Q4FY21 preview | Pharma sector likely to see moderate earnings sequentially

Q4FY21 preview | Pharma sector likely to see moderate earnings sequentially

Pharma: Pharmaceutical firms may report sequentially softer earnings for the March quarter of the financial year 2021. As it is a seasonally weak quarter while the decline in the COVID-19 portfolio might also exert some pressure.

While most brokerages anticipate sequential moderation in revenue, EBITDA, and PAT for pharma firms for Q4FY21. However, the numbers may still be better on a year-on-year (YoY) basis. We expect a moderate Q4 for the companies under coverage, with YoY revenue, EBITDA. And earnings growth of 5 percent, 22 percent, and 25 percent, respectively.

Sequentially, we expect revenue, EBITDA, and PAT to decline by 3 percent, 10 percent, and 19 percent, respectively said brokerage firm Emkay Global. As per the brokerage, a sequential decline in the topline and profitability will be due to seasonally weak India business, the decline in COVID-19 portfolio sales, ramp-up in other expenses, and higher personnel expenses.

India’s revenue is expecting to decline 10 percent quarter-on-quarter (QoQ). Due to seasonality and weaker COVID-19 portfolio performance for select companies. EBITDA margins are impacting by the reversal of COVID-relating cost savings, Emkay said.

Motilal Oswal believes while YoY growth is expecting to e robust, on a sequential basis. EBITDA and PAT are likely to be marginally impacted by the rising cost of solvents and intermediates. The total sales growth trajectory for companies under our coverage is expecting to moderate to 8 percent YoY at 53,100 crores for Q4FY21E.

While reduced export incentives are expecting to drive 29th percent YoY growth in EBITDA to Rs. 12,500 crore and 42 percent YoY growth in PAT to Rs. 7,700 crore for the quarter gone by, said Motilal Oswal. In addition, the US market also did not witness any meaningful launches while the overall prescriptions remained under pressure due to COVID cases.

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