Expect pharma's splendid performance to continue: Dhiraj Sachdev, HSBC AM India

In a chat with ET Now, Dhiraj Sachdev, Senior VP & Fund Manager-Equities, HSBC AM India, talks about the pharma space.

ET Now: Let us talk about pharmaceuticals. It is one of your core holdings. The numbers which we got from Dr. Reddy's, or Lupin or for that matter Sun Pharma, are absolutely breathtaking. So, even though pharma stocks have optically seen an extraordinary run-up, do you think the outperformance is here to stay purely on the back of strong numbers?

Dhiraj Sachdev: The market of late has been actually rewarding very strong results from companies. Companies coming up with very good and decent numbers — provided they are sustainable in nature — are being rewarded by the market.

Such large companies reporting 25%-30% compounded growth rate in revenues, and maintaining or expanding the margins, is a fairly decent thing. So, we do expect this kind of outperformance to continue.

They have very strong balance sheet characteristics in terms of capital efficiency, return on capital employed, cash flow management, etc. So, the sector will continue with a sustained performance. The other aspect is that obviously they have a very big opportunity in the US market and the European market.