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Cadila Healthcare has been seeing the strongest rally in recent times which clearly indicates a structural transformation. Time to enter!
Stable earnings visibility, least stressed balance sheets, healthy free cash flows and ability to deliver products at the time of crisis are some key attributes of Indian pharma.
Over the last few quarters, most players are recalibrating CAPEX and R&D spend in order to optimise capital utilisation. The current situation, underpinned by Covid-19 pandemic and its negative impact on most sectors, further strengthens the argument for investment in pharma.
While the Q1 performances of most pharma companies have been skewed, H2 should reflect the normalised trend.
Technically, the Pharma index has registered a structural turnaround on long term charts. At the current juncture, Cadila Healthcare and Caplin Point Laboratories seem to be well placed in terms of a favourable risk-reward set-up from a medium-term perspective.
The pharma sector has been relatively outperforming over the past couple of months after witnessing a structural turnaround off March 2020 lows, signalling a reversal of five-year-long downtrend.
o In the pharma space, Cadila Healthcare has been relatively underperforming. However, currently, it has been seeing a faster pace of retracement as it retraced past five week’s decline (Rs 412-358) in just a single week, signalling an acceleration of upward momentum, auguring well for the next leg of up. moneyinvestors.in/cadila-healthcare/
Source: https://www.flickr.com/photos/165450454@N07/50387274258/
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