Secular prediction for pharma space difficult, Cadila's correction not a surprise: P Phani Sekhar

In a chat with ET Now, P Phani Sekhar, Karvy Stock Broking, shares his view on pharmaceutical stocks.

ET Now: Cadilla Health Care has brought back that concern over the pharma sector again. Last day of the trading year, not a happy ending but the problem has been plaguing pharma for the better part of this year so where do you see the story, I mean how did you take to that news?

P Phani Sekhar: Well, this is something that did not really come as a surprise to us. Well, this is something that did not really come as a surprise to us.

ET Now: It has been under the cloud?

P Phani Sekhar: It had been under a cloud. And, if you actually look at pharma, last six months you have an Ipca Labs, you have Cadilla, you have Dr. Reddy’s.

ET Now: The previous issue was more product-specific and that you can still understand there might be some routine non-alignments for which questions can be raised but a production facility getting a warning letter and two of them. We do not know the exact nature of the warning letters, but were you not taken by surprise because Cadilla is pretty much in a lot of ways has weathered the storm a lot better than the other guys?

P Phani Sekhar: We thought that there was a fair bit of overhang on Cadilla, and hence, it did not come as a surprise to us. But, the larger point is if you look at the last six months. You had the bluest of the blue chip companies whether it is Lupin, Ipca, Dr. Reddy’s, Cadilla, Sun Pharma from time to time which have given you these kinds of scares. I think to take a secular call on the pharma space for the next one year is difficult because it has become extremely bottom-up. It depends on what stocks you pick and at what valuations.