5 pharma stocks to buy on Monday ahead of the market rally
Domestic activity supports growth
According to Sharekhan, the United States is not yet completely out of the woods and internal affairs have helped to support growth.
“Revenue growth improved to 10.7% YoY from 4% and 7.6% YoY for Q3Fy22 and Q2FY22 respectively. While domestic revenue growth was driven by Cipla ( up 21% YoY), IPCA Labs (up 27% YoY) and Sun Pharma (up 16% YoY).At the same time, corporate operations in the United States were under pressure, impacted by highly competitive pressures and channel destocking in some pockets However, comments from some managements suggested a possible easing of pricing pressures in the medium term in US revenues of companies like Aurobindo Pharma were down 5% YoY year-on-year, while those of Cipla (due to strong growth in the respiratory franchise) and Sun Pharma (due to growth in the specialty segment) saw healthy growth in ns their respective US markets. In the API space, Divis Labs delivered 41% YoY revenue growth, while Biocon delivered strong 31% YoY revenue growth, driven by a strong performance of organic products segments,” the brokerage said.
Buy Aurobindo Pharma and Cipla in the pharmaceutical space
Sharekhan has a call to buy shares in Aurobindo Pharma and has set a price target of Rs 610 on the shares.
“The company delivered a weak performance for Q4FY2022, impacted by higher cost pressures and management expects cost pressures to continue. We have therefore revised our estimates for FY2023E/ FY2024E by 13-16%,” the company said.
Apart from this, the company also has a call to buy on Cipla shares with a price target of Rs 1150 on the shares. “Incorporating a one-time inventory write-down, Q4FY22 was an operating quarter in line for Cipla. This, coupled with management feedback highlighting likely near-term cost pressures, allowed us to refine our estimates for FY23E/FY24E,” the company said. said.
Buy Sun Pharma and Torrent Pharma shares
Apart from the above two, the company also recommended buying shares of Sun Pharma, with a price target of Rs 1000 on the shares. “Q4FY2022 was a weak quarter and results reflected elevated cost pressures leading to OPM contraction. Adjusted PAT missed estimates. However, management feedback was encouraging, while pressures on costs could moderate OPM expansion. Based on this, we have refined our estimates for FY2023E/FY2024E,” the company said.
For Sun Pharma, the brokerage has a buy target of Rs 3,540. and in Europe with a healthy margin trajectory expected, we have refined our estimates for FY2023E/FY2024E,” Sharekhan said.
Buy Lupine for a target price of Rs 780
The company is also bullish on Lupine shares and has suggested buying them for a price target of Rs 780. Lupine reported weak performance in Q4FY2022, with OPM surprising negatively, marred by rising commodity prices raw. Consequently, the company declared a net loss. Based on this and the apparent near-term headwinds, we have reduced our estimates for FY2023E/FY2024E.