Despite the recent dip in Nifty Pharma, long-term growth prospects remain b. Brokerages recommend investments in stocks like Divi's Lab, Sun Pharma, and Granules India, with potential returns of up to 39%.
Pharma Stocks: The Nifty Pharma sector witnessed a decline of up to 1% on Thursday. The index has weakened by approximately 1.58% in the last five days, while showing a gain of 4.77% in the past month. Over the past year, the Nifty Pharma index registered a growth of 12.77%, but it is currently trading around 11.50% below its 52-week high. Following the recent correction, Devang Choksi Research believes the pharma sector has reached a reasonable valuation.
Brokerage Perspective on the Pharma Sector
According to the brokerage firm, Nifty Pharma's current 1-year forward P/E is 28.0x, close to its three-year average. Therefore, future growth may be primarily stock-specific, depending on companies' margin improvements and new product launches. The brokerage has updated the ratings and target prices for several companies in this sector.
Recommended Pharma Stocks for Investment
According to the brokerage, companies like Granules India, Aurobindo Pharma, Zydus Lifesciences, and Glenmark Pharmaceuticals show an upside potential of 19% to 39%. Meanwhile, established companies such as Sun Pharma, Divi's Lab, and Cipla have received an "Accumulate" rating, indicating potential long-term investment benefits.
Expected Q4 Results for Pharma Companies?
Devang Choksi Research expects double-digit year-on-year revenue growth for pharma companies in the fourth quarter of fiscal year 2025 (Q4FY25E). This growth will be primarily driven by emerging markets (EM), European markets, and domestic formulations. The report anticipates an annual revenue increase of 11.5%.
Focus on Divi's Lab, Supriya Lifescience, and Sun Pharma
The brokerage anticipates b revenue growth for major companies like Divi's Laboratories, Supriya Lifescience, and Sun Pharma. These companies benefit from b demand for their specialized products and expansion plans into new markets, suggesting further performance improvement.
