Divi's Labs, Lupin, other pharma stocks rise up to 4%; here's why HDFC Securities says sector looks 'attractive'

Pharma stocks

• Pharma stocks surged as brokerages issued positive notes for key companies
• Nifty Pharma index rose 1.7 percent; Divi's Labs shares jumped over 4.5 percent
• HDFC Securities sees India's CRDMO market share rising to 4.7 percent by 2029

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The shares of pharma companies jumped on January 6 as brokerages issued positive notes for several of the key players, as well as the entire sector.

The sharp rise in the share prices pushed the Nifty Pharma index nearly 1.7 percent to 23,126.85 on Tuesday.

“Pharma stocks advanced due to the consistent growth reported by the Indian Pharmaceutical Market (IPM) for December,” said Vinod Nair, Head of Research, Geojit Investments. Bajaj Broking meanwhile attributed the sharp rise in the share prices to selective buying.

HDFC Securities began coverage on Indian contract drug makers Divi’s Labs, Anthem Biosciences, Sai Life Sciences, Laurus Labs and Piramal Pharma. The brokerage sees rising research & development outsourcing boosting Indian contract drug makers that have expanded capabilities to cover various stages of drug development.

India's share in global contract research, development, and manufacturing organisations (CRDMO) market will likely rise to 4.7 percent by 2029 from 3.8 percent in 2024, "making it an attractive sector", it added.

HDFC Securities further said that low labour costs will act as an advantage as companies reduce China dependence. It expects revenue CAGR to accelerate to 15 percent in FY25-28 as against 9 percent in FY23-25, with EBITDA CAGR at 22 percent as against 12 percent.

Divi's Laboratories shares jumped over 4.5 percent to close at Rs 6,651 apiece. Citi has called the stock its “top pick” in India’s pharma sector, stating that 2026 can be an inflection year for the company. It added that Divi’s has strong pipeline catalysts over the next 12 months and the generic segment is expected to witness a recovery. Citi expects the company’s revenue to expand by three times, and EBITDA to rise by four times over FY25-FY30.

IPCA Laboratories and Lupin shares gained 4 percent, Aurobindo Pharma, Mankind Pharma, Glenmark Pharma and JB Chemicals & Pharmaceuticals shares rose more than 2 percent each. Torrent Pharmaceuticals, Alkem Laboratories and Sun Pharmaceutical Industries shares gained nearly 2 percent each.

Wockhardt, Laurus Labs and Zydus Lifesciences shares gained more than 1 percent each, while Abbott India, Piramal Pharma and Cipla shares rose nearly 1 percent each. Bucking the trend, Ajanta Pharma shares fell 2.5 percent each, while Biocon and Gland Pharma shares fell 1 percent each.