Brokerage house Axis Securities expects pharma companies under its Pharma coverage to report high single-digit growth (6.2% YoY) in Q4FY22, primarily driven by injectable and generic segment.
With elevated prices of organic chemicals and solvents led by the Russia-Ukraine conflict, persistently high API/KSM costs from China that have risen around 7-8% QoQ in Q4FY22, and near-normal A&P spends for the India market, the brokerage expects the fourth quarter EBITDA margins of Indian pharma companies to remain under pressure.
“We expect EBITDA in 4QFY22E to be sequentially lower for the majority of Indian generic pharma companies on account of lower gross margins due to an increase in raw material costs and sustained price erosion in the US during the quarter. The sales growth trend in India is expected to be high single-digits for most firms in the last quarter,” Axis Securities added.
Axis Securities top stock picks in the pharma space are Cipla, Abbott India, Krishna Institute Of Medical Sciencs (KIMS), and Healthcare Global Enterprises (HCG), it said in a note on the fourth quarter preview of the pharma companies.
The Hospital sector has performed relatively stronger than the overall industry owing to its lower base due to Covid-19 advent and significant consumer preference shift from unorganized to organized healthcare services given integrated platforms.
The brokerage and research firm remains selective on strong domestic plays such as HCG and KIMS that have robust balance sheets as well as leadership in their respective therapies.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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