Pharma index gains more than 1% . Defensives in focus as markets break their winning momentum ahead of Budget'2024

Stock Market Today: Nifty Pharma Index gained more than 1% on Monday even as the Benchmark Nifty-50 index was trading marginally negative ahead of Budget'2024. The defensives remain is spotlight amidst volatility in the markets ahead of budget 2024.

Granules India, Torrent Pharmaceuticals, Abbott India , Dr Reddy's Laboratories , Alkem Laboratories, IPCA Laboratories, Sun Pharmaceutical Industries, Zydus Life Sciences and JB Pharma (JB Chemicals and Pharmaceuticals ) share prices gained more than 1% contributing to gains of Nifty Pharma Index.

The health of the Indian Pharmaceutical manufacturers also remains steady. The Domestic pharma market is expected to grow well.

Even Nifty Healthcare Index gained 1.10%. The diagnostic stocks as Metropolis Healthcare and Dr Lal Pathlabs gained 2.5-3.0 % contributing to the gains in addition to the pharma stocks mentioned above.

The Indian Pharmaceutical market (IPM) has posted growth of 8.7% yoy in 1QFY25, as per analysts at Kotak institutional Equities, largely led by improved traction in the acute segment. Although growth in June 2024 was relatively subdued at 6.7% yoy, the initial trends in FY2025 suggest better prospects for Indian Pharmaceutical market as per Kotak.

Meanwhile the companies having exposure to the international markets, mainly the US are also doing well.

The US growth is expected to be robust for Indian healthcare companies. The new launches are driving prospects while the competitive intensity also remained slightly subdues leading to lower pricing pressure and in turn lower pressure on margins.

The analysts at BNP Paribas in their preview report have forecast 10% y-y revenue growth in 1QFY25 for Pharma firms under their coverage, driven by double-digit revenue growth for the India formulations business with Torrent and Mankind and Mankind expected to report market-beating organic growth.

In the US business they assume stable market share for the companies in key molecules and contributions from generic of Revlimid at levels similar to that in 4QFY25. For Lupin and Zydus they expect 5% plus constant currency sales growth sequentially led by the launch of generic Mirabegron.

The aggregate Ebitda margin may expand 60bps y-o-y with Lupin, Aurobindo, Divi's and Torrent Pharma showing the highest improvement, in that order.

As all this keeps pharma in limelight, Analysts expect Pharma to remain in focus in budget day tomorrow too.

“With all eyes on the Union Budget, volatility is expected to remain high on Tuesday. We thus maintain a cautious stance and recommend a hedged approach. Traders should seek buying opportunities in low-beta counters, especially in the defensive sectors, and remain selective in other areas” said Ajit Mishra – SVP, Research, Religare Broking

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.