An unprecedented rally in Glenmark. Yes, we did receive this news pre-market that there is an approval for Favipiravir but do you think it merits this 40% rally that we are seeing today?
The run up is totally unjustifiable and illogical. I really do not think there will be any kind of big benefit out of it because there will be another two or three guys who will be coming into the picture. Given that Remdesivir will also be in the competition, I think the government expenditure will be through hospitals and that will be more for Remdesivir. And again, that product will not be very costly given that it will be a pandemic approval and there will be not much. So I consider FabiFlu to be more of another flu option through medicine and this is kind of mild to moderate kind of thing which could be easily curable even with other normal medicines as well as some placebo effect. So I really do not find much logic in that because when you are supposed to spend Rs 7,000-14,000 I doubt how many individual people will be doing that in their individual capacity.
When we just talk about valuations, what is really happening in some of these names?
I am not expecting results to be very good in Q4 or Q1 FY21. If you go by the other guys who are also present in the domestic market as well as the US like these guys as well as in Latin America, globally the rest of the other business may not get that kind of great opportunity at this point of time given they did not get much approval. We really believe their US business should be roughly around $100-105 million in this quarter which is much lower than their normal run rate of $115-130 million and Q1 will not be any much different; both in the US and domestic market. So I really find it unjustifiable at this point of time. The kind of valuation is much-much ahead than the fundamentals.
Do you think the rally in pharma will only get narrower from here on?
Yes, I think very soon we will start getting the earnings. I think the first half definitely will not be that great. So people might be waiting for earnings to justify the kind of valuation. We have already had a run up for the last three to four months and that time is around the corner.
What will be your top picks right now?
Our top picks are Dr Reddy’s Lab, Lupin, Ipca. These are the top picks in both the large and midcaps. We have Aegis Life in smallcap.
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