Pharmaceuticals: Exports continue to drive growth in Q1FY13
Results - A snapshot: During the quarter, our pharma universe posted a robust set of numbers with top-line growth of 34.1% y-o-y and OPM at 23.5% (up 300bp y-o-y), however, the adjusted PAT declined 11.2% y-o-y. The export business (up 47.9% y-o-y; largely owing to US, which grew 90.7% y-o-y) continued its growth momentum, while, the domestic business (up 15.8% y-o-y) showed signs of sustained growth momentum. Though Sun, Lupin and Ranbaxy continued to contribute mostly (FTF / one time sales) in US, improvement on base performance front was witnessed in Unichem, Cadila and Glenmark. The domestic camp was supported by strong growth from Cadila, Cipla, Dr Reddy’s, Glenmark, Ipca, Lupin and Unichem Labs.
- In-line: Dr Reddy’s, Glenmark, Ipca, Lupin, Strides Arcolab, Torrent, Unichem Labs, Vivimed Labs
- Above estimates: Cadila, Cipla, Divi’s Labs, JB Chemicals, Opto Circuits, Sun Pharma
- Below estimates: Aurobindo, Ranbaxy
Outlook: Going forward, the high growth momentum is expected to be unsustainable and that it might taper off, as fewer drugs would be up for patent expiry. Thus, Reliance Securities' prefer stocks with differentiated products and ANDA pipeline coupled with clear growth strategy in place. Strategic tie ups, outlicensing deals and exclusive product launches could result in significant incremental profitability and could surprise positively going in FY2013-14. Moreover, Indian players are stepping up efforts in domestic market in view of steady revenue growth opportunities and relatively high margins. Scale up of operations in emerging generic markets, outsourcing of R&D and recovery in CRAMS would add to the growth momentum.
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Reliance Securities comes from the house of Reliance Capital, one of India’s leading & prominent financial houses. Founded in 1986, Reliance Capital has come a long way from being into steady annuity yielding businesses such as leasing, bill discounting, and inter-corporate deposits to diversifying its activities in the areas of asset management and mutual fund; life and general insurance; consumer finance and industrial finance; stock broking; depository services; private equity and proprietary investments; exchanges, asset reconstruction; distribution of financial products and other activities in financial services.
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