International brokerage Morgan Stanley initiated coverage on India’s four largest pharmaceutical companies by market capitalization, but maintains a bullish stance only on Sun Pharmaceutical Industries.
The brokerage expects earnings growth across the pharma sector to moderate during FY25–27, though robust balance sheets could support investments in high-growth areas like peptides, biosimilars, and specialty drugs.
The firm has an 'overweight' rating on Sun Pharma, citing its strong specialty pipeline, focus on chronic therapies in the Indian market, and solid financials. It has set a target price of Rs 1,960 per share. Over the past one year, shares of Sun Pharma have gained 5.6 percent.
Lupin has been rated 'equal-weight' with a target price of Rs 2,096. Morgan Stanley sees a strong first half for FY26, but flags potential downside due to intensifying competition in the U.S. market. Lupin shares have seen a flat performance on the bourses over the past one year, gaining 3.2 percent.
Both Dr. Reddy’s Laboratories (DRL) and Cipla are expected to go through a transition year in FY26, with revenues from gRevlimid tapering off. DRL is also rated 'equal-weight' with a target of Rs 1,298, though the firm notes the ramp-up of semaglutide could deliver upside surprises. Dr Reddy's Labs stock has fallen 7.7 percent over 12 months, underperforming its peers.
Cipla is the least favored among the pack by Morgan Stanley, as the brokerage gave it an 'underweight' rating and a target price of Rs 1,400, as the brokerage forecasts a negative 2 percent EPS CAGR over FY25–27. Cipla's stock has traded near the flatline over the past year, slipping two percent into the red.
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