<ul><li>Shares of the majority of pharma companies have delivered negative returns to investors in 2022.</li><li>Analysts say this is because the industry is struggling after Covid-19 as margins reported during FY21 (peak of Covid-19) will not be repeated anytime soon.</li><li>Along with it, softer generic prices in the US are also impacting the company revenues.</li></ul>Fortunes of pharmaceutical companies have taken a turn for the worse as the peak demand witnessed during the Covid-19 pandemic is tapering off. High freight costs and pricing pressures in the key US generics market have taken a heavy toll on the margins of Indian drug firms. However, analysts are confident that the firms will begin to recover some of the lustre in the second half of the current financial year. After a successful run in the Covid-19 period that created fortunes for pharma companies, dynamics have changed. There is no longer a constant need for medication and vaccines, and this has led to a slowdown in the industry. Shares of the majority of the pharma companies have received a battering at the bourses as well – the fall has been steep so far this year, many in the double digits. In the same period, the Nifty Pharma index slipped 10.98%, while the broader Sensex remained flat. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"><colgroup></colgroup><col /><col /><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Pharma companies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">% change in 2022 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Sun Pharmaceutical Industries </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.64% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Cipla </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">11.45% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Divi's Laboratories </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-22.70% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Dr Reddy’s Laboratories </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-12.77% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Pfizer </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-15.54% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Biocon </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-19.50% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Aurobindo Pharma </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-26.69% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Laurus Lab </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.04% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Abbott India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-4.92% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Lupin </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-31.16% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Gland Pharma </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-35.85% </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table> Cost pressures build up post Covid-19 Analysts say the performance of pharma companies have been on a declining trend due to cost pressures, freight costs and pricing pressure in the US generics market. Note that the US is the most profitable market for pharmaceutical companies. It’s the prime export destination for the industry, constituting nearly 34% of total Indian exports during FY22, which registered a growth of 2% in dollar terms. Meanwhile, exports to the rest of the world (ROW) witnessed a decline of 7%, said a report by CareEdge, a rating agency. With the normalisation of Covid-19 related medication expenses, the industry suffered a decline in its profit margin during FY22 over FY21. “This apart, the US generic market saw a steep rise in competition and consequent price erosion, which also impacted the profitability of the <keyword id="1134323" type="General" weightage="20" keywordseo="indian-pharma-industry" source="Orion">Indian pharma industry</keyword> during FY22. However, the negative impact of price erosion on profitability was partly offset by the depreciation of INR against USD,” said the CareEdge report. The recent June-quarter performance also reflected the weakness in the sector. “The quarter performance was largely weak for our coverage universe, which resulted in a sharp margin contraction and earnings de-growth. The performance was tainted by increased cost pressure on account of inflated raw material costs, freight costs, and increased operating expenses led to margin contraction,” said a report by Centrum Institutional Research. Another reason for the poor performance is a high base on account of strong demand for Covid-led products in Q1FY22. “With the continued cost pressure, the Indian pharma space has been struggling,” said the report. Industry outlook going ahead Going ahead, analysts believe the sector is set to recover. They expect the sales in the US to normalise in the second half of the current financial year (FY23). “We expect the pharma sector to continue its strong growth trajectory ahead on a disrupted base. The Indian pharmaceutical market (IPM) is expected to report around 10-12% growth in FY23, and we expect