Indian Pharma Sector’s Growth Visibility Remains Strong: ICICI Securities
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ICICI Securities Report
We remain positive on pharmaceutical sector considering high possibility of growth revival in India formulations on low base of FY21, stable pricing in U.S. generics and sustenance of cost control initiatives seen during FY21 due to pandemic, albeit partially over long term.
Hence, FY22E Ebitda margin would likely be lower than FY21 with resumption of some selling, general and administrative expenses (travelling, marketing etc.) but would still be higher than FY20 levels.
We believe the underperformance of the sector in the last few months has factored in this concern.
We prefer companies with a strong India business, complex generics pipeline for the U.S. and improving return ratios.
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