Pharma Stocks To Buy: Two Pharma Stocks To Bet Now, Says ICICI Securities

The pharmaceutical industry is a fantastic place to search for companies that can weather bad economic times, perhaps wounded and bruised but still standing. People require medicines in both happy and terrible times. That's why many of the industry's top players have been in business for decades, survived multiple economic and market downturns in the process, and are expected to continue doing so for decades to come.

Suven Pharmaceuticals and Glenmark Pharmaceuticals are two of the many pharma stocks on the market that ICICI Securities believe are particularly strong right now.

Suven Pharmaceuticals

Suven Pharma is a contract development and manufacturing organization (CDMO) that assists global life sciences and fine chemical companies with NCE development.

Suven Pharmaceuticals' stock, according to ICICI Securities, could rise up to 19 percent from its current market price of Rs 544, and the stock might surge up to a target price of Rs 650 from present levels.

"Suven's share price has grown by ~1.6x over the past five years . Target Price and Valuation: We value Suven at Rs 650 with 32x P/E on FY23E EPS.

We continue to emphasize the strong execution capability and focused approach without the burden of success/failure of the innovative pipeline (now part of Suven Life Sciences)," the brokerage has said.

Key triggers for future price-performance:

• The corporation has announced a Rs 600 crore investment - in facility upgrades, new technology adoption, and R&D relocation - that will be carried out over a two to three-year period, with long-term benefits expected.
• Formulations has experienced excellent growth as a result of an expanded commercial basket, and has six ANDAs in the pipeline for FY22, boosting growth levers.
• Following Covid, global innovators have increased their focus on research, which bodes well for pharma CRAMS activities, which remain a key growth driver.

Glenmark Pharmaceuticals

Glenmark Pharmaceuticals develop a global generic, speciality, and over-the-counter company in dermatology, respiratory medicine, and oncology, among other fields. 

ICICI Securities expects Glenmark Pharmaceuticals stock to rise up to 18% from its current market price of Rs 575, and believes it can reach a target price of Rs 680 from present levels.

"Glenmark's share price has de-grown by ~0.7x over the past five years. We retain our BUY rating on the stock Target Price and Valuation: We value Glenmark at Rs 680 based on SOTP valuation," the brokerage has said.

Key triggers for future price-performance:

• It is the market leader in dermatology in India, and it is expanding its foothold in respiratory, CVS, anti-infectives, and anti-diabetics. It has also entered the consumer health industry with two brands, Candid and Scalpe+, concentrating on Rx-OTC switch items (| 150 crore).
• Aside from sustained product launches, traction from the newly commissioned Monroe factory in the United States will be a crucial determinant.
• Due to cost-cutting efforts and a decrease in R&D expenses as a percentage of revenue, management anticipates margins to improve.

Disclaimer

The article is informational in nature, which is taken from the brokerage report of ICICI Securities. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.