Pharma stocks in focus: Pharmaceutical companies’ stocks such as Cipla, Zydus Wellness, and Torrent Pharma surged up to 5 per cent on the BSE intraday during Monday’s trading session after reporting healthy earnings in the first quarter of the financial year 2022-23 (Q1FY23) in the previous weekend.
Individually, Cipla shares gained over 5 per cent to Rs 1030.1 per share, followed by Zydus Wellness shares jumped almost 3.5 per cent to Rs 1665.5 per share, and Torrent Pharma shares up nearly 2 per cent to Rs 1554.8 per share on the BSE intraday today.
Despite healthy Q1FY23 earnings, the pharma major Sun Pharma shares were seen trading flat in the early morning and later declined more than 3 per cent to Rs 913 per share on the BSE intraday.
Sun Pharma Q1 is largely in line with estimates, Nomura said, adding the expectation of sustained growth in India, EM, and specialty on track. It maintained a Buy stance with a target of Rs 1,095 apiece and said a positive view was driven by high contribution to earnings from the branded generic business.
Similarly, HSBC gives a Buy rating on Sun Pharma with a target of Rs 1,120 apiece, stating specialty sales traction continued in Q1 as the June quarter beat mainly on lower R&D costs. The global brokerage firm said improved realisations for Winlevi and Halol clearance key catalysts.
While Morgan Stanly gives an Overweight call on Cipla with a target of Rs 1,122 per share. The brokerage said that the company continues to enrich its US pipeline of complex products and there is good visibility of 2-3 complex launches per year for the next three years.
For Zydus, YES Securities said Q1 performance was quite encouraging, led by 10.3 per cent volume growth and sequential market share gains in key brands Glucon-D, Nycil, and Everyuth.
Timely price hikes in the March quarter also aided gross margin contraction to only 110 basis points (bps), YES Securities said, while maintaining an ADD rating with a target price of Rs 1,858 per share based on 35x FY24E earnings.
Torrent Pharma’s 1Q performance met expectations as strong domestic performance overshadowed weakness in Germany, JM Financial said, adding, company’s medium-term outlook remains positive with a healthy US launch pipeline, field force expansion, and a consistently growing domestic portfolio.
Given the moderate earnings growth over the next few quarters despite factoring in margin expansion, The brokerage has recommended to Hold with a price target of Rs 1,515 per share.