US sales to normalise in H2FY23, with recovery in wave three followed by improvement in inventories,” said the Centrum Institutional Research report. However, the on-going pricing pressure in the US market has “tapered down sequentially, growing in mid-single digits as compared to the double-digit price erosion in Q4FY22,” said the report. Meanwhile, near-term headwinds like plant inspections by the US drug regulator – FDA – could drag down the short-term performance but long-term growth prospects remain intact, said analysts at Centrum. “On a full-year basis, CareEdge expects the PBILDT (profit before interest, lease rentals, depreciation and taxation) margin to shrink by 200-250 bps during FY23 over FY22 after considering the positive impact of rupee depreciation. Despite expected moderation in operating profitability in the near to medium term, the credit profile of pharmaceutical companies is expected to remain strong due to their low reliance on external debt,” said a report by CareEdge. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<blockquote class="stocktwits-embedded-post" data-origin="https://stocktwits.com" data-id="483622731"> $NIFTYPHARMA.NSE - To be kept in radar Initial signs of change of trend in Pharma Sector is seen... Price has been bouncing from a key level of importance (holding importance since last 5 years).... The bearish patterns are slowly turning to Bullish pattern (Refer chart)... Bullish patterns seen- Inv. H&amp;S Rounding bottom Double bottom with Higher lows Base formation Technically, second sign of bullishness will be cross and close above 13200. &mdash; (@PHIstocks) <a href="https://stocktwits.com/PHIstocks/message/483622731"> September 08, 2022</a></blockquote><script async src="https://stocktwits.com/min/widgets.js" charset="utf-8"></script>]]></cdata></div> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/entertainment/news/brahmstra-hits-the-advance-booking-bulls-eye-but-needs-word-of-mouth-publicity/articleshow/94055321.cms">Brahmāstra hits the advance booking bulls eye but needs word of mouth publicity</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/from-sbi-to-icici-indian-banks-are-entering-an-earnings-upgrade-cycle-says-morgan-stanley/articleshow/94049013.cms">Time to buy banks? Morgan Stanley says yes as banks are entering 2nd leg of earnings upgrades</a>

Indian pharma to recover from pricing pressures in the second half of FY23

<ul><li><keyword id="6367391" type="General" weightage="20" keywordseo="domestic-travel" source="Orion">Domestic travel</keyword> is expected to be a growth driver for the Indian hospitality and tourism industry.</li><li>International <keyword id="34619" type="General" weightage="20" keywordseo="travel-industry" source="Orion">travel industry</keyword> may still have to wait a little longer for travel to grow at the same rate.</li><li>The credit rating agency emphasized that the slow recovery in international travel could be a silver lining for domestic industry.</li></ul>The cost of everything has been increasing – including the cost of travel – but that is not stopping lockdown-affected Indians as they head on to ‘<keyword id="10039138" type="General" weightage="20" keywordseo="revenge-tourism" source="Orion">revenge tourism</keyword>’. The biggest benefactor of this is the sector that has been hit the hardest since the pandemic – hospitality. While the more lucrative international travel is yet to pick up, domestic travel is expected to be a growth driver for the Indian hospitality and tourism industry, according to credit rating agency CARE Ratings. The sector which has been in retrenchment mode for the last two years has seen a ‘re-alignment of cost structures’ by industry players. This forms a strong base for the profitability of the hospitality sector in the coming months. “FY22 has been a promising year for the sector wherein the revival in the occupancy and RevPAR has led to green shoots for the industry players. The decline in Covid cases, resumption of international flights from March 2022, and strong leisure and wedding demand are the positive factors that should lead to growth in occupancy and ARRs in FY23,” the CARE report said. <cmsannotation type="cmsannotation" annotationid="International travels likely to recover in next two years" comment="subhead" text="International travels likely to recover in next two years">International travels likely to recover in next two years</cmsannotation> Care Ratings is betting on international travel demand to recover gradually through FY23 till the end of FY24. Notably, 25 million tourists travel from India to international destinations annually. The credit rating agency — in a report published in September 2022 — emphasized that the slow recovery in international travel could be a silver lining for domestic industry. “For FY23, CareEdge estimates the majority of its portfolio of hotel companies to report improved performance, largely restored to pre-Covid levels. Domestic tourism is expected to be the key growth driver, with international travel slowly gaining momentum, specifically post resumption of international flights,” the report