Pharma Stocks Are A ‘Good Contra-Bet’, Says Aditya Birla Sun Life
It’s a good time to increase exposure in the pharmaceutical sector, says Mahesh Patil.
It is a good time to increase exposure to India’s pharmaceutical sector, according to Aditya Birla Sun Life Mutual Fund.
Drug makers that are starting to upgrade from generics to speciality products have the potential to do well, Co-Chief Investment Officer Mahesh Patil told BloombergQuint in an interview.
It can be a good contra-bet to start building exposure in pharma at this time.Mahesh Patil, Co-Chief Investment Officer, Aditya Birla Sun Life Mutual Fund
Some of the U.S. regulatory challenges faced by Indian drug firms are starting to get resolved, Patil said. He however cautioned that faster approvals for generic drugs by the Food and Drug Administration could create an additional challenge for drugmakers.
The industry may still give “some pain” in the next two quarters, but earnings growth will return in the next 1-2 years, he added.
The NSE Nifty Pharma Index has fallen over 7 percent in 2017, while the index has dropped nearly 18 percent over the last one year.
Earnings Expectations
Aditya Birla Sun Life expects the July-September quarter earnings to be mostly flat. Consumer durable firms and companies with exposure to commodities such as oil and gas and metals are expected to report strong earnings, said Patil.
Aditya Birla Sun Life Mutual Fund is India’s fourth largest mutual fund with assets worth Rs 2.24 lakh crore as of September 30, according to Bloomberg.