NIFTY Pharma index touches record high level; Here are three pharma stocks with highest YTD return

In 2024, the Nifty’s Pharma Index surged over 32.7% on a year-to-date basis (YTD), outperforming the benchmark NIFTY50’s 13.6% YTD return. This shows the investor’s keen interest in the sector. Among the top performers, Glenmark Pharmaceuticals is close to doubling its value in 2024, while Zydus Lifesciences and NATCO Pharma have surged over 70%.

Here are the 3 pharma stocks with the highest YTD in 2024

Zydus Lifesciences (YTD return: 72.59%)

In Q1FY25 the company posted a 30% YoY surge in the net profit to ₹1419.9 crore, Revenue also grew 20% YoY to ₹6207.5 crore. EBITDA margin improved to 33.6% up 430 bps on a YoY basis. The EBITDA stood at ₹2,084 crore, up 38% YoY.

Sustained growth momentum across all businesses along with enhanced profitability resulted in strong Q1 performance. Domestic formulation sales grew 12% YoY and was ahead of the Indian pharmaceutical market. As for the US market, sales growth was fueled by higher contributions from the cancer drug Revlimid as well as from the recently-launched overactive bladder drug Mirabegron. The company launched seven products in the US in the quarter gone by and expects around 25 launches for FY25.

The deleveraging of the balance sheet and improvement in profitability have garnered investors' interest in the stock. The company has reduced debt and is almost debt-free. Focus on patient centricity, operational efficiency, strategic investments, and executing a diversified product portfolio has resulted in significant profitability improvements, the company’s profit has compounded at 18% CAGR in the last 3 years.

Glenmark Pharmaceuticals (YTD return: 95.33%)

For the first quarter of FY25, Glenmark’s consolidated revenue from operations was at ₹3,244.2 crore with YoY growth of 6.9%. EBITDA was at ₹588.2 crore with YoY growth of 34.5% and EBITDA margin of 18.1%. Profit After Tax stood at ₹340.2 crore, registering a PAT margin of 10.5%

Q1 FY25 results marked a strong turnaround, driven by powerhouse domestic formulations and a stellar performance in the Europe market. Europe Business grew by 21.4% YoY to ₹695.7 crore. India Business grew by 11.9% YoY to ₹1196.2 crore. Rest of the world Business grew by 3.3% YoY to ₹570.8 crore, reflecting a robust revenue growth across key regions.

Glenmark’s stock price has outperformed its peers over the last year, driven by balance sheet deleveraging, an announcement to reduce R&D spending, and a ramp-up of its novel product, Ryaltris.

NATCO Pharma (YTD return: 77.54%)

In Q1FY25 earnings, the company reported a 59% uptick on a YoY basis in net profit at ₹669 crore, the company’s revenue grew by 19.5% YoY to ₹1,362.6 crore. Operating income grew 52% YoY to ₹804.8 crore, with an operating margin expanding to 59.1%.

During Q1, the company's revenue from API stood at ₹39.2 crore (down 47.8% YoY), income from domestic formulations was at ₹102.2 crore (down 22.81% YoY) and revenue from crop health sciences (CHS) came in at ₹15.6 crore (down 65.1% YoY) during the period under review.

The uptick in investors' interest is due to strong financial and operational performance in recent years, with profit compounding at 49% and sales at 25% over the last three years. Robust pipeline in U.S. business has also supported the performance. Further, the company also has a healthy dividend payout ratio of 24.9%.

Conclusion

In 2024, the Pharma sector emerged as a standout performer, with the Nifty Pharma Index outpacing the broader market. Top stocks like Glenmark Pharmaceuticals, Zydus Lifesciences, and NATCO Pharma have delivered impressive YTD returns, driven by strong financial results, balance sheet improvements, and strategic business expansions. Investors' confidence in these companies continues to rise, supported by their robust growth and future prospects.