added. The India tourism and hospitality segment has been witnessing an uptick post relaxation of the lockdown since June 2021 and the decline in Covid-19 infections. The industry did witness a sudden surge in bookings in May 2021 as customers explored the option for staycation and workcation. <cmsannotation type="cmsannotation" annotationid="Challenges still remain" comment="subhead" text="Challenges still remain">Challenges still remain</cmsannotation> A recent Travel &amp; Tourism Development Index by the World Economic Forum (WEF) noted that despite the positive trends, the travel and tourism sector is still facing many hurdles with its recovery. “As the world emerges from the pandemic, economies must invest in building a strong and resilient environment to deliver the travel and tourism experience and services for many decades to come,” Lauren Uppink, Head of Aviation, Travel and Tourism at the World Economic Forum. SEE ALSO <a href="https://www.businessinsider.in/tech/news/airtel-launches-its-first-multiplex-but-in-the-metaverse/articleshow/92200692.cms">Airtel launches its first multiplex, but in the metaverse</a> <a href="https://www.businessinsider.in/business/news/adani-sells-a-fourth-of-its-green-hydrogen-business-to-frances-totalenergies/articleshow/92197541.cms">Adani sells a fourth of its green hydrogen business to France’s TotalEnergies</a> <a href="https://www.businessinsider.in/stock-market/news/burger-king-dominos-kfc-to-see-high-growth-even-as-consumer-staples-suffer/articleshow/92196523.cms">Burger King, Domino's &amp; KFC to see high growth even as consumer staples suffer</a>

Domestic travel, fuelled by revenge tourism, aids growth in hospitality sector

<ul><li>India’s benchmark indices have touched new all-time highs in 2022 thanks to a rally in several key sectoral indices. </li><li>While the charge was led by <keyword id="6372319" type="General" weightage="80" keywordseo="psu-bank" source="Orion">PSU bank</keyword>, FMCG and metal indices, other key sectors also pitched in with substantial contributions. </li><li>Overall, eight sectoral indices posted gains in 2022, while six indices registered declines. </li></ul>India’s benchmark indices have touched new all-time highs in 2022 thanks to a rally in several key sectoral indices. Leading the charge were the PSU bank, FMCG and metal indices, with substantial contributions from several other key sectors. Overall, eight out of the fourteen <keyword id="6354813" type="General" weightage="20" keywordseo="Nifty" source="Orion">Nifty</keyword> sectoral indices have gained so far this year – with their gains handsomely topping the benchmark <keyword id="2931774" type="General" weightage="20" keywordseo="Nifty50" source="Orion">Nifty50</keyword>’s 4.4% returns this year. <div type="image" title="Sectoral indices Nifty Jan-Dec 2022." msid="96448679" hostid="261" sizebytes="20876" caption="&amp;lt;p&amp;gt;Best and worst performing sectoral indices of Nifty in 2022&amp;lt;/p&amp;gt;"></div> <cmsannotation type="cmsannotation" annotationid="PSU bank index rules" comment="subhead" text="PSU bank index rules">PSU bank index rules</cmsannotation> The PSU Bank index emerged as the top sectoral winner, recording gains of nearly 73% – or about 16x the gains of the Nifty50. Despite this increase, the PSU bank index’s price-to-book (PB) ratio is considerably lower at 1.2. This number has risen from 0.67 at the beginning of 2021 and 0.89 at the beginning of 2020. PB ratio measures a company’s market capitalisation to its book value by dividing the share price by the book value per share. A value lower than up to 3 is considered good for value investments. It’s not just the PSU banks index that has rallied in the banking universe – the <keyword id="15863733" type="General" weightage="50" keywordseo="nifty-private-banks" source="Orion">Nifty Private Banks</keyword> index, and the broader <keyword id="722345" type="General" weightage="50" keywordseo="nifty-bank" source="Orion">Nifty Bank</keyword> index have both seen a surge. Both the indices are currently trading at a PB ratio of 2.9. “Banking stocks have been going up for a few reasons – one is, the credit growth has now started picking up nicely, the net interest margins (NIMs) are improving, and asset quality, so far, has been stable as there is no deterioration. All three put together have led to re-rating of banking stocks,” <keyword id="161383" type="General" weightage="50" keywordseo="deepak-jasani" source="Orion">Deepak Jasani</keyword>, head of retail research at <keyword id="103838" type="General" weightage="50" keywordseo="hdfc-securities" source="Orion">HDFC Securities</keyword>, told Business Insider India. Among the best performers were also the FMCG, auto, metals and oil &amp; gas indices – all of which gained between 16-21%. The FMCG sector benefited from softening commodity prices – for instance, the prices of palm oil, a key input, softened from highs of $1,800 per tonne to $880 now, easing the pressure on margins. The auto sector rebounded after a slump in 2021, thanks to the resumption of travel, offices, schools and colleges. Coupled with 2022 being