Nifty Pharma index hits two-month high; Sun Pharma surges 7%

Shares of pharmaceutical companies were trading higher for the fourth straight day, with Nifty Pharma index hitting a two-month high after 7 per cent rally in share price of Sun Pharmaceutical.

At 01:01 pm, Nifty Pharma index, the largest gainer among sectoral indices today, was up 3.5 per cent at 8,122 points. The pharma index was quoting at its highest level since September 13, 2019. In comparison, the Nifty 50 index was up 0.69 per cent at 12,023 points.

Sun Pharma soared 7 per cent to Rs 455. The stock has gained 11 per cent in the past four trading days. The stock of pharma major was trading at its highest level since September 3, 2019. It erased entire losses that it incurred earlier after Sebi ordered forensic audit of the company.

“A forensic audit has been ordered by SEBI w.r.t. the financial statements of Sun Pharma for the financial years ending March 31, 2016, March 31, 2017 and March 31, 201 8. The said forensic audit is presently ongoing,” Sun Pharma had said in a regulatory filing on September 5, 2019.

Sun Pharma outpaced the market by surging 20 per cent from its recent low of Rs 380 on October 10, against 9 per cent rally in the S&P BSE Sensex.

Analysts at KR Choksey expect Sun Pharma’s topline/bottom-line to grow by CAGR 12.3 per cent/18.6 per cent over the period FY19 to FY21 on back of specialty revenue and with launch of Cequa (launched in Oct2019) while EBITDA margin is forecast to further expand in near term with traction seen in Ilumya. Domestic business is now getting back on track, it should normalise further, the brokerage firm said in Q2 result update with ‘buy’ rating and target price of Rs 511 per share.

Among other individual stocks, Lupin, Dr Reddy’s Laboratories, Divi’s Laboratories and Aurobindo Pharma from the Nifty Pharma index were up 3 per cent each on the NSE.

Glenmark Pharmaceuticals (up 4 per cent at Rs 365) bounced back 37 per cent from its 52-week low of Rs 267 touched on last Thursday, after global brokerage firm CLSA upgraded the stock to 'buy' from 'Sell', citing attractive valuation.

The brokerage firm, in its review report on Glenmark Pharma, said the US sales momentum is expected to remain strong whereas India should continue growing above the industry rate. It also noted that all geographies witnessed year-on-year growth for the first time in over three years.