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Sharekhan maintains 'buy' on these 15 pharma names post Q2 earnings. Take a look

Cadila Healthcare, Dr Reddy’s and Sun Pharma among the preferred largecap picks of Sharekhan. Read on to know which stocks Sharekhan is backing and why.

November 25, 2021 / 12:58 PM IST
Q2FY2022 was a mixed quarter for pharmaceutical companies and revenues, earnings growth moderated on a y-o-y basis versus Q1FY22. Growth during the quarter was driven by India business while US growth was muted. Higher raw material prices and freight charges led to costs pressures leading to margin contraction, consequently the PAT growth moderated to 9% versus double digit growth in Q1FY22.
Q2FY2022 was a mixed quarter for the pharmaceutical companies. Revenues, earnings growth moderated on a Y-o-Y basis versus Q1FY22. Growth during the quarter was driven by India business while US growth was muted. Higher raw material prices and freight charges led to costs pressures leading to margin contraction. Consequently, PAT growth moderated to 9% versus double digit growth in Q1FY22.
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Aurobindo Pharma | Rating: Buy | LTP: Rs 658 | Target: Rs 875 | Upside: 33 percent | For Aurobindo Q2FY22 was a weak quarter and the results missed estimates. Further, basis the uncertainties persisting for its US business as well as weak performance of ARV segment, broking house revised earnings estimates downwards by around 5% each for FY22E and FY23E.
Cadila Healthcare | Rating: Buy | LTP: Rs 459 | Target: Rs 720 | Upside: 57 percent | Cadila reported steady performance in Q2FY22. Sharekhan retained its estimates for FY22E and FY23E.
Cadila Healthcare | Rating: Buy | LTP: Rs 459 | Target: Rs 720 | Upside: 57 percent | Cadila reported steady performance in Q2FY22. Sharekhan retained its estimates for FY22E and FY23E.
Cipla | Rating: Buy | LTP: Rs 893 | Target: Rs 1,150 | Upside: 28 percent | Cipla’s Q2FY2022 was a healthy quarter and based on management commentary, broking firm fine-tuned FY2022E and FY2023E estimates.
Cipla | Rating: Buy | LTP: Rs 893 | Target: Rs 1,150 | Upside: 28 percent | Cipla’s Q2FY2022 was a healthy quarter and based on management commentary, broking firm fine-tuned FY2022E and FY2023E estimates.
Divis Laboratories | Rating: Buy | LTP: Rs 4,682 | Target: Rs 5,620 | Upside: 20 percent | Divis witnessed a moderation in growth for Q2FY22 and the results were in line on the operational front. Given the de- stocking in the generic API segment and possible cost pressures Sharekhan revised broadly maintained its estimates by 1% / 2% for FY22E and FY23E.
Divis Laboratories | Rating: Buy | LTP: Rs 4,682 | Target: Rs 5,620 | Upside: 20 percent | Divis witnessed a moderation in growth for Q2FY22 and the results were in line on the operational front. Given the de- stocking in the generic API segment and possible cost pressures Sharekhan revised broadly maintained its estimates by 1% / 2% for FY22E and FY23E.
Ipca Laboratories | Rating: Buy | LTP: Rs 2,060 | Target: Rs 2,675 | Upside: 30 percent | Ipca reported operationally in line results for Q2FY22. The management commentary was mixed pointing at possible near term challenges for its API business and expected escalation in raw material and logistics costs. Thus, lowered the estimates for FY22E to FY24E in the range of 4% to 7%.
Ipca Laboratories | Rating: Buy | LTP: Rs 2,060 | Target: Rs 2,675 | Upside: 30 percent | Ipca reported operationally in line results for Q2FY22. The management commentary was mixed pointing at possible near term challenges for its API business and expected escalation in raw material and logistics costs. Thus, lowered the estimates for FY22E to FY24E in the range of 4% to 7%.
Sun Pharmaceutical Industries | Rating: Buy | LTP: Rs 778 | Target: Rs 950 | Upside: 22 percent | Sun Pharma reported a strong set of numbers for Q2FY22 and the results were ahead of estimates. Basis this and an encouraging outlook, Sharekhan revised earnings estimates upwards by 5% and 3% for FY22E and FY23E.
Sun Pharmaceutical Industries | Rating: Buy | LTP: Rs 778 | Target: Rs 950 | Upside: 22 percent | Sun Pharma reported a strong set of numbers for Q2FY22 and the results were ahead of estimates. Basis this and an encouraging outlook, Sharekhan revised earnings estimates upwards by 5% and 3% for FY22E and FY23E.
Torrent Pharmaceuticals | Rating: Buy | LTP: Rs 2,817 | Target: Rs 3,400 | Upside: 20 percent | Q2FY2022 was a steady quarter for Torrent Pharma and, given sustained pricing pressures in the US markets, broking house fine-tuned estimates for FY2022E and FY202.
Torrent Pharmaceuticals | Rating: Buy | LTP: Rs 2,817 | Target: Rs 3,400 | Upside: 20 percent | Q2FY2022 was a steady quarter for Torrent Pharma and, given sustained pricing pressures in the US markets, broking house fine-tuned estimates for FY2022E and FY202.
