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Healthcare – strong numbers from

ICICIdirect Research 08 Nov 2024 DISCLAIMER

Large cap pharma companies DRL and Lupin reported strong set of Q2FY25.

DRL Revenues grew ~17% YoY to ₹ 8038 crore, with strong growth of 17% and 18% in the US and India besides growth across geographies mainly driven by new launches. There was some dent in margins which declined 326 bps to 25.8% mainly due to some one-off expenses and higher R&D.  

Overall, we believe DRL’s capability of complex launches on a consistent basis across geographies to be the key determinant for overall performance going forward.

Lupin witnessed 11% YoY revenue growth driven by the India, (EMEA) markets and Growth markets which grew by 18%, 12%, and 12% respectively. US growth was relatively subdued at ~6%. EBITDA grew 42% YoY to ₹ 1308 crore and EBITDA margins stood at ~23% (472 bps improvement) mainly on the back of strong GPMs (70% vs 66%).  Going forward the sustainability of this performance particularly on the margins front will require careful monitoring. 

Among Hospitals, Apollo Q2FY25 numbers maintained strong momentum; Narayana Q2FY25 numbers decent for India business.

Apollo witnessed 15%(YoY) topline growth to ₹ 5589 crore during the quarter stemming from core segments of Hospitals and Pharmacy which grew 14% and 18% respectively. Hospitals margins were strong at 25% and Pharmacy also witnessed EBTIDA expansion. The company has embarked into next big capex cycle for expansion for the next 3-5 years.

Narayana saw a 7% YoY growth in revenue to ₹ 1400 crore, with decent growth of 11% YoY in India with 21% margins. On the other hand, Cayman performance was muted due to ongoing expansion. Like Apollo, Narayana also has initiated significant capex both in India and at Cayman Islands.

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