Jefferies expects India’s healthcare sector to deliver another resilient quarter, backed by healthy domestic pharmaceutical demand and steady growth in hospital operations, even as margin pressures persist in parts of the industry because of product mix and expansion costs.
The brokerage says the Indian pharma market grew 11.5% year-on-year during the June quarter, led by chronic therapies such as cardiac and anti-diabetic drugs. Generic semaglutide continue to support growth, although Jefferies says commentary on demand trends after the initial launch phase will remain an important monitor.
Among pharmaceutical companies, Jefferies expects Torrent Pharma to post the strongest growth, followed by healthy performances from Ajanta Pharma, Zydus Lifesciences, Alkem Laboratories, Mankind Pharma and Emcure Pharmaceuticals. In hospitals, the brokerage expects Apollo Hospitals to lead the sector, while Global Health (Medanta), Fortis Healthcare and Max Healthcare are also expected to report healthy revenue growth.
Torrent Pharma: Jefferies sees acquisition-led growth driving earnings
Jefferies expects Torrent Pharmaceuticals Ltd. to deliver one of the strongest performances in its healthcare coverage during the June quarter.
The brokerage estimates revenue growth of 51% year-on-year and earnings before interest, tax, depreciation and amortisation growth of 54%, supported by the consolidation of JB Pharma and healthy underlying domestic demand. Torrent Pharma is also expected to lead sequential North America sales growth among export-focused pharmaceutical companies.
“We expect the fastest growth from Torrent Pharma (+54% year-on-year), aided by the JB Pharma acquisition, with organic growth of 14%,” Jefferies says.
Apollo Hospitals: Jefferies sees another strong quarter
Jefferies expects Apollo Hospitals Enterprise Ltd. to report another healthy quarter, supported by strong hospital operations and improving profitability at HealthCo.
The brokerage expects hospital revenue to grow in the high teens year-on-year, while continued improvement at HealthCo is likely to support overall earnings despite ongoing investments across the healthcare network.
“We factor in good results from Apollo and expect the hospital division to grow in high-teens year-on-year and continued profitability improvement in HealthCo,” Jefferies says.
Mankind Pharma: Healthy domestic demand remains supportive
Jefferies expects Mankind Pharma to report 11% year-on-year revenue growth and 17% growth in earnings before interest, tax, depreciation and amortisation during the June quarter.
The brokerage expects operating margins to remain healthy as the company continues to benefit from steady domestic prescription growth across key therapy areas.
Ajanta Pharma: Profitability to remain strong
Jefferies expects Ajanta Pharma Ltd. to report 15% year-on-year revenue growth, with earnings before interest, tax, depreciation and amortisation also expected to increase 15%.
The brokerage expects the company to maintain strong profitability, supported by an operating margin of around 27%.
Alkem Laboratories: Sequential margin recovery likely
Jefferies expects Alkem Laboratories Ltd. to post 13% revenue growth and 11% growth in earnings before interest, tax, depreciation and amortisation.
The brokerage expects domestic business momentum to remain healthy, helping operating profitability improve on a sequential basis.
Emcure Pharma: Stable operating performance likely
Jefferies expects Emcure Pharmaceuticals Ltd. to report 12% year-on-year revenue growth during the June quarter.
The brokerage expects earnings before interest, tax, depreciation and amortisation to grow 12%, while operating margins are likely to remain broadly stable.
Zydus Lifesciences: Domestic business continues to support growth
Jefferies expects Zydus Lifesciences to continue benefiting from healthy domestic formulations demand during the June quarter.
The brokerage expects the India business to remain resilient, although export growth is likely to stay more measured.
Global Health (Medanta), Fortis Healthcare and Max Healthcare: Hospital demand remains healthy
Jefferies expects Global Health, Fortis Healthcare and Max Healthcare to report double-digit revenue growth during the June quarter.
The brokerage says expansion costs and losses from newly commissioned hospitals are likely to weigh on margins in the near term, but underlying demand across the hospital sector remains healthy.
Conclusion
Jefferies expects the June quarter to reinforce the resilience of India’s healthcare sector despite a mixed earnings environment.
The brokerage says chronic therapies continue to drive domestic pharmaceutical demand, while hospitals benefit from healthy patient volumes. At the same time, lower contribution from high-margin products, expansion costs at hospitals and evolving demand trends for generic semaglutide are likely to remain the key themes during the earnings season.
Disclaimer: This article summarizes a third-party institutional brokerage report by Jefferies regarding quarterly earnings expectations for the Indian healthcare and pharmaceutical sectors. The financial projections, sector analysis, and company specific metrics are the views of the research firm and do not constitute an offer, solicitation, or direct investment recommendation to buy or sell any financial instruments. Equity investments involve significant market risks; readers are advised to conduct independent evaluation and consult a SEBI-registered financial advisor before making any investment choices.
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