Cipla, Ajanta Pharma to Alkem Laboratories: Pharma stocks rise amid weak trends on Dalal Street

Pharma stocks jumped up to 20% on Monday, led by strong buying momentum across the sector, despite a weak sentiment in the broader Indian stock market. The rally in pharma stocks lifted the Nifty Pharma index by 1.65%.

Torrent Pharmaceuticals and Mankind Pharma were the top gainers on the Nifty Pharma index with more than 3% rally each. Cipla, Divi’s Laboratories, Laurus Labs, Alkem Laboratories and Sai Life Sciences shares rose over 2% each, while Zydus Lifesciences, Aurobindo Pharma and Ajanta Pharma shares witnessed gains of over 1%.

Among other pharma stocks, RPG Life Sciences, Thyrocare Technologies, Hester Biosciences, Onesource Specialty Pharma and Neuland Laboratories shares surged up to 7%.

Additionally, Tatva Chintan Pharma Chem share price jumped 20% to hit a fresh 52-week high of ₹1,714.10 apiece on the BSE, after strong Q1 results.

The rally in pharma stocks today came despite a weak trend in the broader Indian stock market today, following a decline in global markets as the escalating US-Iran war and surging crude oil prices kept investor sentiment cautious.

The BSE Sensex was trading 671.29 points, or 0.86%, lower at 77,480.16, while the NSE Nifty 50 was down by 169.40 points, or 0.70%, at 24,164.75.

“Pharma stocks are witnessing strong investor demand on the back of improving earnings visibility, resilient domestic formulations growth, and a defensive sector rotation amid heightened market volatility. Companies have benefited from new product launches, healthy execution domestic business and healthy margin trends,” said Sunny Agrawal - Head of Fundamental Research at SBI Securities.

He expects most pharma companies to witness healthy year-on-year (YoY) revenue growth during the first quarter of FY27, driven primarily by robust momentum in the Domestic Formulations (DF) business, with chronic therapies continuing to outpace the broader Indian Pharmaceutical Market (IPM). However, the US business is likely to remain a mixed bag.

Here’s how the pharma sector is likely to perform in Q1FY27.

Pharma sector Q1 results preview

According to Sunny Agrawal, while new launches and operational execution should provide support, the base business is expected to face pressure from lower gRevlimid sales and continued pricing erosion in select generic segments.

“Consequently, domestic growth is likely to remain the key earnings anchor for the sector in the near term. On the profitability front, margins could remain range-bound as companies continue to invest in R&D, specialty portfolios and commercialization initiatives, including GLP-1-related opportunities and other differentiated launches,” said Agrawal.

Over the medium term, the analyst remains constructive on the pharma sector, supported by sustained growth in domestic healthcare demand and increasing global outsourcing opportunities across CDMO/API businesses. However, after the recent rerating, further upside is likely to be more earnings-driven than valuation-driven.

Within the pharma space, SBI Securities continues to prefer Sun Pharmaceutical Industries, Ajanta Pharma, Alkem Laboratories, Divi’s Laboratories and Zydus Lifesciences from a long-term perspective.

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