Prefer Sun Pharma, Dishman Pharmaceuticals: Mayuresh Joshi

Mayuresh Joshi of Angel Broking told CNBC-TV18, "Strong outperformance by Lupin and clearly from risk-reward perspective, 4-5 percent upside cannot be ruled out. However I think valuations are tad bit on the higher side 26 times on FY’17 earnings. So it will be extremely selective when it comes to the pharma pack. From the large cap names, Sun Pharma is something that we still continue to prefer. It would have integration issues and remedial issues for the better part of FY’16 but the markets are aware of these facts. So, FY’17 numbers will be far better." "Similarly in the midcap universe, Dishman Pharmaceuticals just came out with numbers, our take is that the kind of capex that Dishman had in the past few years, the capex intensity should start reducing over the next few years which means that the turnover ratios for the company should improve, they should start sweating their assets which basically means that the return on capital employed (RoCE) should come to 13 percent mark in our opinion over the next year and a half. Clearly the other business are stabilising. The contract research and manufacturing services (CRAMS) specifically on the Carbogen Amcis business has a decent order book. The vitamin D business is expected to get ramped up to Rs 300 crore with a 20 percent margin and their oncology division is expected to post margins of 40-50 percent," he said."Clearly Dishman even at the current juncture or on declines is something we will prefer but on Lupin valuations seeming on the higher side currently."