Nifty Pharma index surges 4%; Sun Pharma, Cipla hit 52-week highs

Shares of pharmaceutical companies were in focus at the bourses on Wednesday, with the Nifty Pharma surging 4 per cent after a consolidating in the last couple of days.

Sun Pharmaceutical Industries and Cipla rallied 6 per cent each, hitting their respective 52-week highs on the National Stock Exchange (NSE) in intra-day trade. Torrent Pharmaceuticals and Dr Reddy’s Laboratories were up 5 per cent, while Divis Laboratories, Lupin, Cadila Healtchare and Biocon from the pharma index were up in the range of 3 per cent to 4 per cent.

At 12:57 pm, Nifty Pharma index, the top gainer among sectoral indices, was up 4.2 per cent, as compared to 1.3 per cent gain in the benchmark Nifty50 index. The pharma index hit an intra-day high of 12,896.90, just 4.5 per cent away from its record high level of 13,476.80, touched in January 2021.

Panacea Biotech, Unichem Laboratories, Granules India, Indoco Remedies, Alembic, Sequent Scientific, Neuland Laboratories and Jubilant Lifesciences from the S&P BSE Healthcare index have surged by up to 14 per cent in intra-day trade today on the BSE.

In Union Budget 2021-22, Finance Minister Nirmala Sitharaman has increased allocation towards holistic health to Rs 2,23,846 crore for FY22 from Rs 94,452 crore in FY21. The announcement is also expected to augur well for the pharma industry.

“The rise in healthcare expenditure will benefit the Indian health infrastructure as we see introduction of a new scheme PM AtmaNirbhar Swasth Bharat Yojana which has an outlay of about Rs 64,180 crores spread over 6 years which will develop capacities of primary, secondary, and tertiary care health systems in India. The Covid-19 vaccination program which comes at an allocation of Rs 35,000 crore will support the inoculation process in India and will aid its reach to the remotest location of the country,” CARE Ratings said in analysis of Union Budget 2021-22.

Meanwhile, among the individual stocks, Ajanta Pharma hit an over four-year high of Rs 1,879, up 8 per cent in intra-day trade after the company reported strong 64 per cent year on year (YoY) jumped in net profit at Rs 177 crore in December quarter (Q3FY21). Revenue from operations grew 15 per cent YoY at Rs 749 crore. Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins improved to 32.3 per cent from 28.6 per cent.

Ajanta Pharma delivered higher than expected earnings, led by superior growth in the Branded Generics segment. This was further supported by a lower tax rate in Q3FY21. While the pace of ANDA filing has moderated in April-December period due to Covid-related disruptions, it would improve with the easing of lockdown restrictions, Motilal Oswal Securities said in result update.

With a recovery in Asia Branded Generics segment, incremental orders for the Institutional business, and new launches/increased market share in existing products in US Generics, the brokerage firm raised its FY21E/FY22/FY23E estimates by 7.4 per cent/7.1 per cent/6.5 per cent, it said.