Indian Pharma Sector:- Goldman Sachs analysts have adjusted their projections for the Indian pharmaceutical sector during Q4 FY24 earnings season, considering factors like monthly sales data and currency fluctuations. The sector continues to trade at valuations above its five-year average, largely due to major players’ resilience.
Goldman Sachs highlights the importance of management commentary on domestic market expansion, US generic drug pricing trends, and fiscal year 2025 margin outlook. They hold a bullish stance on Syngene, Neuland, Torrent Pharma, Aurobindo, Gland, and Biocon, while expressing reservations about Laurus, Cipla, and Sun Pharma.
Domestic Market Dynamics:
- Base volume growth modest.
- Stable pricing dynamics and patent expirations.
- Management guidance needed on volume growth sustainability and pricing adjustments impact.
US Generic Pricing Analysis
- Goldman Sachs predicts price erosion stabilization at mid-to-high single digits.
- This trend may benefit companies like Aurobindo and Gland.
Margin Outlook:
- Persistent robust gross margins in past fiscal year.
- Potential headwinds from input cost escalations.
- Management commentary on cost dynamics monitored amid volatile commodity price environment.
- Adjustments include market developments and forward valuation bases.
- Top picks: Torrent Pharma for structural exposure, Aurobindo for tactical US generics play, Syngene and Neuland.
- Downward revisions: Laurus, Cipla, Sun Pharma due to specific earnings projection factors.
- Investors can follow a framework to make informed investment decisions.