Global brokerage and research firm BNP Paribas projects its Indian pharma and healthcare coverage universe to report year-on-year (YoY) revenue growth and a decline of c3% yy in 1QFY23.
It expects revenue growth during the quarter to be company specific, with a higher base of Covid-related sales in the India business for some companies and a only c2% quarter-on-quarter improvement in US sales overall in the domestic formulations segment. c1% yy is increasing. Or QoQ (+6% yy) even if new launches partially offset price erosion.
share it top stock picksBNP Paribas said it is giving preference to Sun Pharma and Aurobindo Pharma in the pharma sector and Dr Lal Path Labs and Fortis Healthcare in healthcare.
It has given buy rating on pharma stocks Sun Pharma, Aurobindo Pharma, Apollo Hospitals, Divi’s Laboratories, Metropolis Healthcare, Torrent Pharma while BNP Paribas has hold stances on Cipla and Zydus Lifesciences.
“At Sun Pharma, we see a structural story, with an uptick in specialty sales and a strong India business. Aurobindo Pharma provides us with our strong product portfolio and valuation facilitation with potential triggers from restructuring of our injectable business,” the note said.
The brokerage said it prefers Dr Lal Path Labs because of its volume growth, market leadership and consistency in long-term value growth from the acquisition of Suburban Diagnostics. Meanwhile, Fortis Healthcare is a turnaround story, with a focus on growth and trading at fair valuations in its view.
“In the healthcare sector, hospitals should recover from the low of 4QFY22, as the omicron wave is over now. Diagnostic companies’ revenue should decline year-on-year due to a higher base of COVID-related revenues, which is decelerating with lower volumes and lower prices. Non-core (pre-Covid) revenue may see a better recovery, led by better volumes.” BNP ParibasAdded note on Indian pharma and healthcare sector.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.