Healthcare Industry Trends And Its Impact On India Globalization Capital Inc (NYSEMKT:IGC)

India Globalization Capital Inc (AMEX:IGC), a US$21.70M small-cap, operates in the healthcare industry, which continues to be affected by the sustained economic uncertainty and structural trends, such as an aging population, impacting the sector globally. The environment facing pharmaceuticals companies, particularly, remains challenging, driven by a more demanding healthcare agenda. This is illustrated by the growing pressure for innovative, cost-effective treatments, along with higher requirements for transparency from regulators and healthcare providers. Healthcare analysts are forecasting for the entire industry, a positive double-digit growth of 10.12% in the upcoming year , and an enormous growth of 40.35% over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the US stock market as a whole. Should your portfolio be overweight in the pharmaceutical sector at the moment? Below, I will examine the sector growth prospects, and also determine whether India Globalization Capital is a laggard or leader relative to its healthcare sector peers. See our latest analysis for India Globalization Capital

What’s the catalyst for India Globalization Capital's sector growth?

Companies operating in the pharmaceutical sector are confronted with ways to improve R&D productivity, increase the efficiency of its operations, rationalise spending on sales and marketing and enhance financial performance. Over the past year, the industry saw growth of 7.65%, though still underperforming the wider US stock market. India Globalization Capital lags the pack with its sustained negative earnings over the past couple of years. The company's outlook seems uncertain, with a lack of analyst coverage, which doesn't boost our confidence in the stock. This lack of growth and transparency means India Globalization Capital may be trading cheaper than its peers.

Is India Globalization Capital and the sector relatively cheap?

Pharmaceutical companies are typically trading at a PE of 23.63x, in-line with the US stock market PE of 18.99x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 10.75% on equities compared to the market’s 10.34%. Since India Globalization Capital’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge India Globalization Capital’s value is to assume the stock should be relatively in-line with its industry.

Next Steps:

India Globalization Capital recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the healthcare industry. However, before you make a decision on the stock, I suggest you look at India Globalization Capital's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has IGC's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of India Globalization Capital? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.