India-focused pharma firms' margins to improve from GST cuts, CLSA says

About this update from Abbott India Limited

** India reducing tax on all medicines from 12% to 5% is a positive move for pharma firms, enabling lower prices and boosting margins by 1%–2%, CLSA notes** CLSA identifies Torrent Pharma NSE:TORNTPHARM, Abbott India NSE:ABBOTINDIA, Cipla NSE:CIPLA, Zydus NSE:ZYDUSLIFE, Lupin NSE:LUPIN and Sun Pharma NSE:SUNPHARMA as key beneficiaries** All shares currently trading flat** Medical equipment such as diagnostic kits, blood glucose monitors, surgical devices and bandages will be taxed at 5% from 12% earlier** CLSA says cut will be positive for diagnostics chains like Dr Lal Pathlabs NSE:LALPATHLAB, also marginally positive for hospital chains; CLSA's top pick is Apollo Hospitals NSE:APOLLOHOSP** DLPA, APLH rise 1.2% and 1.8%, respectively ** YTD, all stocks rise except Lupin and Sun, which have fallen ~18% and 16.7%, respectively vs pharma index's NSE:CNXPHARMA 6.5% decline

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