On the topic of US tariffs affecting Indian pharma, Pandey noted, “From an overall growth perspective, we do not see much of impact because we export somewhere about $10 billion, so that way growth largely is generic in nature, so that will not be impacted. Where probably there could be some impact would be for, say, for example, for Sun Pharma speciality accounts about 15% to 16% of their overall sales, but the positive aspect of that is that a lot of these products are manufactured or company does CDMO outsourcing through South Korea and EU region which are subject to lower tariff.
“It can be actually a positive surprise for some of the companies like Jubilant Pharma and Piramal Pharma because these companies do have capacities. Jubilant is something which we would prefer because Piramal is still struggling with the lower growth rate for this year, probably growth will improve from next year onwards. So, Jubilant Pharma is something which we feel that could be indirect beneficiary of this,” he added.
Regarding Sun Pharma specifically, Pandey added, “So, Sun Pharma, see, when we look at Thursday, the stock was down six odd percent but subsequently the losses got pruned. Why we like Sun Pharma is more from the perspective that after a long period of time this company is doing a good amount of capex on the domestic side. Domestic is something where the growth rate will become even a lot more better, say from 7% to 8% kind of a growth rate, the GLP-1 opportunity itself can lift the growth rate by one or two odd percent and this company doing a capex of 3,000 odd crores domestically, we have not seen at least for the last 8-10 odd years and typically, most of your capex happens only for the export market. So, US market will continue to remain challenging for a lot of players and overall growth is expected to be muted, but domestic growth is somewhere we draw a lot of comfort even for Sun Pharma.”
On the auto sector, Pandey highlighted robust volume growth and recent price hikes. “Overall most of the players are supposed to be taking a price hike, volume growth has been pretty robust across segments. I mean, PV, CV, or even two wheelers and our sense is that the numbers are likely to remain good till September that is when the base will also catch up and subsequently, our sense is that we might see a high single-digit kind of growth. Our sense is that auto would be the first sector to witness a recovery going forward, the demand remains pretty strong at this point in time and what we like is again PV players like say Maruti Suzuki and M&M at current levels. Beside that in two wheelers both TVS and Eicher have done very well 23% kind of a growth on a YoY basis for full year. But what we like is Bajaj Auto because our sense is that probably on the EV side they can pitch in more in terms of growth and stock looks attractive at current levels.”
He further elaborated on two-wheelers: “So, between TVS and Eicher, we will prefer Eicher because see, this company has been clocking one lakh kind of a unit monthly run rate and also the fact that now they are going for capacity expansion as well. So, it is a sort of a better play on the entire premium strategy. So, Eicher is something relatively we would prefer. And CV also was a positive surprise in terms of double-digit growth. So, this company that is doing well on both the fronts which is two wheelers and CV as well.”
Turning to IT, Pandey offered a tempered outlook: “So, number-wise we do not expect much to happen because see, overall, sense is that you could have minus 0.3% to about 3.2 quarter-on-quarter growth for most of the players. For Infosys it will be down about 0.2 odd percent. TCS might do better with 1.5 % kind of a growth. I think tier II is something which is expected to do slightly better set of growth. So, Mphasis and Coforge can do somewhere about 2-2.5% and Persistent is something which is expected to do very well. There could be some margin tailwind, but overall sense is that we do not see this quarter in terms of meaningful outlook improvement for the entire sector and while yes, FY27 growth outlook plus also the AI-led opportunities what needs to be watched out for, but from a price performance perspective, most of the stock prices are containing that kind of a damage in terms of 2% to 3% kind of a deflation because of AI related issues. So, price damage may not happen but for it to move, I do not think this quarter is going to provide that kind of a relief.”Lastly, on the recent Aurobindo buyback, he said, “Overall, see, this company is one of the largest generic players and has been struggling in terms of growth from a US market perspective. So, definitely not our top pick. But yes, when we look at in terms of the price point, the stock has been struggling at lower levels for a good period of time. So, risk-reward is attractive, but definitely not the stock you would want to chase from a portfolio perspective.”
