Healthcare stocks rally up to 8% as Covid cases spurt in China, Japan
Shares of healthcare service providers were in focus, rallying up to 8 per cent on the BSE in Wednesday’s intra-day trade in an otherwise subdued market amid reports that Union Health Minister Mansukh Mandaviya will review the Covid-19 pandemic situation, in view of a spurt in COVID-19 cases in Japan, South Korea, Brazil, China and the US.
On Tuesday, the Health Ministry urged all states and Union territories to ramp up the whole genome sequencing of positive samples to keep track of newer variants.
In a letter to states and UTs, Union Health Secretary Rajesh Bhushan said such an exercise will enable timely detection of newer variants, if any, circulating in the country and will facilitate undertaking of requisite public health measures, the PTI reported. CLICK HERE FOR FULL REPORT
Among the individual stocks, Vijaya Diagnostic Centre surged 8 per cent to Rs 461.95 on the BSE in intra-day trade today. Dr Lal PathLabs soared 6 per cent to Rs 2,434.70, followed by Metropolis Healthcare (up 5 per cent at Rs 1,342) and Thyrocare Technologies (up 3 per cent at Rs 630.30).
Besides these four stocks, IOL Chemicals & Pharmaceuticals, Supriya Lifescience, Panacea Biotec, Vimta Labs, Glenmark Pharmaceuticals and Granules India from the S&P BSE Healthcare index were are p in the range of 4 per cent to 12 per cent on the BSE. In comparison, the S&P BSE Sensex was down 0.22 per cent at 61,564.
However, in past one year, most of these stocks have underperformed the market by recording negative returns, as compared to 9 per cent rise in the benchmark index. The contribution of covid and allied business to total revenue of these companies has declined substantially in September quarter, as compared to previous year quarter (Q2FY22).
While Q1 FY22 saw the highest contribution to revenue coming from RT-PCR testing and COVID allied tests like IL-6 and D-Dimer, it also significantly impacted the non-COVID portfolio due to nationwide mobility restrictions.
Post second half of Q2FY22, the instances of COVID-19 infections started declining meaningfully and contribution of COVID-19 testing to overall revenue tapered as also the realizations due to price caps introduced by various states for RT-PCR tests.
In December 2021 and January 2022, we again witnessed some spurt in COVID testing due to Omicron variant which was rather short-lived with significantly lower fatalities as compared to previous two waves. Faster adoption of vaccinations in the country across various age groups has reduced the intensity of infection caused by newer variants, Dr Lal PathLabs said in its FY22 annual report.
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