The Pharma or Health sector soared 22 .4 percent in the previous year and it will continue to grow in the coming year too.The estimate varies between 24 to 32 percent better performance in the year FY 2014 .The continued tapering process, the uncertainty in the domestic economic situation and the out come of the coming election do add an element of uncertainty in which Pharma thrives as it provides shelter and steady return on capital employed.
The gradual fall in the rupee, as it could break the 63 rupees to a dollar barrier soon enough and this could see rupee depreciating to 67 or 68 level.It could come about with the outcome of the elections which can be an eye opener and a cause for concern. All it takes for this market to go into a downward spiral is a hung parliament or a third front government which does not augur well for the market.
Some of the stories in this sector has been outstanding and others have seen their value eroded in an instant due to external factors which have made the stock value plunge,Wockhartd and Ranbaxy would be glaring examples of this outcome. On the other side of the coin we have Auro Pharma which has been rising day in and out and still on an uptrend. The pharma companies are not restricted to the local or the US market, they have been exploring various place in the world where they can get a foot hold and help improve their sales and profitability.We see them now stretching from the Japanese market to those in the remote corner of Africa and south America.
When one takes a deep look at this sector we immediately respond to the following names, Ranbaxy, Dr. Reddy’s , SunPharma, Lupin, Cipla, Torrent, Glen Pharma, Cadila health care, Auro Pharma, Wockhardt, these are generally seen to be active in the Indian Market, make the news regularly and invested in by the lowest rung of the pole in the stock market, that is the retail investor.I will now take each on its own merit and do a small outlook for the company for the present year that is FY 2014.
A company which has seen its share value crash many a time and rises like the phoenix to crash yet again, and why it does so, well it does because of its own volition and not due to any thing not concerned with it. Its productions plants get closed one by one by the USFDA and the latest one was no different.It has to get it’s act together and put a good management and governance in place.stick to good practices, even if it cost money, for a Japanese owned company it leaves much to be desired in manufacturing practice. The foresee able increase in the share value is 15 percent in a 5 to 8 months time frame.It may even take longer if the USFDA does not allow them to manufacture out of Indian plants.
A consistent performer, which has it’s act together and we can see this company doing better in the year to come, we could see an increase in performance quarter by quarter, there may be a dip in the first quarter which should be recouped and does better in the subsequent quarters. The stock can rise anything between 20 to 28 percent in the coming year. A true blue chip in its nature.
This company is expected to outperform the market and with the help of Taro, we can expect this to happen. Do not see any hindrance to this ambition or guidance given by the company. The shares can be seen peaking over 28 to 35 percent in the year to come.
Every time the shares of this company climbs the 400 rupees mark, the quarterly result of the company comes out and we see it retreating to 370 rupees level , it seems to be making a habit of this. For the coming few quarters we can see this continuing.Unless the company gets it act together and has the will to make things right and go forward boldly, we will not see much happening to this impasse.If interested in holding for a time period of over an year we may see 500 rupees level.Otherwise the share can be used for trading and nothing more. Range being 370 to 440 rupees
This company will outperform in the coming year. It has everything going for it self and one can see anything between 20 to 35 percent appreciation in its stock price. We could see 1100 rupees by mid June or early July.
A company in which one can safely invest one’s money and leave it to grow. Run like a tight ship and good prospect for growth and has the potential to go the long haul.The stock which is now in mid 500 level can be seen to cross the 600 level and may even touch the 700 level by year end.
A company which depends on its special formulation and overseas generic drug sales for its growth. It has beaten analyst forecast this time round. The generic business should do well going forward the question is the special formulation business. We can see a modest growth of 12 to 15 percent this year provided nothing adverse happens .
An example of small is beautiful. This company has been growing steadily and has gone through its capex cycle and the fruits will soon bear. The stock has moved from 650 levels to 950 level in less than 6 months.We can soon see it crossing the 1000 rupees mark. The company can clock a growth in its share value from current levels to 1200 levels.
The flavor of the season. It has been rising constantly for the last 45 days as if no end in sight. Should plateau at 550 rupees level. There could be a pull back to 450 levels , but this story could be repeated later in the year where we could see the stock breaching the 600 levels on its way to 700.The company needs to see that the new found value is maintained and not frittered away easily by being overly ambitious.
The bad boy of the pharma pack , it single handily did itself in and wiped out the value of its stock many times over. It will take sheer hard work to gain the investor trust and share valuation it once enjoyed, if it ever comes.It is can used as a trading tool for the year….and nothing more at present.
Those who play on the pharma index, it should do better than the main index.A rise of 12 percent would be an excellent return for the year.