Divis Labs, Lupin, Dr Reddy’s, Glenmark: Check fresh targets for Pharma stocks post Q3

Choice Institutional Equities believes that expansion in global market ex-US, biosimilars and peptides patents, CDMO and backward integration for margin expansion shall be major drivers for the pharma companies. Indian players are shifting towards innovative solutions, better pricing and API upgrades.

Pharma companies under Choice Institutional Equities’ coverage delivered a strong performance during the recent quarter, with average year-on-year revenue rising by 12.8 per cent in December 2025 quarter. This growth was attributed to successful new product launches, notable expansion in markets outside the US, and continued outperformance within the Indian Pharmaceutical Market (IPM).

Key outperformers included Senores Pharmaceuticals Ltd, which saw a 69.4 per cent increase, Zydus Lifesciences Ltd with a 30.3 per cent rise, and Laurus Labs Ltd posting 25.7 per cent higher revenue. Despite the healthy revenue trend, overall margin expansion was muted across the sector. According to Choice, sharp contractions were seen in major companies such as Cipla Ltd, Piramal Pharma Ltd, and Dr. Reddy’s Laboratories Ltd.

The pressure on margins was primarily due to an adverse product mix and increased investment in research and development (R&D) activities. Choice Institutional Equities noted, “That said, we expect margin to expand meaningfully as recent launches scale up and operating leverage improves.”

In the generics segment, companies continued to outperform the IPM, with pricing pressures in the US and UK markets showing early signs of stabilisation. Choice said, “We expect launch momentum to remain strong, with key upcoming products including Mirabegron, Advair, Adzenys, Vocloosporin and Nystatin. We anticipate margin expansion from FY27.”

Peptides and biosimilars are emerging as strategic priorities for Indian pharmaceutical players. Supported by a robust pipeline and favourable patent expiries, companies such as Alkem Laboratories Ltd, Cipla, Dr Reddy’s , Lupin Ltd, Sun Pharma, and Zydus Life are preparing to launch Semaglutide after the relevant patents expire, the brokerage firm noted.

Overall industry prospects remain positive, with biosimilars and GLP-1 opportunities expected by Choice to drive the next phase of structural growth. “Overall, we expect biosimilars and GLP-1 opportunities to drive the next phase of structural growth for the industry,” said Choice.

Contract development and manufacturing organisation (CDMO) businesses are also seeing growth, with Alkem, Dr Reddy’s, Granules India Ltd and Supriya Lifesciences Ltd entering this high-growth segment.

Choice pointed out, “With more companies, such as Alkem, Dr Reddy’s, Granules India and Supriya Lifescience entering this high-growth segment, we remain positive on the outlook.” Players like Granules India, Supriya Life, Senores Pharma, and Laurus Labs Ltd benefit from strong order books, which is expected to sustain revenue momentum.

Choice Institutional Equities has a ‘buy’ rating on Granules India (Target Price: Rs 690), Lupin (Target Price: Rs 2,630), Marksans Pharma (Target Price: Rs 160), Senores Pharma (Target Price: Rs 1,045), Supriya Lifesciences (Target Price: Rs 1,030).

The brokerage firm has an ‘add’ rating on Alkem Labs (Target Price: Rs 5,995), Concord Biotech Ltd (Target Price: Rs 1,400), Dr Reddy’s Labs (Target Price: Rs 1,315), Glenmark Pharmaceuticals Ltd (Target Price: Rs 2,175), IPCA Labs Ltd (Target Price: Rs 1,585), Laurus Labs (Target Price: Rs 1,140), Sun Pharma (Target Price: Rs 1,825) and Zydus Life (Target Price: Rs 1,020).

However, Choice has given a ‘reduce’ rating on Piramal Pharma (Target Price: Rs 160), Divis Laboratories Ltd (Target Price: Rs 6,300), Cipla Ltd (Target Price: Rs 1,350) and Ajanta Pharma Ltd (Target Price: Rs 2,760).