Sun, Dr Reddy's, Aurobindo, Lupin, Zydus lead US performance in Q3. Sun Pharma, JB Pharma are BNP Paribas 2 top picks

Stock Market Today: Nifty pharma index is on an  uptrend and having seen gains of more than 12% year to date, has outperformed Nifty-50 index that has gained 1-2% during the same period. 

The  gains in the Nifty pharma index has been supported by good performance seen by companies during the December quarter. Most of the companies having exposure to the US markets saw a good growth in the geography helped by large products launches and lower competition in the base business. The domestic market growth also remained supportive for the  earnings trajectory of majority of pharmaceutical manufacturers.

Analysts at BNP Paribas in the Q3 result preview say that "aggregate earnings of pharma companies we track beat our aggregate revenue and net profit estimates by 2.8% and 14.4% respectively. 

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Analysts at Motilal Oswal Financial Services said that aggregate net profit for pharma companies under their coverage universe were up 15.5% YoY in 3QFY24.

Aggregate growth for domestic formulation was 12% y-o-y for companies under BNP Paribas coverage, which is highest in the last seven quarters. Most with exception of Dr Reddy's Laboratories saw domestic growth exceeding expectations. Mankind,  Zydus life reported high growth of 20% and 16% year-on-year in 3QFY24, while Lupin's domestic formulations grew by 13% y-o-y, which is its highest in the last in nine quarters they said.

Aggregate US revenue for companies under BNP Paribas coverage grew by 5% sequentially versus their expectations of 1% sequentially, largely led by companies such as Sun Pharma, Aurobindo Pharma and Dr Reddy's Laboratories. 

Sun Pharmaceutical notably had reported its highest ever quarterly sales from its specialty division of $276 million (adjusted for milestone income). Aurobindo Pharma and Dr Reddy's posted sequential US revenue growth of 10% and 4% respectively, which analysts believe was largely led by contributions of Revlimid, the blockbuster multiple Myeloma treatment drug. 

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Lupin too continues performing well in the US market and its performance is being led by respiratory products. Launch of generics of Spiriva was key highlight during Q3.

Analysts at Antique Stock Broking also said that growth momentum for Lupin continues, EBITDA margin at a multi-quarter high.  Zydus Lifesciences performance as per Antique stock broking was exceptionally good with niche launches supporting loss in other key products.

Top picks post Q3 results as per are BNP Paribas are Sun Pharma and JB Pharma (JB Chemicals and Pharmaceuticals Ltd)

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

Our top picks are SUNP and JBCPlso