Q2FY15E Results Preview Of Pharma Sector By IndiaNivesh

We expect 17 companies under INSPL pharma universe to deliver 20% y-y and 15% y-y growth in sales and adjusted PAT respectively for 2Q FY15. The major companies in the pack – Sun Pharma (SUNP IN) and Dr. Reddy’s Lab (DRRD IN), which contributes 32% and 12% to the aggregate adjusted PAT, are expected to show muted growth of 13% y-y and (11% y-y) for the quarter. This is due to lesser number of limited competition products and few launches in US market for SUNP as well as DRRD.
However, the other major companies – Lupin and Aurobindo Pharma, which contributes 11% and 8% to the aggregate adjusted PAT are expected to show superior growth in earnings due to strong execution in US market. Lupin is expected to show robust growth in domestic formulation market as well. EBITDA margin is expected to remain stable at 25.9% for the quarter. The rupee has appreciated by ~3% y-y and remained at similar rate sequentially. This would have adverse impact on earnings compared to previous quarters, when companies had benefit of rupee depreciation.

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