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"Buying just before the rally starts", that’s what everybody wants to do. Domestic pharma stocks seem to provide the right medicine in these falling markets. We hope, you are enjoying the recent rally in domestic pharma stocks. Strange, but true, markets are clearly showing interest for domestic pharma stocks as against MNC Pharma stocks.

Traditionally, any MNC stock enjoys a higher P/E ratio in the industry because of the proven track record of its parent. Operations of the parent are vast and huge, so they can afford to spend large amounts on research and product development, which can be applied to all their subsidiaries. So, what's wrong with MNC pharma stocks? Well, markets are bullish on the export earnings of pharma companies and that’s where the catch is. While domestic pharma companies are showing a good jump in export earnings, MNC pharma stocks have very little export earning. But, as it happens in most cases, markets are over-reacting.

As the following table shows, valuations of Indian pharma companies have been stretched too far while MNC pharma companies are available for a bargain. It's time to change the prescription by switching over from Domestic Pharma companies to MNC pharma companies. Are you ready?

 Gold Digger

Contact at : godi@indiainfoline.com

5Paisa Team

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