Technical Outlook of the Indian Pharmaceutical Sector December 2012


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The Indian Pharmaceutical sector has been on a roll ever since the global economy picked itself up post the 2007 mayhem.  Given the    strong fundamentals of the Indian Pharmaceutical industry and the global opportunity due to the patent cliff in the western world, listed pharmaceutical stocks have responded well and rallied substantially. While the international opportunities have been good for the bottom line, pharmaceutical stocks with a larger or significant share of the domestic  pharma market have come in for a rude shock as the implementation of the new pricing policy outline of the NPPA can sharply erode profitability. As the policy elements are still not clear, it would be premature to judge how individual companies would be affected.

With a view to having a mid journey  outlook on expected price performance of  pharmaceutical stocks,  we decided to conduct a study of the major pharmaceutical stocks using technical analysis and analyse which stocks offer the best opportunity both from a long and short point of view. The exhaustive analysis was done on 29 of the major stocks, the details of which one can obtained from the slideshow embedded below.

 

The analysis was done using weekly chart data to get a more longer term picture and some of the results we found were quite contrary to general market expectation; yet others were quite revealing of exciting investment opportunities. We could have easily summed up our analysis and provided an instant listing of our analysis and recommendations for the benefit of our blog readers, but we thought it more appropriate that the reader “visualize” our analysis as “one picture is worth more than a thousand words.”

Technical analysis is a great science for stock price forecasting, but the overall investment decision can be more solid  if backed by  hard core fundamental study.  In part 2 of the Indian Pharmaceutical Outlook, we would be providing extremely high quality fundamental evaluation on the fortunes of these very 29 stocks so that our faithful blog readers can make investment decisions based on comprehensive analysis.

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Hope you enjoy reading the Technical Outlook of the Indian Pharmaceutical Sector December 2012 as much as I enjoyed creating it.  So tell us which is your favourite pharma stock.

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd
Vinit Bolinjkar
Winning Trades
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Nod from US FDA sets up Claris Life Sciences as a low risk high return stock pick


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Claris Life Sciences is a new low risk high returns investment idea on our radar after getting an NOC from the US FDA.  Based on this news the stock was up ~20% today.

It is estimated from unconfirmed sources that the stock has high potential  to achieve an EPS of Rs 30-35 / share during FY13/FY14. This is a sizeable jump from the current Rs 20/share. Based on these expectations the stock is available at a PE of 8x 1 yr forward making it an extremely cheap stocks. Given its business of injectables it can easily get a PE of 12 as new products are launched and market starts recognising its true potential making it a multi bagger idea. However this is only a preliminary analysis based on here say and you are advised to do your own homework before investing in the stock.

Claris Lifesciences is one of the largest sterile injectables pharmaceutical companies in India with five manufacturing facilities spread over a 78-acre campus located in Ahmedabad,India. Claris primarily manufacture and market products across multiple markets, and therapeutic segments. A significant majority of these products are generic drugs that are capable of being directly injected into the human body and are predominantly used in the treatment of critical illnesses.

Its products range across various therapeutic segments, including anaesthesia, critical care, anti-infectives, renal care, infusion therapy, enteral & parenteral nutrition and oncology. We offer injectables in various delivery systems, such as glass and plastic bottles, vials, ampoules, pre-filled syringes and non-PVC/PVC bags.

Keep watching this space http://winningtrades1.com/ for new updates on the new find Claris Life Sciences which is a low risk high yielding investment or you may subscribe to the blog by clicking on the RSS links at top of the page or subscribing for email updates.

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Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd
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Wockhardt – top pick in the Indian Pharmaceutical space


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Wockhardt represents a unique low risk high gain potential investment in the Indian Pharma space. It is quite amazing to notice that Wockhardt (CMP RS 865) which is one of the top 10 pharma companies by profits and having one of the highest Return on equity should be quoting at such abysmal valuations. In comparison to its peers it is quoting at nearly 40-50% discount making it a low risk investment.

Wockhardt is a low risk high return investment idea in the Indian Pharma space

Wockhardt Ltd. is one of the top picks in the Indian pharma space

Given the fact that its turnover is over Rs 5000 crore and has enviable margins of +30%, its only time that the market starts re-rating this stock. On the basis of our conservative estimates we would expect the stock to rally and cover the valuation gap with its peers implying a nearly 70-100% appreciation from current levels over the next 12-18 months.

Further we would not be surprised if Wockhardt were to sharply surprise to the upside on its performance beating our own estimates. For further reading please refer to our following Q4FY12 result update and our initiating coverage reports.

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither http://winningtrades1.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd

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Wockhardt Ltd. – Attractive investment idea in the Indian pharmaceutical space


We initiate coverage on Wockhardt Limited (WOCKPHARMA; WPL) as a BUY with a Price Objective of ` 978 (target 10.0x FY14 P/E). At CMP of ` 688 the stock is trading at 4.1x and 7.9x its estimated earnings for FY2013E & FY2014E representing a potential upside of ~73% over a period of 18 months. With the contingent liability concerns addressed and bulk of FCCBs already repaid, the sale of nutrition business will lead to a substantial increase in cash which could be used to draw down debt or pursue organic / inorganic grow opportunities. Further its portfolio of high margin niche products and impressive FTF launches should provide for strong growth in revenues (12.3% FY11-14 CAGR) to ` 5311.2 crore and earnings (123.6% FY11-14 CAGR) of ` 97.8 /share by FY14.

During the period 2003 through 2008, Wockhardt has traded mostly in line with the 1 Year forward PE multiple of its peers viz: Sun Pharma, Cipla,
Lupin and Glenmark. However, post its derivative losses, Wockhardt’s EPS turned negative. Now that the balance sheet is all cleaned up and all
contingent liabilities addressed, we expect that going forward, Wockhardt will catch up with its peers leading to a substantial re-rating of the stock. This implies that it wont be surprising if Wockhardt’s 1 year forwar price earning multiple were to trade in the mid teens, in line with that of its peers.

Wockhardt Ltd. PE to be re-rated sharply upwards.

For further reference you may refer to http://www.slideshare.net/bolinjkar007/wockhardt-ltd

In addition most the development financial institutions with the exception of LIC (Life Insurance Corporation of India) have virtually exited the counter (or have miniscule holdings). In my opinion the stock has moved into strong hands and smart money continues to accumulate.

Disclaimer: The views expressed in this article are entirely my own and do not reflect the views of my employer. This report is neither an offer nor a solicitation to purchase or sell securities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the securities mentioned in their articles. Neither https://winningtrades1.wordpress.com or myself accepts any liability arising out of the above information/articles.

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Vinit Bolinjkar Head of Research, Ventura Securities Ltd

Tel: | Mobile: 0 9730836363

http://winingtrades1.wordpress.com

http://in.linkedin.com/in/vinitbolinjkar

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