In addition, the Street will keep an eye out for December quarter results. Revenues from the US, which account for 42 per cent of total, should see a four per cent sequential increase, given the upside from sales of anti-inflammatory drug Asacol in a limited competition market. Price erosion in its other products including HCQS (Hydroxychloroquine, used for rheumatoid arthritis, etc) and no major approvals, will mean that over the year-ago period, US sales are expected to fall five per cent. Domestic formulations, which account for 31 per cent of revenues, are expected to report a muted six per cent year-on-year growth due to demonetisation. But, beyond December quarter, analysts say growth is expected to pick up as things come back to normal.
While the company has a significantly large pipeline, which includes 275 abbreviated new drug applications since FY04 and approvals for 105 of those, analysts are not giving adequate valuations to the stock, due to pricing pressure in the US, unresolved issues related to Moraiya plant, and US Department of Justice price-fixing probe. The Moraiya plant US FDA resolution will boost the company's long-term visibility and is a key rerating trigger for the stock as it will bring the large pipeline, which has not yet been approved, into play.