Pharma MNCs with domestic focus continue to drive investor’s interest on the back of 1) consistency in stable growth despite higher competition and regulatory changes, 2) strong focus on legacy power brands as well as introduction from the global parent’s stable, 3) consistent free cash-flow generation, 4) debt-free balance sheet and strong core RoEs and 5) healthy dividend payout track record. The domestic pharma industry is expected to grow in the range of 9-11% per annum. Issues such as NLEM and other regulatory aspects are mostly in the price. On the flip side, the looming threat of Jan Aushadhi and trade generics are some headwinds at this juncture. However, we continue to believe in Pfizer’s strong growth track in power brands and capability of new launches on a fairly consistent basis. We expect revenues, EBITDA and PAT to grow at ~10%, 15% and 19% CAGR, respectively, in FY19-22E. We arrive at a target price of Rs 4775 based on 30x FY22 EPS of Rs 159.
We have Accumulate rating on Pfizer with a target price (TP) of Rs3,181, which represents a 9% upside from the CMP. We expect Pfizer’s revenue to clock low-teen growth, while net profit should grow faster.