Ranbaxy's lone ranger for pharma sector in Sensex
With Cipla exiting the Sensex from July 28, Ranbaxy will be the lone representative of the Rs 40,000-crore Indian pharma industry in the benchmark 30-stock index.
By Kiran Kabtta, ET Bureau |
With Cipla exiting the Sensex from July 28, Ranbaxy will be the lone representative of the Rs 40,000-crore Indian pharma industry in the benchmark 30-stock index. The situation, however, has changed sharply in the past seven months; from three pharma companies in the bellweather index ��� Ranbaxy, Cipla and Dr Reddy���s ��� today it is only Ranbaxy.
However, this is also likely to change. Shares of Ranbaxy have recently seen much volatility due to uncertainty regarding reports that the US department of justice is investigating charges of selling adulterated and sub-standard drugs in the US market.
The pharmaceutical sector has never boasted of a high weightage in the sensex. From having nearly 2% weightage in the index when all the three pharma companies were part of the index, the weightage is expected to drop to 1.3% after Cipla is replaced by Tata Power.
A benchmark index provides a representation of the broader economy. With the number of pharma companies falling in the Sensex, it indicates the shift in investors��� preference from pharma to other sectors. In the current market scenario, analysts say it is unclear as to how well Ranbaxy can be pegged to be the bellwether representative of the healthcare sector.
At a m-cap of Rs 17,607 crore, Ranbaxy is the second largest pharma company with a free-float (non-promoter holding) of 65%. Sun Pharma is the largest in this segment, with a m-cap of Rs 26,638
crore, but a lower free float of 36%.
ET INTELLIGENCE GROUP
However, this is also likely to change. Shares of Ranbaxy have recently seen much volatility due to uncertainty regarding reports that the US department of justice is investigating charges of selling adulterated and sub-standard drugs in the US market.
The pharmaceutical sector has never boasted of a high weightage in the sensex. From having nearly 2% weightage in the index when all the three pharma companies were part of the index, the weightage is expected to drop to 1.3% after Cipla is replaced by Tata Power.
A benchmark index provides a representation of the broader economy. With the number of pharma companies falling in the Sensex, it indicates the shift in investors��� preference from pharma to other sectors. In the current market scenario, analysts say it is unclear as to how well Ranbaxy can be pegged to be the bellwether representative of the healthcare sector.
At a m-cap of Rs 17,607 crore, Ranbaxy is the second largest pharma company with a free-float (non-promoter holding) of 65%. Sun Pharma is the largest in this segment, with a m-cap of Rs 26,638
crore, but a lower free float of 36%.
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���In these turbulent times, pharma stocks being defensive (stocks that defy trend) would have been better constituents of the sensex. The visibility of the earnings for this sector is clearer than many other sectors which are interest-rate sensitive,��� said a Mumbai-based analyst. ET INTELLIGENCE GROUP
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