Even as the Sensex opened at all-time high levels on Friday morning, Mihir Vora of Max Life Insurance says that the pharma sector offers a few interesting picks. In an interview to ET Now, Mihir Vora, Director & Chief Investment Officer, Max Life Insurance said, “ Probably in the next year or so, we should see the bottomed out segment, the pharma sector offering some good picks, as companies begin to correct their problems, which are correctable. These were self-inflicted wounds, and I think there’s a good chance that these segments will come back.”
In fact, many top experts are betting on a revival in the beaten down sector. The big bull of Dalal street told CNBC TV18 in October, “Everything that could go wrong for the pharma sector, has gone wrong. The US market got very competitive. Rupee depreciated, and the pharma companies had very bad sales domestically due to GST. I would say the worst in behind us. The rebound will depend a lot on the individual companies.”
Similarly, S Naren of ICICI Prudential said that the sector will soon see a recovery. In an interview to ET Now, S Naren said recently, “We are going to see that in the next three years, rupee is likely to go back to the old depreciation situation. The two principal exports of India are IT and pharma. Actually they have got hurt in the last four years due to a flat rupee. We think they will gain out of a flat rupee depreciation from here over the next 2-3 years.” Saurabh Mukherjea of Ambit Capital said that the sector offers good undervalued stocks.
“What we’re telling clients is look at the sectors where nobody wants to invest. Look at IT and pharma, there are very high quality franchises, which are trading at 14, 15-16 times earnings, with solid cash generation, high 20’s Return on Equity, both in the large-cap IT stocks, and mid-cap pharma stocks. There’s plenty of value there, but investors currently don’t want to look there,” Saurabh Mukherjea told ET Now in October.