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Domestic formulations expected to support growth…

The I-direct Pharma universe is likely to witness decent growth during the quarter on a YoY basis, mainly led by continued traction in the domestic formulations business, which is poised to maintain a normalised growth trajectory of ~10% YoY during the quarter. The US portfolio is also expected to deliver decent growth amid favourable currency movement and new launches. The universe (13 coverage companies) is expected to post ~13% growth to | 50,342 crore. Besides India and the US, Biocon’s Viatris integration and Torrent’s Curation acquisition are likely to factor in Q3 (our expectation) to push overall growth.

Domestic formulations (select pack) are expected to experience a jump of ~12% YoY at | 13,075 crore to be driven by incremental chronic disease prevalence, positive seasonality effect in acute therapies, new products introduction, MR and geographical expansion and growing patient awareness campaigns by pharma companies.

On the US front, a favourable currency movement is likely to play out during the quarter as the rupee has depreciated 9.6% vis-à-vis the US$. The US base business environment continues to remain challenging. Besides currency movement, we expect growth to be driven by new launches and volume gains. We expect US (select pack) portfolio to grow ~10% YoY to | 13,785 crore. Europe (select pack) is expected to de grow ~1% YoY to | 2,861 crore due to adverse currency movement (rupee has appreciated ~2% vis-à-vis Euro) and lack of meaningful launches. API segment (select pack) is likely to grow ~6% YoY to | 4,883 crore.

EBITDA margins to remain intact at ~ 22.6%

Due to better growth prospects of domestic formulations, favourable currency movement (except Euro and SA Rand) and easing raw material and logistic costs, we expect margins to hold up in Q3. This is expected to neutralise pricing pressure in the US base business and fixed overheads pertaining to new capex. We expect EBITDA margins for I-direct pharma universe to decline marginally by 33 bps YoY to 22.6%

Adjusted PAT to remain flat

PAT of coverage universe is expected to remain flat at | 7,292 crore. Delta vis-à-vis EBIDTA growth is mainly on account of higher depreciation, taxation and certain one offs in base quarter.

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