a disruption-free year, the auto industry witnessed an improvement in demand. Metal stocks, on the other hand, faced multiple headwinds this year due to rising energy and input prices. However, those concerns have started to ease and analysts believe a pick up in prices should translate to margin improvements. Lastly, the oil and gas sector gained on account of a boil in energy prices due to the Russia-Ukraine war sparking a rush to shore up oil and gas reserves. <cmsannotation type="cmsannotation" annotationid="IT, pharma indices among top losers" comment="subhead" text="IT, pharma indices among top losers">IT, pharma indices among top losers</cmsannotation> After an unprecedented rally in 2020 and 2021, the IT and pharma indices have emerged as the top losers in 2022 so far. The Nifty IT index, for instance, gained 145% in total between 2020 and 2021, while the Nifty Pharma index gained 76% in the two years. However, the trend reversed in 2022. While the IT index lost the most at almost 26%, the pharma index shed nearly 9%. According to a CareEdge report, the pharma sector lost steam as it came off the Covid boost and as supply chain disruptions resulted in a rise in the cost of active pharmaceutical ingredients (APIs), the key ingredients of a drug. The wearing off of the Covid boost also affected the healthcare sector, with the index declining over 9% this year. Consumer durables, which was the second-biggest sectoral loser this year, struggled due to a rise in commodity prices resulting in multiple price hikes. Coupled with interest rate hikes pushing EMIs higher for customers, 2022 was a disappointing year for investors in this sector. The realty and media sectors also lost their sheen this year as inflation and recessionary concerns spooked investor sentiment. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/foreign-portfolio-investors-flows-in-2022-in-india/articleshow/96223765.cms">FPI flows in 2022 – a tale in two parts</a> <a href="https://www.businessinsider.in/stock-market/news/yes-bank-shares-decline-after-rallying-26-in-five-days/articleshow/96226772.cms">Yes Bank shares tumble after rallying 26% in the last five days – analysts recommend caution</a> <a href="https://www.businessinsider.in/stock-market/news/best-and-worst-performing-ipos-of-2022-in-india/articleshow/96160391.cms">Best and worst performing IPOs of 2022</a>

Best and worst performing sectoral stock market indices in 2022

<ul><li><keyword id="524709" type="General" weightage="20" keywordseo="healthcare-in-india" source="Orion">Healthcare in India</keyword> has turned more expensive as the government has levied a 5% goods and services tax (GST) on all non-ICU hospital rooms that cost more than ₹5,000.</li><li>India also imports a lot of <keyword id="6375143" type="General" weightage="20" keywordseo="medicines" source="Orion">medicines</keyword>, even though Indian pharma companies also export to the US and other nations.</li><li>As per a recent survey by LocalCircles, a community social media platform, 52% of respondents feared that a weakening rupee would adversely impact them and their families as <keyword id="6181" type="General" weightage="20" keywordseo="food" source="Orion">food</keyword>, medicines and overall healthcare costs go up.</li></ul>Indians would now have to deal with expensive medical care, which will make a <a href="https://www.businessinsider.in/india/news/indians-are-saving-more-and-working-longer-hours-to-meet-living-expenses-says-study/articleshow/92961985.cms">dent</a> in their home budgets — that are already weighed down by food. The fall in rupee value is the last nail that’s hitting consumers across healthcare needs – be it medical devices, medication and even hospitalization. As per a recent survey by LocalCircles, a community social media platform, 52% of respondents were worried that a <a href="https://www.businessinsider.in/finance/news/zero-tolerance-for-high-volatility-says-rbi-guv-shaktikanta-das-as-rupee-stays-above-80/articleshow/93049194.cms">weakening rupee</a> would adversely impact them and their families as food, medicines and overall healthcare costs go up. India relies heavily on imports for its medical equipment and the <a href="https://www.businessinsider.in/business/news/indian-current-rupee-value-will-be-a-bonanza-for-indias-exporters/articleshow/93061118.cms">weakening of the Rupee</a> makes imports more expensive. “Their (consumers) fear seems to have basis as India continues to import a considerable amount of pharmaceutical products and medical devices despite having a thriving generic medicines industry and scaling up production of medical devices,” the report said. Exports surge, but so have imports While the Indian pharma industry’s exports <a href="https://www.ibef.org/blogs/indian-pharma-exports-making-a-global-mark">grew</a> 103% from $11.6 billion to $24.6 billion during 2014-22, it also imports a lot for its own medical needs. As per the commerce ministry <a href="https://www.livemint.com/news/india/import-of-medical-devices-rose-a-record-41-in-fy22-report-11658481569408.html">data</a> by the Association of Indian Medical Device Industry (AiMeD), imports of medical devices increased by a record 41% to ₹63,200 crore (approx. $8.1 billion) in 2021-22 from ₹44,708 crore (approx. $6 billion) in 2020-21. A majority of Active Pharmaceutical Ingredients (APIs), raw material and hospital equipment is also imported and paid for in dollars, said the LocalCircles report. <keyword id="471072" type="General" weightage="20" keywordseo="indian-consumers" source="Orion">Indian consumers</keyword>, therefore, feel healthcare will burn a deep hole in their pockets in the future. “Given an option, those who can afford the cost continue to buy imported devices for implants. Also, most of the medical equipment used in hospitals continues to be imported, which will necessarily get reflected in higher cost of treatment in private hospitals and laboratories,” said the report. In addition to the rupee value, earlier this year, the government allowed <a href="https://www.businessinsider.in/finance/news/snacks-health-bills-electricity-bills-and-more-will-add-to-your-chunkier-home-loan-emis/articleshow/91429752.cms">pharma companies</a> to hike prices of domestic formulations by up to 10%. It has affected 800 formulations covering major medicine groups like painkillers, antibiotics, cardiac medicines and more, further adding to <a href="https://www.businessinsider.in/finance/news/snacks-health-bills-electricity-bills-and-more-will-add-to-your-chunkier-home-loan-emis/articleshow/91429752.cms">healthcare costs</a>. Rising input costs also a cause of concern for pharma There are other troubles on the horizon as well. Increased input cost and rising prices of APIs are already eating into the profitability of pharmaceutical companies. Some of this may be passed on to the customers. As per a <a href="https://theprint.in/economy/rising-input-costs-to-hurt-profitability-of-indian-pharma-sector-in-2022-23-report/1045170/">report</a> by rating agency CareEdge, the operating profitability of Indian pharmaceutical companies is expected to decline by 200-250 basis points (or 2.5% points) in the financial year 2022-23. “Due to supply chain disruptions and prevailing lockdown in China, the prices of some APIs have increased between 25-120% while prices of excipients have risen between 15-200% during the last 12-18 months,” said the report. On top of that, the Indian government recently introduced a 5% GST on all non-ICU hospital rooms that cost more than ₹5,000, which would further make healthcare pricier.

After food, healthcare expenses are becoming a bitter pill to swallow for Indian consumers

<ul><li>The listing of the most awaited issue was disappointing though widely expected. Its stock fell over 8% today.</li><li>However, analysts believe investors need not feel dejected and end up selling in losses as the long term view for life insurance products remains strong.</li><li>India’s highly underpenetrated life insurance space is still at a nascent stage and LIC is attractively positioned to capture the huge growth opportunity, say analysts.</li></ul>Almost one in every two retail investors who applied for the initial public offering of Life Insurance Corporation of India (LIC) has been allotted the shares. This is because 13.77 crore retail investors bid for 6.91 crore shares reserved for this category of investors. However, the listing of the most awaited issue was disappointing though widely expected. Its stock fell over 8% today on listing to ₹867.20 while the price band was fixed at ₹902 - ₹949 per share. Hold LIC for the long term, recommend analysts But there is no case to feel dejected and go on a selling spree, believe analysts. They recommend them to hold them for the long term as demand for life insurance products remains strong. A report by CareEdge expects the life insurance industry to grow at around 12-14% for the next three to five years. “Insurance demand is positively correlated with economic growth and grows at a multiple to the GDP. FY23 has started on a strong note, and LIC’s growth momentum over the past few months comes ahead of its initial public offering…Overall, the outlook is expected to be positive in the medium term,” said the report. Moreover, stock analysts also believe at the current market prices, LIC’s share price is significantly cheaper compared to listed players. This is despite the fact that LIC is a dominant player with 60% market share in premiums. “At current price, LIC is trading at a price-to-earnings P/EV (embedded value) of close to 1.08 times, which is at a significant discount to other listed private life insurance companies like HDFC Life, ICICI Pru Life, and SBI Life,” said Yash Gupta, equity research analyst at Angel One. “As expected given the adverse market conditions listing has been muted for LIC. However, cheap valuations as compared to other listed players offer comfort, and investors with a longer time horizon can hold on to their positions while retail traders with a short-term view can exit their positions in case there is any upside movement over the next few days,” he added. