Short-term uncertainties back; look at pharma stocks as long-term bets: Kunj Bansal

In a chat with ET Now, Kunj Bansal, ED & CIO, Centrum Wealth Management Ltd, talks about the telecom sector

ET Now: A 25 per cent correction in any market is like a body blow for any stock. Sun Pharma is a very widely owned-stock, yet the stock has come under pressure. The management has not given FY16 guidance. What is your view?

Kunj Bansal: I am not in a position to give an exact view, but to take on from your question one thought comes to my mind was whether the Rs 1,200 levels on the counter were irrational or is it Rs 850-860 level which is irrational. If we assume that if Rs 1,200 level was irrational, then the fall of 25 per cent does not mean anything.

ET Now: So Rs 1,200 was irrational?

Kunj Bansal: I do not know. It is market which decides the valuation on a sustainable basis.

ET Now: Is there a problem in the US generic business and that has been the constant problem not for Sun Pharma, but for Lupin and Dr Reddy’s that USFDA is going strict on approvals and current product prices are coming down and the competition in the generic market has only intensified. Do you believe that it is not a Sun Pharma-specific problem but, is an industry-specific problem.

Kunj Bansal: Yes. That is visible too. These are the facts of life with which every business has to live with.
How the developments are shaping in that particular industry — they have to be ready with that. Let us also not forget the fact that it was the Indian companies which had been continuously hammering the US market.

It is obvious that the vested interest which is getting affected adversely will possibly try to come back.
I am not suggesting anything, but who knows it might have been the case. More importantly, the question also is in terms of the market fund, investor behavior, if I talk about.

What I am trying to say is that this was the sector and stocks which was continuously offering you return. You did not have that concept of long-term holding or a risk. You were making money within days.

But, with short-term uncertainties coming back, if you buy pharma stocks at the right prices and hold them over a longer period, you will make money. You cannot expect that pharma companies to keep delivering for you on a quarter basis.