As you know Nifty has gone down a lot, its almost 30% down from its peak level
But at this time there is such a sector
The outperforms the entire Nifty
And the name of this sector is pharma sector
If I talk about the nifty index of the pharma sector
This index has very badly outperformed the entire nifty index
If I look at its returns for the past month
So the pharma sector, for the past month
Has a return of +31%
If I look at its returns for the past 6 months
In the past 6 months, the return has been +18%
So in this video today we have brought 4 such stocks in the pharma sector
That are acting very defensively at this time when the entire market is going down
I, Jagdeep Singh, welcome you to the Groww channel
Today we are going to talk about the pharma sector
And the 4 top companies in it
We will talk a little about its business model
We will talk about its products
And we will talk about the returns it has given in the recent days
Let us talk about the first company
And the first company comes in the 5 biggest pharmaceutical companies in the world
And it is India's biggest pharmaceutical company
And its total revenue
It is around 4.5 billion dollars
Apart from this, this company was founded in 1983
By Dilip Singhvee
And after that it became India's biggest company for generic production
If we talk in a little detail about this company, then its name is Sun Pharmaceutical
And if we go in a little detail about what it makes
It makes generic products
Now you must be thinking what generic products and generic medicines are
If we talk about medicine then there are two types of medicines
First, branded
For which you have to file a patent and then trials are conducted
After that when you get the entire FDA approval
And you get the approval of the authorities
After that the companies productions start
Which we normally call branded medicine
Generic medicine is a cheaper version of generic medicine
Now how is it cheaper?
The people who make generic medicine do not have to file or patent
They already know how to make medicine
Because of which their research cost is saved
And they can make cheaper medicine as compared to branded medicine
And when Dilip Singhvee started this company
At that time, there were very less companies in generic medicine
And the benefit they got is no competition
But as generic medicine started to become more famous across the globe
Even this company became very big
And in 1994, when this company was listed
After that this company started to perform well
And today this company has become the 5th biggest pharmaceutical company
If we talk about Sun pharmaceuticals then this company made a lot of acquisitions
Which made this a very big company
And a very famous acquisition was in 2014
When the took over Ranbaxy
When they took over Ranbaxy, the company's portfolio became very big
After which this company made a lot of expansions as well
If we talk about the overall sales
So 70% of the total sales
Are made out of India, in other countries
Now let us talk about the financials of Sun pharma
So to understand the growth of the company, I will tell you a number
In the quarter of March 2008
Their total revenue was around 3000 crores
But if I talk about the recent financial year
Their total revenue
Comes out to be around 30,000 crores
Which means that this company has made massive growth in the past few years
Apart from this, there is another parameter which we see a lot
P/E ratio
So if I talk about the P/E ratio of Sun pharma, then the P/E ratio of Sun pharma
That is around 28.37
So if I compare this to the industries P/E
The industry P/E of the pharma sector
That is around 24
So its P/E ratio is slightly higher as compared to the industry
After this if we talk about the operating profit margin
So in the recent year, the operating profit margin they got was more than 20%
And they have always tried to maintain their operating profit margin at 20
So if we talk about its debt level then that has increased in the recent years
So apart from operating margin if we talk about operating cash flow, then that is positive
Which is a very good thing for any company
Let us talk about the second company and this company has a market capitalisation of more than 40,000 crores
And the name of this company is Cipla
If we talk about Cipla, then they have a very diversified portfolio
Along with generic drugs they also manufacture API
So what are APIs
So APIs are used in manufacturing other drugs
They are ingredients that are used in other drugs
So Cipla's portfolio is quite diversified
Generic drugs, branded drugs, apart from that APIs and
They also make devices that are used in the pharma sector
Because of which this company beecomes very important for the Indian pharma sector
If I tell you another interesting thing relate to Cipla, then it is the world's biggest
Antiretroviral drug manufacturing company
So this drug is used in the manufacturing HIV medication
Because of which it has a lot of demand in the recent time
Apart from this, if we talk about the financial of Cipla
The P/E ratio of Cipla
That is around 28
I aleady told you the industry P/E ratio of 28
Compared to that, its P/E ratio is higher
If we talk in a little more detail
About Ciplas revenue
How mich comes from where, I will show you a screenshot
As you can see on my screen, this is the revenue breakup of Cipla, about how much revenue comes from where
Like we spoke in the case of Sun pharma
More than 75% of Sun pharma's revenue
That comes from out of India
So if we talk about the total revenue of Cipla
So the major revenue of that, 41% of the total revenue
That comes from India
After that the major revenue comes from North America
From North America, 22% of their total revenue comes
After that if we talk about South Africa and East region
From there, we get 19% of their revenue
And after that 7% from emerging markets
4% from Europe
This is their revenue distributions
From this we get to see, the most important region from where Cipla gets its revenue
After India it is South Africa region
And apart from that is North America
Because of which in the recent times, Cipla got an FDA approval from the US
For a drug, after which its share went up by more than 10%
So if I tell you about the return Cipla has given in the past month, then you will be shocked to hear
