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    Q4 earning preview: Pharma pack up for good show, may go unscathed from virus hit

    Synopsis

    Investors may keenly follow Sun Pharma earnings for updates on Halol OAI.

    Pharma
    For Cipla, the progress on USFDA warning letter on Goa facility and any update on key respiratory assets (gAdvair filing) will be keenly watched.
    NEW DELHI: Drug makers, despite major reliance on China for key inputs, are unlikely to see any big impact on March quarter earnings due to Covid-19 disruptions. For them, sales may rise 7-30 per cent (except for Lupin and Cipla) while profit growth may vary from company to company.

    Investors may keenly follow Sun Pharma earnings for updates on Halol OAI, its specialty products and cost control measures.

    For Cipla, the progress on USFDA warning letter on Goa facility and any update on key respiratory assets (gAdvair filing) will be keenly watched. For Dr Reddy’s, China business, updates on Srikakulam API plant and any progress on the generic copy of Covid-19 drug will be keenly watched.

    Aurobindo’s Unit IV remediation and re-inspection timelines for Unit 10 will be tracked while updates on Solosec, bEnbrel and gFostair in the EU, on gProAir and FDA reinspection for Somerset/Goa sites will be watched keenly.

    “We do not see a meaningful adverse impact of Covid-19 lockdown on pharma earnings. With China resuming supplies of raw materials, potential disruption in manufacturing is now no longer a concern. There has been inflation in select raw material supplies, but the same may have only a minor impact on gross margins during the quarter,” said Nirmal Bang Institutional Equities.

    ICICI Securities expects Sun Pharma to report 41 per cent jump in profit at Rs 868 crore on an 11 per cent rise in sales at Rs 7,925 crore.

    It expects Dr Reddy’s Labs to clock 14.6 per cent rise in profit at Rs 522 crore on a 7.9 per cent rise in sales at Rs 4,349 crore.

    Lupin, it said, may fare poorly, with a 46 per cent drop in profit at Rs 155 crore on a 15.7 per cent fall in sales at 3714 crore.

    Cipla may report a 4 per cent drop in sales due to high base of gSensipar in the US, besides some currency impact in African business and due to Covid-led shipment delays, said Phillip Capital.

    “A high base of depreciation due to large impairment may help Cipla deliver 8 per cent PAT growth,” the brokerage said.

    ICICI Securities expects Biocon and Aurobindo Pharma to report 11 per cent and 5.5 per cent rise in profit on 22.6 per cent 10.1 per cent rise in sales.

    Nirmal Bang Institutional Equities said the domestic pharma market continued to grow in high single digits while the US market may see marginal benefit from dollar appreciation and potential increase in stocking at the wholesale level, which should be offset by currency depreciation in emerging markets due to declining crude prices.

    FY21 guidance will be the key amidst Covid-19 disruptions, said BoB Capital Markets.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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