GOLDEN RULES FOR TRADING

Pharma Stocks Outlook for the week – 02 to 06.11.2015 Seen firm on defensive buy; Cipla results key

Pharma Stocks Outlook for the week – 02 to 06.11.2015
Seen firm on defensive buy; Cipla results key
  www.rupeedesk.in )

With the broader market expected to be weak during the next seven days as the National
Stock Exchange's Nifty erased gains in the second half of the session yesterday, frontline
pharmaceutical stocks are seen firm on defensive buying. The key driver for the market
next week would be exit polls of the Bihar elections on Thursday. A win for the
Bharatiya Janata Party will boost sentiment as it will mean higher representation for the
party in the Rajya Sabha, where key bills such as the constitutional amendment to
introduce the Goods and Services Tax are stuck.

In the pharmaceutical space, the Street expects positions to be taken in stocks of Cipla
and Sun Pharmaceutical Industries, which will report their Jul-Sep earnings on Friday
and Saturday, respectively. We sees Cipla reporting consolidated net profit for the
September quarter at 5.04 bln rupees, up 69% on year.

After a stellar 1Q16 (Apr-Jun), we expect Nexium sales to be lower at US$20 mln in
2Q16 (Jul-Sep). Overall 2Q16 sales growth should be strong at 20% (base business
growing at 15%). The company is seen reporting consolidated net sales of 35.36 bln
rupees during the quarter. For Sun Pharmaceutical Industries, the Street estimates a
consolidated net profit of 13.01 bln rupees during the reporting quarter, 17% lower from
the year ago period. Having an accumulate rating on Sun Pharma's counter and the
remediation process at the company's Halol unit is expected to impact core sales growth
and operating margin during Jul-Sep.