The impact of COVID-19 has shown us the importance of the healthcare sector in the modern world. Millions of people had died because of Spanish Influenza (Spanish Flu) in 1918. Spanish Influenza was the last reported pandemic in the modern world. The disease had affected 500 million people worldwide and various estimates have put the death toll between 17 million and 50 million. The disease had affected one third of the world's population.
Healthcare infrastructure of the most advanced countries also crumbled under the impact of COVID-19. We are very fortunate that the medical infrastructure has improved immensely throughout the world in the last 102 years because of which the impact could be minimized. Medical infrastructure in India has improved a lot in the last two decades.Vaccination has been made available to every citizen of the country. Is there a scope for improvement? Yes, there is a huge scope for improvement and a lot is needed to be done so that healthcare services reach every citizen of the country.
Let us now see how the companies in the healthcare sector (includes Pharmaceutical & Biotech companies, Hospitals and Diagnostic facilities) have performed in Q4FY20. COVID-19 related restrictions were not in place until the last week of March. So, the impact on the result wasn't that big. The healthcare companies were exempted from most of the restrictions, but they may have been impacted due to delay in shipments and decrease in demand.
Thyrocare Technologies reported loss for the period (both Standalone and Consolidated); hence, it is not part of this analysis.
Standalone Result
Gujarat Themis Biosyn reported a jump in revenue of over 154% (Q4FY20 vs Q4FY19). The profit in Q4FY20 jumped by 332% over Q4FY19. This result was exceptional. Market has aptly rewarded the company.
Other companies which have reported a rise in revenue of more than 15% in Q4FY20 over Q4FY19 are:
Companies which have reported a growth in PAT of more than 50% YoY are:
Divi's Lab, Abbot, Ajanta Pharma and Procter & Gamble Health maintain very low Financial Liabilities to Equity ratio.
Granules India, Laurus Labs, Gujarat Themis and Glenmark Pharma have PEG ratio of less than 1. This means that these companies have maintained very high growth rate in the last couple of quarters over the corresponding quarters of the previous financial year.
Consolidated Result
On consolidated basis, a few companies have reported more than 15% increase in revenue YoY. These companies are:
- MARKSANS PHARMA
- AJANTA PHARMA
- Laurus Labs Ltd
- ALEMBIC PHARMACEUTICALS
- IPCA LABORATORIES
- AUROBINDO PHARMA
- Eris Lifesciences Ltd
Following companies have reported more than 40% increase in PAT (YoY):
- MARKSANS PHARMA
- Laurus Labs Ltd
- AARTI DRUGS
- DR.REDDYS LABORATORIES
- ALEMBIC PHARMACEUTICALS
- SHILPA MEDICARE
- AJANTA PHARMA
- AUROBINDO PHARMA
- GRANULES INDIA
While most of the companies in the healthcare sector have reduced their debt, a few companies such as Laurus Labs Ltd, GLENMARK PHARMACEUTICALS, AARTI DRUGS and CADILA HEALTHCARE for example, have very high financial liabilities.
Dr. Lal PathLabs, CAPLIN POINT LABORATORIES, Eris Lifesciences Ltd, DIVIS LABORATORIES, AJANTA PHARMA, MARKSANS PHARMA, AARTI DRUGS, J.B.CHEMICALS & PHARMACEUTICALS, LINCOLN PHARMACEUTICALS, and ALEMBIC PHARMACEUTICALS have maintained high ROCE.
Hospitals and Diagnostic Centers have reaped windfall profit because of COVID-19. As the number of tests and active cases continue to rise, these companies are likely to increase their revenue and PAT. Market has already ensured that these factors do reflect in the stock prices of the companies in this sector.