In the past month when the market was going down a lot
Cipla gave more than 50% returns to its investors
If you had this share
You would have gotten more than 50% returns in the past month
So I would like to tell you again that you should invest for the long term
You shouldn't invest by looking at the short term returns
If someone would have invested in it by looking at its business, then they would have gotten good returns
But you should not speculate
Apart from this, if we talk about the operating profit margin of Cipla, then that in December's quarter came out to be 17%
Which had actually come down from last year
Apart from this, if we talk about its borrowing and its debt, then that has reduced
Apart from this if we talk about operating cash flow
This company's operating cash flow is positive which is a good thing
Let us talk about the third company in the pharma sector which has given good returns
And the name of this company is Dr Reddy's lab ltd
So if I talk about this company, when the whole pharma industry has given good returns
Even this company in the past month
Gave more than 40% returns
If we talk about the overall market capitalisation of this company then this company's market cap
It is more than 65,000 crores
If we talk about its P/E ratio
Its P/E ratio is more than 35
There if we talk about the industry's P/E ratio
The industry's P/E ratio is around 23
Now let us talk about Dr Reddy's portfolio
How much of their revenue comes from where
If we talk about the major pharma companies of India, their major revenue comes from generic industries
Because generic products are cheaper as compared to branded products
So here, if I talk about Dr Reddy's, its
75-80% of their total revenue
That comes from genric products and generic drugs
Which they export to other countries
Apart from this, the remaining of their revenue of around 20%
That comes from APIs
Which we call Active Ingredients
So these are ingredients that are used in other drugs
In which Indian companies are performing really well
In which their total revenue
That has improved in the recent quarters
Now let us talk about the December's result of Dr Reddy
If I talk about the December result of Dr Reddy's
The revenue that they said was around 4397 crores
If I compare that to the same quarter of last year
Which means with December 2018
So their total revenue in December 2018
That was around 3865 crores
But this time, there is a very important thing
That in this quarter of December 2019
Dr Reddy's has booked losses
And they said that the loss the faced in this quarter
That was around 538 crores
Apart from this if we talk about the annual operating profit margin
They have maintained their operatin profit margin from 17 to 20
Because this is considered standard operating profit
In the generic drug industry
So here if you compare any company's operating profit margin
Compare it to the industry so that you can get a good idea
How this company performs in the case of operating profit margin
Apart from this if we talk about debt, then this company has reduced its debt a little in the last quarter
So if we talk about operating cash flow which says where the company's operational cash flow is positive or negative
Dr Reddy's operating cash flow has been positive
In the past year
Which is a good thing for this company
Let us talk about the fourth and last company
Such a company, which in the past month
Gave a return of 120%
And the name of this company is Aurobindo Pharma
If I talk about Aurobindo pharma then it comes from the pharma industry
In its portfolio as well, APIs
And generic drugs are there
If I talk about its P/E ratio then the companies P/E ratio
Is still 14
There if I talk about the industry P/E ratio then that is around 23
So in the case of P/E ratio it is very less right now
And in the past month, it gave such good returns
Even then its P/E ratio is low
As compared to the industry
After this if I talk about the market cap of Aurobindo pharma , then its market cap is around 37,000 crores
Now let us talk about its revenue
How its revenue was in this quarter
And if we compare it to the past year
How its revenue has improved
So if I talk about this quarter, then the revenue that it reported
That was around 5,000 crores
And in the same quarter of last year it was 5270 crores
So there has been a good increment in their revenue
If I talk about the operating profit margin of this company, its operating profit margin is more than 20%
So this is a good thing because in the industry an operating profit margin of around 20% is considered good
In the end if we talk about the company's operating cashflow
Its operating cash flow is also positive which is a good thing
Apart from this I would like to tell you that if you are thinking of investing
Then do your research first
After that decide whether you should invest or not
Because there was an economic downturn because of Coronavirus
Because of which all industries were impacted
But pharma sector was such that wasn't impacted much
And this sector in a downturn like this
If you would have kept the stocks in your portfolio
A few months ago
Your portfolio would not have bled that much
Because they would have acted as defensive stocks in your portfolio and when your portfolio would have gone down
This sector would have gone up
That is why it is said that diversification is very important
And whenever you diversify
You have to diversify in every industry
And even pharma is such an industry
In which you can think to invest in the coming time
But before that I would like to tell you again
Do your research
And then choose a good company after that
Now that these stocks have gone up, just by thinking that in the past month or year they have given good returns
You shouldn't invest
Because this is not a good investment stratergy
If you want to invest
You can choose a good company among all of them
Apart from this, there are many companies in the pharma sector
If you think that their product is going to perform well in the coming time
Their business is going to expand
And after that you think good efficiency is going to come in their business
So keep all these things in mind
Then take your investment decision
Apart from this, we do not give the recommendation of buying or selling in any video
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