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| Pharma shares touch 12-month high, amid choppy stock market |
| Joe C Mathew / New Delhi Jan 08, 2011, 00:38 IST |
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Amid a choppy stock market, share prices of at least four leading drug makers — Sun Pharma, GlaxoSmithKline (GSK), Cipla and Aurobindo — touched a 12-month high this week. The stock movement is in tune with investors’ perception of a healthy performance by pharmaceutical companies during the three months that ended on December 31.
 While the share prices of Sun Pharma touched a 52- week high of Rs 511.45 a share to close at Rs 492.45 on Bombay Stock Exchange (BSE) today, GlaxoSmithKline (GSK) which went up to Rs 2,404 a share on Thursday, to close at Rs 2,375 today. Aurobindo shares closed at Rs 1,311.55, after touching Rs 1,375 a share on Wednesday. Cipla, which saw its share price reach the year’s high of Rs 380 a share on Tuesday, closed at Rs 356.85 today.
“It is an indication that growth momentum in pharma sector will continue and drug firms are expected to register healthy results in the third quarter,” says Ranjit Kapadia, vice-president (institutional sales), HDFC Securities.
A recent investor note from ICICI Securities indicates that in December 2010, domestic pharmaceutical firms, with marketing approvals in key foreign markets, had registered strong growth trends on export front.
The third quarter preview carried out by Angel Broking says in the last three months, the BSE’s healthcare index had outperformed the BSE’s 30 stock Sensex as it registered 10.3 per cent growth as against a flat closing of the latter.
Motilal Oswal, yet another stock trading firm that tracks at least 15 leading drug firms, expect the growth in third quarter sales revenues of the companies to be 17 per cent. The broking firm predicts an average 147 per cent growth in the net profits of the drug companies it tracks. “The growth will be led by strong performances of Sun Pharma, Divis Lab and second-tier generic companies,” notes analysts Nimish Desai and Amit Shah, Motilal Oswal.
Angel Broking expects average sales revenues of the pharma companies it tracks to be 14.7 per cent. Among large caps, it expects Sun Pharma to post 48.2 per cent year-on-year sales growth, mainly on the back of integration of Taro.
Lupin and Cadila, expected to register 36.6 per cent and 33.6 per cent growth in net profit, respectively, are the other leading players, Sarabjit Kaur Nangra, analyst with Angel Broking said.
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