Shares of Lupin – the country’s second-largest pharmaceutical company in terms of market capitalisation – surged more than 9% on Friday on the back of strong Q3FY16 results.
It reported a 30% Q-o-Q growth in its consolidated net profit for the quarter ended December, thanks to a healthy revenue growth in Europe and Indian markets. This rally comes as a relief for Lupin as its shares have corrected close to 17% since the peak in the beginning of October 2015.
The gains in Lupin shares helped other pharma stocks register gains. The BSE Healthcare index closed 3.37% higher on Friday as shares of Cipla and Dr Reddy’s Laboratories gained more than 3%. Domestic brokerage Edelweiss said in a note to investors that the near- to medium-term prospects of Indian pharmaceutical companies look positive due to rebound in earnings and recovery in domestic acute segment.
“Continuing benefits of Abilify and Nexiumowing to limited competition and sequential stabilisation of emerging markets (EM) currencies will help India pharma companies post positive earnings,” the brokerage said in the note.
Shares of pharma companies have outperformed benchmark indices every year since Calendar 2011 as pick-up in US FDA approvals and a weak rupee had boosted profitability and stock performance of drug makers.
During Calendar 2015, the BSE Healthcare index climbed more than 15%, against the Sensex which posted a 5% decline.
Shares of Eicher Motors also rallied more than 7% on Friday due to positive Q3FY16 results. A total of 2.48 lakh Eicher shares changed hands across the stock exchanges against the three-month average of 54,000. For the quarter ended December, the company reported a 76.1% increase in its consolidated net profit year-on-year.
Shares of Eicher Motors have climbed 7.5% since the beginning of Calendar 2016 even as the BSE sectoral index for auto companies lost more than 9% during the same period.
Shares of all the major auto companies have registered a double-digit decline year-to-date (y-t-d) in the current calendar. Shares of Maruti Suzuki – India’s largest automaker – have declined close 19% since January 1, while Tata Motors has shed close to 15% y-t-d.
The Indian stock markets have corrected sharply since the beginning of CY16 as global investors offloaded their exposure to Indian markets amid falling crude oil prices and concerns about China. The BSE Sensex has lost more than 5% since the beginning of January, Bloomberg data showed.