Pharma stocks to buy: India’s CRDMO (Contract Research, Development and Manufacturing Organisation) sector is poised for robust growth over the next three to five years, global brokerage Jefferies said in its latest note. The US brokerage expects multiple tailwinds to support the sector and highlighted four stocks with potential gains of 17–30 per cent, while maintaining a cautious stance on Laurus Labs due to valuation concerns.
Jefferies’ recommendations follow over 50 investor meetings, where key themes such as differentiated capabilities, contract-winning track record, and the China+1 opportunity emerged as critical drivers for investment decisions. However, it flagged high valuations, earnings volatility, and the opaque nature of some B2B businesses as major concerns for investors.
“Most investors agree that there are several structural drivers that can deliver strong mid-term growth for the Indian CRDMO sector,” Jefferies noted, adding that questions remain around whether the China+1 shift is materialising at the expected pace and whether trade tariffs could challenge geographic diversification.
Top Pharma Stock Picks
Divi’s Laboratories: Jefferies sees Divi’s Labs as its top pick, setting a target price of ₹7,150, implying an almost 19 per cent upside. The brokerage cited the company’s proven execution record and strong visibility in mid- to long-term growth as key positives. However, it flagged concerns that a significant portion of this growth may already be priced into current valuations, raising the risk that consensus estimates could prove difficult to achieve. The stock has added 10 per cent in the last 1 year and 7 per cent in the last six months. However, in the last three months, it has shed 9.5 per cent.
Cohance Lifesciences: With a target price of ₹1,150, Jefferies projects a 17 per cent upside for this small-cap stock, despite its 17 per cent decline in the past year. The brokerage highlighted strong interest in the company’s pipeline and growth prospects, particularly in ADC payload manufacturing. It also noted that the stock has been a multibagger, delivering 105 per cent returns over three years and 160 per cent in 5 years. However, it has lost 19 per cent in the last 1 year, 15 per cent in six months and 2.5 per cent in three months.
Sai Life Sciences: Jefferies recommends buying Sai Life Sciences with a price target of ₹1,100, implying a 26 per cent upside. Improved project visibility over the last couple of quarters has boosted investor confidence. That said, Jefferies cautioned that the easier re-rating phase may already be behind, suggesting more measured returns going forward. The pharma scrip has risen 25 per cent in the last six months and 14 per cent in three months.
Piramal Pharma: This small-cap stock is another preferred pick, with Jefferies setting a target of ₹260, indicating an almost 30 per cent potential upside. The brokerage believes the stock’s valuation discount relative to peers makes it an attractive bet, despite a 15 per cent drop over the past year. The stock has shed 11 per cent in the last year but has been flat in recent times, up just 1 per cent in three months.
Companies with Concerns
Syngene International: Jefferies observed strong investor interest in Syngene due to its valuation discount but said concerns remain about its operational underperformance, capacity utilisation timelines, and ability to secure new RFQs. Still, the brokerage has a price target of ₹720 for the stock, indicating an upside potential of over 8 per cent. The stock has lost 28 per cent in last one year; however, it is flat in recent times, up 1.5 per cent in the last 3 months and down 0.4 per cent in the last 6 months.
Laurus Labs: While Laurus Labs has been a midcap multibagger with a five-year return of 256 per cent, Jefferies maintained an ‘Underperform’ rating on the stock. The brokerage cited rising risks to its ARV business, lack of forward guidance, and elevated valuations as reasons for its cautious view. The brokerage has a target price of ₹590 for the stock, implying a fall of 34 per cent. The scrip has also rallied 77 per cent in the last one year, 56 per cent in six months and 34 per cent in three months.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
