3 Pharma Stocks to Look at Amid Possible New Covid Variant

  • Stock Market Analysis
  • Editors Pick

On November 26, pharmaceutical stocks turned out to be an oasis in the desert. The sector that was losing its sheen as India moved to normalcy found itself in the spotlight. The Nifty Pharma index gained 1.7% today in sharp contrast with Nifty50’s 2.91% loss on Friday. The index gained 2.34% in a week whereas Nifty50 declined 4.16%. The Pharma index returned 16.91% in a year against 31.3% by Nifty50. Apart from pharma stocks, healthcare stocks especially diagnostic stocks also witnessed a rally. Although we don't know in detail about the possible new Covid-19 variant found in South Africa with a large number of mutations, pharma stocks have already caught a frenzy. Let’s take a quick look at some pharma stocks poised to gain out of this situation.

1. Cipla (NS: CIPL ) Ltd

Cipla has the largest portfolio of Covid-19 related drugs. The company has partnerships with Roche Pharma for the latter’s trademark oncology drugs-Trastuzumab, antibody cocktail Casirivimab, and Imdevimab. Cipla was the sole supplier of the drug in Covid-19’s second wave. It also has tie-ups with Gilead (NASDAQ: GILD ) for Remdesivir and with MSD for Molnupiravir. The company’s second-quarter FY2022 revenue was up 3.33% year-on-year at Rs 3,935 crore. Net profit was up 4.8% y-o-y at Rs 782 crore. Its 3-year revenue CAGR stood at 7% and net profit CAGR remained at 19% during the same period. Return on equity CAGR was 13% for a 3-year period.

CIPLA

The number of FIIs/FPIs investors in the company went up from 1,047 in June 2021 quarter to 1,156 in September 2021 quarter. DIIs raised their stake by 4.76% in the quarter. The scrip appears lucrative based on key technical parameters such as RSI, MACD, and 10-day/20-day/30-day/50-day/100-day/200-day EMA.

2. Dr. Reddy’s Laboratories Ltd (NS: REDY )

Dr. Reddy’s Covid related portfolio includes Remdesvir, Molnupiravir, and Favipiravir. The company is the marketing partner for the Sputnik vaccine in India. It is widely guessed that Sputnik Light vaccine may get approval in India in December 2021. The company has performed decently in the recently concluded quarter. Revenue was Rs 5,787 crore, up 17.8% y-o-y in September 2021 quarter. Operating profit was up 17.6% y-o-y at Rs 1,360 crore. Net profit surged 29% at Rs 996 crore from Rs 772 crore in the year-ago quarter. EPS grew 28.9% y-o-y at Rs 59.84 in the quarter from Rs 46.42 in Q2FY2021. Notably, Dr Reddy’s revenue CAGR remained at 10% for a 3-year as well as 10-year period. Net profit CAGR was a solid 30% in last three years. Return on equity was 13% for a 3-year period.

DRL

DIIs raised their holding by 4.39% in September 2021 quarter. The stock has mixed signals based on important technical indicators. While RSI and 10-day/20-day/30-day EMA look favorable, MACD and 50-day/100-day/200-day EMA appear unfavorable for the scrip.

3. Divi's Laboratories Ltd. (NS: DIVI )

Divi’s Laboratories is the authorized API (Active Pharmaceutical Ingredient) manufacturer of Molnupiravir—an oral antiviral drug of Merck (NS: PROR ). The drug is approved by the UK due to favorable results in treating Covid-19 patients. Divi’s is likely going to be a major player in Covid’s anti-viral opportunities. The entire gamut of Covid’s oral antiviral opportunity is pegged at $50-70 billion. Divi is almost a debt-free company with a solid sales growth trajectory. Its revenue CAGR stood at 21% for a 3-year period and net profit CAGR was 31% during the same period. Among major pharma companies, Divi has a robust return on equity with a 3-year CAGR resting at 21%. What is noteworthy is the marginal upping of stake by FIIs and mutual funds in the September 2021 quarter.

DLL

The promoters’ holding at 51.95% remained unchanged from the last six quarters and is comparatively higher among major pharma stocks. Investors are advised to look at Divi’s all-time stock price chart and compare it with the peer group. The share has mixed signals based on key technical parameters. While RSI and 10-day/20-day EMA look favorable, MACD and 30-day/50-day/100-day EMA appear unfavorable for the stock. 

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  • Vijay Raut @Vijay Raut
    thankyou sir
    Like 0
  • Sudama Sonkar @Sudama Sonkar
    sir comments sunpharma
    Like 0
  • Sudama Sonkar @Sudama Sonkar
    sunpharma ke bare kuch bataiye
    Like 0
  • MANOJ YADAV @MANOJ YADAV
    thanks sir
    Like 0
  • Ashok Khade @Ashok Khade
    Thanks Sir 🙏
    Like 1

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