Elara's take on top pharma stocks: Ranbaxy, DRL, Cipla

Surajit Pal, Pharma Analyst at Elara Capital, in an interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy, spoke about his reading of the pharma sector and his outlook on a few stocks.

Below is a verbatim transcript of the interview. Also watch the accompanying video. Q: Is that the house view at Elara that perhaps we are entering a down cycle, pharmaceutical could be the relative out-performer?
A: For quite sometime, we are underweight in pharmaceutical sector. We have been telling investors that the pharma space is not the kind of space which you can compare with 2010 market downturn.
As far as valuation is concerned, they are definitely at very high end of the range. If anything happens from hereon and they are not able to meet the expectation of the investors, then the downfall is quite eminent in pharma sector particularly in large and medium. Q: What have you made of the USFDA penalty news on Ranbaxy? Do you have any clarity on whether it would be a USD 1 billion or USD 300 million? What is your call on the stock at this point?
A: My recommendation in the counter is to sell or reduce. On base business, the company