Lupin | Rating: Buy | LTP: Rs 894 | Target: Rs 1,210 | Upside: 35 percent | Q2FY22 was a weak quarter for Lupin. Basis the rising raw material costs & higher competitive pressures in US, EBITDA guidance for H2FY22 has been revised downwards, factoring in the same Sharekhan revised estimates for FY22E/FY23E downwards by 8-10%.
Lupin | Rating: Buy | LTP: Rs 894 | Target: Rs 1,210 | Upside: 35 percent | Q2FY22 was a weak quarter for Lupin. Basis the rising raw material costs & higher competitive pressures in US, EBITDA guidance for H2FY22 has been revised downwards, factoring in the same Sharekhan revised estimates for FY22E/FY23E downwards by 8-10%.
Biocon | Rating: Buy | LTP: Rs 359 | Target: Rs 470 | Upside: 31 percent | Biocon’s Q2FY22 results were healthy though the results missed estimates on the operating front. Basis the weak performance in the generics business, Sharekhan revised estimates downwards by 3% each for FY22E and FY23E.
Biocon | Rating: Buy | LTP: Rs 359 | Target: Rs 470 | Upside: 31 percent | Biocon’s Q2FY22 results were healthy though the results missed estimates on the operating front. Basis the weak performance in the generics business, Sharekhan revised estimates downwards by 3% each for FY22E and FY23E.
Laurus Lab | Rating: Buy | LTP: Rs 502 | Target: Rs 735 | Upside: 46 percent | Laurus reported a subdued performance for Q2FY22 and results missed estimates. Basis the transient issues in ARV API and likely cost escalations, Broking house revised downwards its estimates by 4-10% over FY22E-FY24E.
Laurus Lab | Rating: Buy | LTP: Rs 502 | Target: Rs 735 | Upside: 46 percent | Laurus reported a subdued performance for Q2FY22 and results missed estimates. Basis the transient issues in ARV API and likely cost escalations, Broking house revised downwards its estimates by 4-10% over FY22E-FY24E.
Biocon | Subsidiary Biocon Biologics, and Viatris launched interchangeable biosimilars SEMGLEE (insulin glargineyfgn) injection, a branded product, and Insulin Glargine (insulin glargine-yfgn) injection, an unbranded product, to help control high blood sugar in adult and pediatric patients with type 1 diabetes and adults with type 2 diabetes, in the US.
Sanofi India | Rating: Buy | LTP: Rs 8,130 | Target: Rs 9,600 | Upside: 18 percent | Sanofi reported a healthy set of results for Q3CY2021 backed by growth in the chronic therapies of Cardiac and anti- diabetes. The results were in line with estimates. Given the in – line results reported by the company, broking firm retained earnings estimates for CY21E/CY22E /CY23E.
Torrent Pharma | The company reported higher profit at Rs 316 crore in Q2FY22 against Rs 310 crore in Q2FY21, revenue increased to Rs 2,137 crore from Rs 2,017 crore YoY.
Abbott India | Rating: Buy | LTP: Rs 19,167 | Target: Rs 22,780 | Upside: 19 percent | Abbott reported a mixed performance for the quarter with the results missing estimates. On the basis of strong growth prospects, and a high share of acute therapies (which are amongst the fastest growing in IPM), Sharekhan fine-tuned its estimates for FY22E/FY23E.
Solara Active Pharma | Rating: Buy | LTP: Rs 1,058 | Target: Rs 1,615 | Upside: 52 percent | Solara Active Pharma reported weak results for Q2FY22 reflecting transitionary headwinds in Ibuprofen business coupled with volatility and increasing cost pressures. Weak performance is expected to adversely hit FY22 earnings and basis this Sharekhan cut FY22E /FY23E estimates.
Solara Active Pharma | Rating: Buy | LTP: Rs 1,058 | Target: Rs 1,615 | Upside: 52 percent | Solara Active Pharma reported weak results for Q2FY22 reflecting transitionary headwinds in Ibuprofen business coupled with volatility and increasing cost pressures. Weak performance is expected to adversely hit FY22 earnings and basis this Sharekhan cut FY22E /FY23E estimates.
Dr Reddy's Laboratories | Rating: Buy | LTP: Rs 4,598 | Target: Rs 5,900 | Upside: 28 percent | Dr Reddy’s reported a strong performance for Q2FY2022 and results are ahead of estimates and based on management commentary, broking firm fine-tuned its estimates for FY2022E/FY2023E.
Dr Reddy's Laboratories | Rating: Buy | LTP: Rs 4,598 | Target: Rs 5,900 | Upside: 28 percent | Dr Reddy’s reported a strong performance for Q2FY2022 and results are ahead of estimates and based on management commentary, broking firm fine-tuned its estimates for FY2022E/FY2023E.
Gland Pharma | Rating: Buy | LTP: Rs 3,509 | Target: Rs 4,400 | Upside: 25 percent | Gland reported strong results for Q2FY2022, but earnings missed estimates due to lower-than-expected gross margins. Given strong growth prospects, Sharekhan largely retained earnings estimates for FY2022E and FY2023E.
Gland Pharma | Rating: Buy | LTP: Rs 3,509 | Target: Rs 4,400 | Upside: 25 percent | Gland reported strong results for Q2FY2022, but earnings missed estimates due to lower-than-expected gross margins. Given strong growth prospects, Sharekhan largely retained earnings estimates for FY2022E and FY2023E.
Rakesh Patil
first published: Nov 25, 2021 12:58 pm

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