Post Q3 results: Value seen in Sun Pharma, Divi’s, Ranbaxy

By Archi Damania/CNBC-TV18

Pharma results, this quarter, have been an absolute mixed bag. While a lot of pharma companies have posted severely mixed expectations, some of them have posted stellar results.

For instance, Sun Pharma can go across as one of the best results in the largecap pharma space. The growth was driven by the Tripletal exclusivity. They also have one-more exclusivity on Protonix, which they have launched already. So, next quarter will also be good. Citi has put a buy rating on that one.

Glenmark Pharma has posted a superb set of numbers once again with the Tripletal exclusivity. They have also got a milestone payment this quarter. Going forward, there would be unlocking of value from the demerger and IPO of the generics business. Merrill Lynch has a buy target of Rs 609 on the company.

Divi’s Laboratories, a player in the CRM space, has also posted an excellent set of numbers. There was superb margin expansion, which was driven by an increasing trend in custom manufacturing services. Merrill Lynch has again placed a buy rating with a target of Rs 2,250.

Ranbaxy did not have an extraordinary quarter nor year. But they have given a very good guidance for the current calendar year. They have also announced a generic immediate settlement which gave support to the stock. Merrill Lynch has a buy target at Rs 529 on this stock.

Cipla also came out with an excellent set of numbers but analysts have doubt about the sustainability of its numbers.

Apart from these gainers, there were a whole a lot of numbers, which were not so good. Dr Reddy’s was one of them. BetaPharma, its German business, has severely been impacting. Then, there was Biocon, Nicholas Piramal, Cadila, Aurobindo, and lots of other as well.

Companies, which have exclusivity, have done well. They have good visibility and have posted good numbers. In the CMS space also, they have posted good numbers. In terms of valuations, most of them are trading between 16-17 times, whereas Dr Reddy’s is at about 12 times FY10 earnings. So, there is selective value in pharma stocks.