The brokerage firm Nuvama has identified seven stocks in the pharma sector that it believes are better placed to benefit from the sector’s next cycle. The brokerage’s latest report shows that companies under its coverage posted 12% revenue growth, 11% earnings before interest, taxes, depreciation and amortisation (EBITDA) growth, and 14% profit after tax (PAT) growth in the second quarter of financial year 2026, even as overall margins stayed almost unchanged.
Let’s take a look at 7 stocks Nuvama prefers now and how much upside they hold –
The brokerage has highlighted seven companies as its top ideas across domestic markets, contract manufacturing, generics and biosimilars. Here is how each one stacks up based on its current market price and Nuvama’s target –
Ajanta Pharma
For Ajanta Pharma, the brokerage has set a target price of Rs 3,250, against a current market price, which works out to an upside potential of nearly 31%.
According to the brokerage report, Ajanta’s staff costs have risen in the short term but this may normalise as expansion stabilises. The brokerage added, “Two–thirds of business is driven by branded generics; hence, it enjoys a strong margin profile and best returns ratios in our coverage. Ajanta’s PE and EV/EBITDA are 25x and 17x, respectively, on our FY27 estimates.”
IPCA Laboratories
IPCA Laboratories has received a target price of Rs 1,610, giving it an upside of around 11.5%.
Nuvama expects a more stable performance as the integration of Unichem Laboratories progresses, supported by more chronic therapies. The brokerage noted that IPCA is focusing on rising medical representative additions and cost controls, with expectations that Unichem’s margins should improve over the next few years.
Torrent Pharmaceuticals
Torrent Pharmaceuticals, backed by its pending JB Chemicals merger and planned launch of semaglutide generic versions, has been assigned a target of Rs 4,180. This translates to an upside potential of roughly 13.4%.
According to the brokerage report, Torrent’s upcoming triggers include “Semaglutide launch in India and Brazil” and synergy gains once the JB Chemicals deal closes in financial year 2027.
Divi’s Laboratories
Divi’s Laboratories has a target price of Rs 7,700, translating to an upside of nearly 20.8%.
The brokerage expects Divi’s to benefit from multiple custom synthesis (CS) projects. It highlighted that upcoming backward-integration efforts and better utilisation at the company’s Kakinada facility may support earnings recovery over the next two to three years.
Neuland Laboratories
Neuland Laboratories leads Nuvama’s CDMO (contract development and manufacturing organisation) picks. The stock has a target price of Rs 22,130, implying a strong upside potential of approximately 33.3%.
The brokerage said the company is positioned for margin expansion owing to “addition of an Rs 1.3 billion dedicated block for two products” and expects Neuland’s peptide facility to become a major driver beyond FY28.
Aurobindo Pharma
Aurobindo Pharma has received a target price of Rs 1,420, leading to an upside potential of about 17.7%.
According to the brokerage report, Aurobindo’s prospects may be supported by the Lannett acquisition, biosimilars and expanded capacities. The brokerage added that long-term drivers include “a growing European generics business and its CDMO business.”
Biocon
Biocon carries a target price of Rs 480, implying an upside of nearly 20.9%.
Nuvama noted signs of early recovery in key segments and stated that performance will depend on “upcoming launches (denosumab and bEylea)” along with improvements in the generics business and lower financing costs.
In its report, the brokerage house added that its preference remains tilted toward domestic formulations and CDMO names, given the continued challenges in the US generics market. The brokerage’s top picks include Ajanta Pharma, IPCA Labs and Torrent Pharma in the domestic space; Neuland Laboratories and Divi’s Labs among CDMOs; and Aurobindo Pharma and Biocon in the generics and biosimilars segment.