Expect market to overvalue domestic pharma stocks: Saurabh Mukherjea, Ambit Capital

In an interview with ET Now, Saurabh Mukherjea, CEO, Institutional Equities, Ambit Capital, shares his views on mid cap pharma stocks. Excerpt:

ET Now: The flurry of trade that we have seen in some of the midcap pharma names has been remarkable. What is your view?

Saurabh Mukherjea: The M&A sentiment is picking up steam; there is a growing perspective that there are small and midcap pharma companies that will be part of a consolidation wave in our country, given the price controls imposed by the government on the back of the Supreme Court order.

Domestic pharma companies selling drugs within India are not going to be lucrative. Hence, there is going to be a clear wave of consolidation coming into some domestic pharma.

If I were to look at the broader pharma space, we have a similar perspective to that on IT. It is hard to see a structural story for Indian pharma, though, that is not reflected in the prices of the pharma stocks.

My sense is that, the market is overvaluing Indian pharma stocks, including the front line names.