Pharma Stocks to Buy: Top 4 picks by Anand Rathi’s Siddharth Sedani – Are they in your portfolio?

The pharma sector in India contributes around 20 per cent to the global supply chain and is currently valued at $55 billion. The market has the potential to reach $130 billion in the coming years.

“India ranks second globally in USFDA approvals after the United States. The pharma sector is expected to grow 9–11 per cent in Europe in 2026,” Sedani said. He added that the Indian currency’s depreciation against the dollar benefits export-oriented companies.

Sedani highlighted strong fundamentals, with segments like formulations, biologics, and biosimilars witnessing robust growth. The government’s PLI scheme in pharma, with Rs 15,000 crore allocated until 2028, is expected to boost investment. 

The Ayush Kart theme offers investors long-term growth opportunities as earnings and margins improve. Four stocks are recommended to be purchased in equal proportion

Divi’s Laboratories operates in generics, APIs, and custom synthesis. The company has a strong return on capital employed at 26 per cent and trades at a price-to-earnings ratio of 45. For FY27, revenue is estimated to grow 17 per cent while profits may rise by 33 per cent. Divi’s is also a major manufacturer of ingredients for weight loss drugs and other generics. CMP is Rs 6,642, with a target of Rs 7,000, offering an upside of 5.4 per cent.

Dr Reddy’s Laboratories has a strong presence in generics and branded formulations in India, Europe, and Russia. The company plans 20 new launches in the US over the next two years and has allocated Rs 2,800 crore towards biosimilar development. Margins are expected to remain healthy at over 25 per cent. CMP is Rs 1,242.60, target Rs 1,400, with an upside of 12.7 per cent.

Wockhardt focuses on formulation injectables and ointments, with growing markets in India and Europe. Investors are advised to maintain the stock for the June 2026 time frame. CMP is Rs 1,513, with a target of Rs 1,730, giving an upside of 14.3 per cent.

Emcure Pharma has 13 manufacturing plants and five R&D facilities. The company focuses on injectables and new product filings, with expansion plans in Europe and Canada. The stock trades at a P/E of 16 and offers a return on equity of 20 per cent. CMP is Rs 1,527, with a target of Rs 1,650, providing an upside of 8.1 per cent.