Pharma shares in focus; Lupin, Sun Pharma gain up to 5%

The shares of pharmaceutical companies were in focus on Tuesday with sector majors like Sun Pharmaceutical and Lupin, each trading 4 per cent higher on the National Stock Exchange (NSE).

At 03:11 pm, Nifty Pharma index, the largest gainer among sectoral indices for the day, was up 1 per cent as compared to 0.19 per cent decline in the benchmark Nifty 50 index.

Lupin gained 5 per cent to Rs 869 in intra-day deal today, after Morgan Stanley upgraded the stock to 'overweight' from 'equal-weight' rating.

The brokerage firm raised the stock's target price from Rs 783 to Rs 1,094 on the back of "earnings concentration risk being normalised" and the "new product catalysts in sight to revive earnings".

Analysts at Reliance Securities expect Lupin to post strong performance in US business (+20 per cent YoY to US$ 270 million) led by niche launches i.e. gRanexa, gLevothyroxine etc and ramp-up in its branded drug Solosec.

“India business is expected to report healthy growth of 12.5 per cent. EBITDA margin is expected to expand by 443 bps YoY to 22.0 per cent due to growth in US and India business”, the brokerage firm said in March quarter results preview.

Edelweiss Securities expect Lupin’s US sales (around $300 million) to grow 55 per cent sequentially, on exclusive launch of gRanexa, seasonal sales of gTamiflu, ramp-up in Solosec and launch of levothyroxine, gSolodyn, gAdcirca, gAnafranil and clobazam.

The brokerage firm expects domestic business to grow 12 per cent YoY, faster than the IPM, while EMEA is likely to grow by 10 per cent YoY on launch of Namuscla in UK and Germany. EBITDA margins are expected to grow to around 24 per cent, led mainly by US product launches, and marginally offset by rupee appreciation.

Sun Pharmaceutical was too trading 4 per cent higher at Rs 472 on the NSE on back of heavy volumes. The trading volumes on the counter doubled with a combined 5.41 million shares changed hands on the NSE and BSE at the time of writing of this report.

Dr Reddy’s Laboratories was up 1.3 per cent at Rs 2,833, trading close to its 52-week high of Rs 2,878 touched on February 4, 2019 in intra-day trade.