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Sensex Opens Marginally Higher; Pharma Stocks Lead
Thu, 21 Sep 09:30 am | Karan Janani, TM Team

Asian stocks markets are higher in morning trade as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.83% while the Hang Seng is up 0.13%. The Shanghai Composite is trading up by 0.19%. The US markets closed at record highs after the US Federal Reserve indicated another rate hike this year was possible and that it would begin the unwinding of its balance sheet next month.

Meanwhile, Indian share markets too have opened the day in green. BSE Sensex is trading higher by 50 points and NSE Nifty is trading higher by 15 points. S&P BSE Mid Cap and S&P BSE Small Cap are trading up by 0.3% respectively. Gains are largely seen in pharma stocks, consumer durables stocks and metal stocks. The rupee is trading at Rs 64.37 against the US$.

In news from engineering sector, L&T share price opened the trading day in green as the company's hydrocarbon division has bagged an order worth Rs 17 billion to build a pipeline for Kuwait Oil Company.

The engineering, procurement and construction order entails setting up a new crude oil transit line from north Kuwait to Ahmadi. The project is scheduled to be completed in the third quarter of 2020.

Cadila Healthcare share price opened the trading day on an encouraging note (up 0.6%) after the company received the final approvals from the US health regulator to market Desoximetasone ointment and Labetalol hydrochloride tablets.

The group now has more than 150 approvals and has so far filed over 300 abbreviated new drug applications since the commencement of its filing process.

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Meanwhile the company also recently entered into an exclusive agreement with Russian company Pharm Aid Ltd for the technology knowhow on varicella vaccine production in the Russian Federation.

Through this agreement, Zydus gains access to the public and private market segments in the Russian Federation, Belarus, Uzbekistan, Kazakhstan, Armenia and Kyrgyzstan. Reportedly, the demand is estimated at 3 million dosages per annum in the Russian Federation alone.

The BSE Healthcare Index has been going through more than a blip. Domestic and export markets have both been challenging. Government regulations on branded generics have proved a roadblock in domestic markets. In developed markets, stringent USFDA checks on manufacturing plants along with price erosion in generics have eroded profitability.

Price to Earnings Ratio (PE) of Top Pharma Companies

There is a structural change taking place in the pharma sector overall as to how business is done and will be done in the future.

Moving on to news from FMCG sector. As per an article in The Livemint, ITC has set an internal target of generating Rs 650 billion from packaged foods by 2030 to reach its goal of Rs1-trillion revenue from non-cigarette packaged goods.

According to ITC, its branded packaged food business crossed Rs 80 billion in the fiscal year FY 17. The company wants to garner Rs 650 billion by selling branded packaged food-from Re 1 candies to Rs 1,000 chocolate boxes, over the next 13 years.

Also, as per the reports, the company is building 20 integrated factories for consumer goods with logistics facilities, and has lined up an investment of Rs 250 billion in 65 projects to ensure its products reach consumers as fresh as possible.

Meanwhile, Patanjali seems to have disrupted the FMCG pecking order. The share of Indian households that use the Patanjali brand is estimated at 38%. That's huge for a company barely a decade and a half old. Especially if you consider Patanjali's competition.

In 2016-17, the company posted revenues of more than Rs 100 billion. It has surged past behemoths such as ITC, Nestle India, Britannia Industries, and Dabur to become the second largest pure play FMCG company...second only to HUL.

ITC share price opened the trading day up by 0.2% on the BSE.

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Mar 21, 2018 02:37 PM