Aurobindo, Biocon, IPCA, Divis among Nuvama's 7 top pharma stock picks; here's why
Nuvama said Aurobindo Pharma is trading at an attractive valuation and has the potential to see a 10-15 per cent EPS upgrade in FY27E on the back of the Lannett acquisition and a potential MIP announcement.
- Nov 25, 2025,
- Updated Nov 25, 2025 7:53 AM IST
With the US generics facing a challenge, Nuvama Institutional Equities on Tuesday said it prefers domestic formulations and CDMO names. Its top picks included Ajanta Pharma, Torrent Pharma, Divi’s Laboratories, Aurobindo Pharma, Biocon, Neuland Laboratories and IPCA Laboratories.
Nuvama said Aurobindo Pharma is trading at an attractive valuation and has the potential to see a 10-15 per cent EPS upgrade in FY27E on the back of the Lannett acquisition and a potential MIP announcement by the government. In Q2, its US business grew, excluding gRevlimid, indicating that its base business is able to grow, it said adding that its long-term catalysts include growing European generics business; growth due to expanded capacities; biosimilars; and its CDMO business. It set a target of Rs 1,420 on the stock.
The domestic brokerage upgraded Biocon after Q2FY26 numbers as it believes the recovery is visible in its business with healthy growth momentum in biosimilar business on steady base and new products; operating leverage in generics business due to new launches including GLP-1; lower finance costs due to deleverage of the structured debt.
"We think Biocon is poised to deliver 15 per cent/19 per cent revenue/Ebitda CAGR (FY25–28E) with margins intact at 23 per cent," it said while suggesting a target of Rs 480.
Neuland Labs is seen witnessing strong growth and margin expansion in the near to mid-term driven, by addition of an Rs 130 crore dedicated block for two products, growth in its base CMS molecules, the addition of at least one new molecule and improved capacity utilization.
"Beyond FY28E, Neuland’s next growth driver will be its Rs 250 crore peptide facility. These CMS and peptide investments significantly strengthen Neuland’s mid-to long-term visibility," Nuvama said.
Nuvama said Divis is a diversified CMO and is set to leverage its backward-integrated peptide fragment capacity, backed by potentially long-term contracts. "We think Divis would exhibit non-linear growth with better Ebitda margins over next 2–3 years," it said while suggesting as target of Rs 7,700.
On Torrent Pharma, Nuvama said its acquisition of majority stake in JB Chemicals is set to conclude in Q4FY26 and JB is likely to merge with Torrent in FY27. JB is a stable, cash-generating asset and Nuvama expects Torrent can generate sizable synergies from the merger in the coming year. It set a target of Rs 4,180 on this stock.
Nuvama finds IPCA stock at 24 times FY27E EPS as 'reasonable' as it suggested a target of Rs 1,610 on the stock.
"We forecast a 17–18 oer cent Ebitda CAGR over FY25–27E supported by its recent 20 per ecnt strategic expansion of the domestic sales force and resultant growth and productivity gains w.e.f. FY27," Nuvama said on Ajanta Pharma. Nuvama suggested a target of Rs 3,250 on the stock.
With the US generics facing a challenge, Nuvama Institutional Equities on Tuesday said it prefers domestic formulations and CDMO names. Its top picks included Ajanta Pharma, Torrent Pharma, Divi’s Laboratories, Aurobindo Pharma, Biocon, Neuland Laboratories and IPCA Laboratories.
Nuvama said Aurobindo Pharma is trading at an attractive valuation and has the potential to see a 10-15 per cent EPS upgrade in FY27E on the back of the Lannett acquisition and a potential MIP announcement by the government. In Q2, its US business grew, excluding gRevlimid, indicating that its base business is able to grow, it said adding that its long-term catalysts include growing European generics business; growth due to expanded capacities; biosimilars; and its CDMO business. It set a target of Rs 1,420 on the stock.
The domestic brokerage upgraded Biocon after Q2FY26 numbers as it believes the recovery is visible in its business with healthy growth momentum in biosimilar business on steady base and new products; operating leverage in generics business due to new launches including GLP-1; lower finance costs due to deleverage of the structured debt.
"We think Biocon is poised to deliver 15 per cent/19 per cent revenue/Ebitda CAGR (FY25–28E) with margins intact at 23 per cent," it said while suggesting a target of Rs 480.
Neuland Labs is seen witnessing strong growth and margin expansion in the near to mid-term driven, by addition of an Rs 130 crore dedicated block for two products, growth in its base CMS molecules, the addition of at least one new molecule and improved capacity utilization.
"Beyond FY28E, Neuland’s next growth driver will be its Rs 250 crore peptide facility. These CMS and peptide investments significantly strengthen Neuland’s mid-to long-term visibility," Nuvama said.
Nuvama said Divis is a diversified CMO and is set to leverage its backward-integrated peptide fragment capacity, backed by potentially long-term contracts. "We think Divis would exhibit non-linear growth with better Ebitda margins over next 2–3 years," it said while suggesting as target of Rs 7,700.
On Torrent Pharma, Nuvama said its acquisition of majority stake in JB Chemicals is set to conclude in Q4FY26 and JB is likely to merge with Torrent in FY27. JB is a stable, cash-generating asset and Nuvama expects Torrent can generate sizable synergies from the merger in the coming year. It set a target of Rs 4,180 on this stock.
Nuvama finds IPCA stock at 24 times FY27E EPS as 'reasonable' as it suggested a target of Rs 1,610 on the stock.
"We forecast a 17–18 oer cent Ebitda CAGR over FY25–27E supported by its recent 20 per ecnt strategic expansion of the domestic sales force and resultant growth and productivity gains w.e.f. FY27," Nuvama said on Ajanta Pharma. Nuvama suggested a target of Rs 3,250 on the stock.