurobindo Pharma, Cipla, Abbott India, and Krishna Institute of Medical Sciences. These companies may surpass the industry growth driven by a superior product portfolio and strong product pipeline.

In hospitals, KIMS is expected to deliver higher occupancies and realisations as the company is gaining market share consistently.

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