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"><colgroup></colgroup><col /><col /><col /><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Life insurers </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Share price </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Market cap </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">LIC India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹901 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹5.68 lakh crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC Life </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹547 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.15 lakh crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">SBI Life </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1,053 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1.05 lakh crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ICICI Prudential Life </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹496 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹71,241 crore </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table> <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[<blockquote class="stocktwits-embedded-post" data-origin="https://stocktwits.com" data-id="460075275"> $LIC.P plunged early in its debut after a record initial pubic offering that priced at the top of the range and was oversubscribed nearly 3 times. Stock is hovering at Rs 904 amid 2.5cr shares traded on NSE. $LIC.P shares started trading at Rs 865 a piece, 8.65% over its issue price of Rs 949 on BSE. The share opened at Rs 872 on NSE, 8.8% discount over the premium. Reason? The sell off in the global and domestic market, the hike in interest rates by the central banks and the accelerating inflating statistics, and an ongoing gobal war have dampened the euphoria around the listing of mega IPO. $LIC.P IPO comes amid intense competition in the industry an has a market share of more than 66 %. LIC IPO valuation is attractive considering its strong market presence, improvement in profitability due to changes in surplus distribution norms and strong sector growth outlook. So, LIC can perform well provided we have bounce in the market. &mdash; (@DhwaniTA) <a href="https://stocktwits.com/DhwaniTA/message/460075275"> May 17, 2022</a></blockquote><script async src="https://stocktwits.com/min/widgets.js" charset="utf-8"></script>]]></cdata></div> Listing gains of IPO stocks maybe a thing of the past LIC is not the only company with a bad listing to its name. LIC is not the only company with a bad listing to its name. On the top of this list is PayTm which lost 60% of its value since it listed in November 2021. “As observed, the majority of big IPOs have not given strong listing debut gains. Considering previous trends, LIC has continued to take the same path. We believe that personal savings and awareness regarding insurance will increase enabling the sector to outperform in the long run and will indirectly benefit LIC as it is the market leader in this sector. We feel long term investors should continue to hold the scrip while short-term investors can wait to enter at a lower price,” said Mohit Nigam, Head - PMS, Hem Securities. Analysts believe India’s highly underpenetrated life insurance space is still at a nascent stage and LIC is attractively positioned to capture the huge growth opportunity. LIC’s brand value, large scale of operations and a wide distribution network will drive its stock performance. “The company’s issue was priced at a price to embedded value of 1.1 times, providing a valuation comfort, so we suggest investors to stay with the company for the long term despite the negative listing,” said Parth Nyati, Founder, Tradingo. <div type="image" title="LIC market share" height="900" width="1200" msid="91615323" hostid="261"></div>Some analysts even hope that the life insurance giant may give dividends to disappointed investors. “LIC didn’t pay any dividends in the last financial year, so there are high chances that the company might declare a good dividend this year, thus making it a good dividend play,” said Santosh Meena, Head of Research at Swastika Investmart. <div type="image" title="LIC profit" height="900" width="1200" msid="91615343" hostid="261"></div> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/lic-stock-falls-8-on-listing-day-but-still-beats-hul-and-icici-to-become-indias-fifth-most-valued-company/articleshow/91609556.cms">LIC stock falls 8% on listing day, but still beats HUL and ICICI to become India’s fifth most valued company</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/elon-musk-says-twitter-deal-cannot-move-forward-until-parag-agrawal-proves-less-than-5-spam-account-claim/articleshow/91615141.cms">Elon Musk says Twitter deal cannot move forward until Parag Agrawal proves less than 5% spam account claim</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/international/news/four-in-ten-american-users-thought-that-facebook-should-have-blocked-trump-sooner-reveal-leaked-internal-documents/articleshow/91610652.cms">Four in ten American users thought that Facebook should have blocked Trump sooner, reveal leaked internal documents</a>

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