Pharma cos lead MCap game among top Hyd stocks
Pharma firms continue to rule the roost when it comes to some of the top performing Hyderabad-based stocks, with most significantly enhancing their market capitalisation as compared to the pre-Covid era, with the exception of Aurobindo Pharma.
Laurus Labs emerged as the biggest gainer in market cap, which it augmented 510% from ₹4,397 crore based on the closing price of ₹82. 25 per share on February 28, 2020, to ₹26,817 crore as per the closing price of ₹499. 05 on October 12, 2022.
On the other hand, Aurobindo Pharma was sluggish with its market cap inching up 2% to ₹30,304. 74 crore (closing price of ₹517 on October 12,2022) from ₹29,632 crore (closing price of ₹505. 75 on February 28, 2020). Other pharma players such as Divi’s Labs and Dr Reddy’s Laboratories too saw their market cap shoot up by 67% and 45%, respectively, over the past two and a half years or so. Divi’s Labs and Dr Reddy’s are the only two Hyderabad-based stocks to feature on the Bombay Stock Exchange’s list of top 100 stocks by market cap. According to analysts, a key factor driving performance for city’s pharma companies was the Covid factor. “Pharma companies saw a Covid benefit as some had Covid portfolios and when the Covid impact went away their non-Covid portfolio picked up,” said Tushar Manudhane, institutionalresearch analyst, Motilal Oswal Services.
“Dr Reddy’s, Divi’s and Laurus Labs are established firms with demand, growth outlook and fundamentals backed by quarterly numbers,” explained Purvi Shah,deputy vice president-fundamental research, Kotak Securities. “Dr Reddy’s had strong growth driven by price hikes, new launches and non-core brand divestments, while Divi’s had Covid drug Molnupiravir API contributing a big chunk to its FY22 numbers. ”
Explaining Laurus Lab’s winning streak despite not having a Covid portfolio,
Shah said: “Their forward integration move paid off. Also demand momentum and new launch pipeline in the non-ARV segment are robust, all their verticals in terms of contract manufacturing were doing well and capacities were also being added, which played out quite well for them. ”
However, in case of Aurobindo Pharma a few decisions backfired. “Their move to divest injectables business under Eugia and unlock value did not work out. Progress across complex segments remains slow and decision to acquire Cronus Pharma for 400 crore cancelled after shareholders and D-street
questioned the rationale behind acquiring a pharma company,” Shah said. “Also, they had a couple of plants facing USFDA inspection and the resignation of their managing director N Govindrajan last year weighed on the stock too,” she added.
During the same time, nonpharma companies like staterun iron ore miner NMDC and agrichem player Coromandel International too saw their market cap grow 37% and 59%.
Explaining this, market expert Kush Ghodasara said: “After Covid, commodity prices have been on the rise and the anti-China strategy has worked out to be positive for Indian metal companies. Even the government capex has helped boost demand of products. ”
