Pharma shares on a roll, BSE Healthcare index hits record high

Glenmark Pharma, Ranbaxy, Lupin, Divi's Lab, Cipla, Dr Reddy's, Sun Pharma, Wockhardt and Biocon are up 1-5% on the BSE.

Shares of pharmaceutical companies are on a roll with the Bombay Stock Exchange (BSE) healthcare index hits a record high today on hopes of higher revenue growth in September quarter due to fall in rupee’s value during the quarter.

Glenmark Pharmaceuticals, Ranbaxy Laboratories, Lupin, Divi’s Laboratories, Cipla, Dr Reddy’s Laboratories, Sun Pharmaceutical Industries, Aurobindo Pharma, Wockhardt and Biocon are up 1-5% on the BSE.

The BSE healthcare index, the largest gainer among the sectoral indices, was up 1% at 9,665 points as compared to 0.90% fall in the benchmark index at 1200 hours. The healthcare index hit a record high of 9,679 in intra-day trades.

Analyst expects Sun Pharma, Lupin, Dr Reddy’s Laboratories, and Cadila Healthcare will witness higher growth from US due to depreciating rupee as they have more than 40% revenues coming from exports.

Dollar has appreciated by 12% year-on-year (YoY) over Q2FY13 and 5 % quarter-on-quarter (Q?o?Q) over Q1 FY13 against Indian Rupee (INR).

“The frontline pharma company to report base revenue growth of 19% YoY and earnings growth of 15% led by scaling up of US base business and strong growth in ROW (rest of the world) markets, while India could see lower growth,” says analyst at Edelweiss Securities in results preview.

Analyst expect lower teen’s domestic growth for most companies due to negative impact of pricing policy. EBITDA margins are expected to remain steady YoY with benefit accruing from INR weakness.

We expect 15.9% YoY improvement in revenues for Q2FY13 for large cap companies in our space. Net Profit growth for large caps (ex?Ranbaxy) will be to the tune of 43.1% for the quarter, says analyst at Karvy Stock Broking.