Cipla beat expectations riding the demand for Covid medication. The Street is likely to push the stock to its record high hit in 2015. While US business revenues declined, the company's domestic business sales grew in double-digits.
APBoth Cadila Healthcare and Lupin are likely to remain low on investor preference on account of near-term headwinds.
Indian pharma companies cannot risk their prospects by under-performing when the external business environment and investor sentiment has improved for Indian pharma sector and those with flawed business models, ineffective strategies or non-agile operations are likely to face the brunt on the Street.
Three leading pharma companies announced June quarter results towards the end of the week - each with different levels of performances and investment prospects.
Cadila Healthcare reported modest growth in sales and improved profitability but that failed to impress the Street. While US business sales posted double-digit growth, the company is over-dependent on a few products. Sales from the active ingredients business compensated for the decline in revenues from India that is skewed towards acute portfolio which will take time to recover to its pre-Covid days. Incidentally, its wellness business posted 12% decline in sales at a time when health and immunity are the main consumption themes.
Lupin has possibly posted the worst performance among India's big pharma groups - severely impacted by the pandemic. The Street reacted by pulling down the stock 6% on Friday. The API business was the only segment that grew over the year-ago level. Drug recall and impact on sales due to pandemic led to 21% slide in US sales. Domestic market sales too declined due to coronavirus impact on the sales of drugs - especially from the acute portfolio.
Cipla beat expectations riding the demand for Covid medication. The Street is likely to push the stock to its record high hit in 2015. While US business revenues declined, the company's domestic business sales grew in double-digits. The company is the market leader in respiratory and inhalation therapies that were under spotlight due to Covid. Cipla has achieved zero net debt position due to improved collections and profitability.
Both Cadila Healthcare and Lupin are likely to remain low on investor preference on account of near-term headwinds. Cipla, on the other hand, is likely to ride on the Covid-induced demand for medication and improving financial health. As per data from Bloomberg, analysts tracking these companies are most bullish on Cipla (79%), then on Cadila (51%) and least on Lupin (35%).
AP
ET Bureau
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