BNP Paribas Identifies Torrent Pharma and JB Chemicals as Top Investment Picks. Up to 55% Return Anticipated Due to US Tariff Exemption.
Pharma Stocks: International brokerage firm BNP Paribas, in a recent report, highlighted Torrent Pharmaceuticals and JB Chemicals & Pharmaceuticals as prime investment opportunities within the Indian pharmaceutical sector. This recommendation follows US President Donald Trump's announcement of new tariffs on imported goods. However, the US government has exempted the pharmaceutical sector from these tariffs, providing relief to Indian drug manufacturers.
Indian Pharma Companies Receive Relief from US Tariffs
On April 2nd, US President Donald Trump announced a 27% "discounted reciprocal tariff" on goods imported from several countries, including India. However, according to the US government's report, pharmaceutical products have been excluded from this tariff, leaving Indian pharmaceutical companies unaffected.
Significant Profit Potential from Investing in JB Chemicals and Torrent Pharma
BNP Paribas believes that investments in JB Chemicals and Torrent Pharmaceuticals stocks offer substantial returns. JB Chemicals currently trades at ₹1,579.80, with a target price set at ₹2,446, indicating a potential 55% increase.
Meanwhile, Torrent Pharmaceuticals' current share price is ₹3,247.7, with a target price of ₹3,710, suggesting a potential 14% growth.
Nifty Pharma Index Expected to Strengthen
The pharma sector recently experienced volatility, primarily due to concerns surrounding US import tariffs, leading to an 11% decline in the Nifty Pharma Index this year. However, with the US government's exemption of pharmaceutical products from the tariffs, BNP Paribas anticipates a surge in the Nifty Pharma Index.
Impact of a 10% Tariff
BNP Paribas also cautioned that if the US government were to impose a 10% tariff on pharmaceutical products in the future, the impact on Indian generic drug companies would be minimal due to their already low margins. However, some major companies like Aurobindo Pharma, Zydus Lifesciences, and Dr. Reddy's Laboratories might experience a slightly greater impact, as a significant portion of their revenue comes from the US market.
Minimal Impact on Divi's Laboratories
According to BNP Paribas, Divi's Laboratories is expected to be the least affected by this tariff. Even if Indian companies absorb 40% of a 10% tariff, the impact on their FY27E EBITDA would only be 1-2%.
