5 Pharma Stocks To Buy On Monday Morning Before Markets Rally

The markets have fallen almost 13% from historic highs, leaving investors with a good opportunity to buy into good quality stocks. Here are 5 pharma stocks to buy chosen from the latest report of Sharekhan on the pharma industry. You can go ahead and buy the same on Monday morning in early trade.

Domestic business sustains growth

According to Sharekhan, the US is not yet out of the woods fully and domestic business has helped to sustain growth.

"Revenue growth improved to 10.7% y-o-y as compared to 4% and 7.6% y-o-y for Q3Fy22 and Q2FY22 respectively. While growth in domestic revenues was driven by Cipla (up 21% y-o-y), IPCA Labs (up 27% y-o-y) and Sun Pharma (up 16% y-o-y). Simultaneously, US businesses of companies were under stress, impacted by highly competitive pressures and channel de-stocking in select pockets. However, the commentaries from select management suggested towards possible easing of pricing pressures over the medium term in the US markets. US revenues of companies like Aurobindo Pharma declined by 5% y-o-y while that of Cipla (due to strong growth in the respiratory franchise) and Sun Pharma (due to growth in the Specialty segment) staged a healthy growth in their respective US businesses. In the API space, Divis Labs staged 41% y-o-y topline growth, while Biocon clocked strong growth of 31% y-o-y in topline led by a robust performance of biologics segments," the brokerage has said.

Buy Aurobindo Pharma and Cipla from the pharma space

Sharekhan has a buy call on the stock of Aurobindo Pharma and has set a price target of Rs 610 on the stock.

"The company reported a weak performance for Q4FY2022, impacted by higher cost pressures and the management expects the cost pressures to sustain ahead. Hence we have revised down our estimates for FY2023E/FY2024E by 13-16%," the firm has said.
Apart from this the company also has a buy call on the stock of Cipla with a price target of Rs 1150 on the stock. "Adjusting for a one-time inventory write-off, Q4FY22 was an operationally in line quarter for Cipla. This coupled with management commentary highlighting the likely cost pressures in the near term we have fine tunes our estimates for FY23E/ FY24E," the firm has said.

Buy Sun Pharma and Torrent Pharma shares

Apart from the above two, the company has also recommended buying the stock of Sun Pharma, with a price target of Rs 1000 on the stock. "Q4FY2022 was a weak quarter and results reflected elevated cost pressures leading to OPM contraction. Adjusted PAT missed estimates. However, management commentary was encouraging, while cost pressures could moderate OPM expansion. Based on this, we have fine-tuned our estimates for FY2023E/FY2024E," the firm has said.

For Sun Pharma, the brokerage has a buy target of Rs 3540. "Q4FY2022 was a healthy quarter for the company. Adjusting for impairment charges, PAT was ahead of estimates. This coupled with encouraging commentary for India and Brazil businesses and muted commentary for US and Europe business along with an expected healthy margin trajectory, we have fine-tuned our estimates for FY2023E/FY2024E," Sharekhan has said.

Buy Lupin for a price target of Rs 780

The firm is also optimistic on the shares of Lupin and has suggested buying the same for a price target of Rs 780. Lupin reported a weak Q4FY2022 performance, with OPM surprising negatively, marred by escalated raw-material prices. Consequently, the company reported net loss. Based on this and the apparent near-term headwinds, we have cut our estimates for FY2023E/FY2024E.