Sun Pharma, Glenmark Pharma, Hikal hit 52-week highs; Aurobindo surges 8%

Topics Sun Pharma

If implemented, the Draft Pharmaceutical Policy, 2017, will disrupt the Indian drug industry in fundamental ways
Shares of pharmaceutical companies were back in focus with Sun Pharmaceutical Industries and Glenmark Pharmaceuticals hitting their respective 52-week highs on the National Stock Exchange (NSE).

Aurobindo Pharma has rallied 8%, while Biocon, Divi’s Laboratories, Cadila Healthcare and Cipla from the Nifty Pharma index gained in the range of 2.5% to 4% on the NSE. Granules India, Hikal, Pfizer, Lincoln Pharmaceuticals, Astrazeneca  Pharma India and Aarti Drugs from the non-index pharma companies were up between 4% and 7%.

At 02:45 pm; Nifty Pharma index, the largest gainer among sectoral indices, was up 2.6% at 10,574, as compared to 0.57% rise in the Nifty 50 index. The pharma index trading close to its 52-week of 10,578 touched on Monday, September 3, 2018, in intra-day trade.

Aurobindo Pharma has rallied 8% to Rs 754 on Thursday, extending its Wednesday’s 2% gain on the BSE, after the company announced the acquisition of Sandoz's generic business in the US for $900 million. The transaction is on a debt-free & cash-free basis and will be financed via a fully committed debt facility.

The acquisition enhances Aurobindo's market-leading pipeline of Abbreviated New Drug Application (ANDA) filings with additional pipeline projects, including AND As that have already been filed, products under development, and first-to-file opportunities which have the potential to be exclusive, the company said.

Sun Pharma hits a fresh 52-week high of Rs 678, up 2% on the NSE.  In past three months, the stock soared 39% as compared to a 9% rise in the benchmark index. On June 12, 2018, Sun Pharma had received the Establishment Inspection Report (EIR) from the US FDA for the inspection conducted at its Halol facility (Gujarat, India) during the period February 12-23, 2018.

Sun Pharma has been investing significantly for building US specialty franchise. Further, due to successful US FDA clearance for Halol facility, best-in-class franchise, strong track record of transforming acquired assets, we see multiple growth drivers for Sun Pharma. We expect Sun Pharma’s overall sales/earnings to clock 19%/45% CAGR over FY18-20E, while EBITDA margin is expected to expand by 433bps to 25.5%,” analyst at Reliance Securities said in Q1FY19 result update.

The brokerage firm increased sales/earnings estimates by 13% and 11% for FY20E to factor in favorable currency; healthy growth in India business; strong outlook for ex-Taro US business led by the launch of specialty products and Halol clearance; and positive operating leverage.

Hikal touched a record high of Rs 196, surged 9% on the back of heavy volumes. A combined 3.58 million equity shares changed hands on the counter on the BSE and NSE so far. In past six trading days the stock zoomed 34% from Rs 144 levels on August 29, 2018.

On Monday, September 3, 2018, investor Ashish Kacholia purchased two million shares, or 1.6% of the Hikal’s equity at price of Rs 166.50 through a bulk deal, the NSE data shows. The investor bought these shares for total consideration of Rs 333 million.

Himalaya Finance & Investment Company had bought 1.78 million shares at Rs 166.50 per share. International Finance Corporation, however, offloaded 3.98 million shares representing 3.2% of total equity of Hikal via the bulk deal, data shows.

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