Best Pharma Stocks in India 2024

pharma stocks

Do you want to make your investment portfolio genuinely unstoppable? If yes, then investing in pharma stocks can be a game-changer. As of 2024, the Indian pharmaceutical market is valued at USD 65 billion and is projected to skyrocket to $130 billion by 2030. 

Now, that’s a massive opportunity knocking on your door! Driven by rising healthcare demands, cutting-edge drug innovations, and supportive government policies, this sector is ripe for investment. Picking the right stocks now can set you up for impressive returns. 

Join us as we discuss the best pharma stocks in India and provide tips to help you make savvy investment decisions. Let’s get started!

Decoding Pharmaceutical Industry in India: A Brief Overview

India’s pharmaceutical industry is a global powerhouse, recognized for its significant contributions to healthcare and active pharmaceutical ingredients (APIs). Often called the “pharmacy of the world,” this sector is crucial in producing affordable, high-quality medicines.

Here is an overview of the current state and future potential of this domain:

  • Global Standing: India is the largest provider of generic drugs worldwide. Our country supplies over 60% of the global demand for vaccines and about 40% of the generic demand in the U.S.

  • Government Initiatives: The Indian government is proactively supporting the pharma sector. For example, in the Interim Budget 2024-25, the administration allocated ₹1,000 crores to promote bulk drug parks.
  • Segments and Specializations: The country has over 3,000 pharma companies and 10,500 manufacturing units. Notably, India has the highest number of USFDA-approved manufacturing plants outside the U.S.

India’s pharmaceutical industry is on an upward trajectory of growth and innovation. And, if you’re an investor looking for the next big opportunity, look no further. It’s prime time to ride this wave of market expansion. 

Ready to explore the best pharma stocks to diversify your portfolio? Let’s check them out!

India’s Hottest Pharma Stocks List in 2024

With ongoing advancements in the pharma sector, an informed investment in these stocks can guarantee significant profits. Here is a snapshot of the 5 best pharma stocks in India:

Stock

Div Yield

Net Profit (₹ Cr)

ROE (%)

ROCE (%)

Net C.F. (₹ Cr)

Market Cap (₹ Cr)

Book Value (₹)

Stock P/E

Piotroski Score

High/Low (₹)

Debt to Equity

Aurobindo Pharma

0.25

940

7.18

8.44

229

71,381

460

25.4

6

1,227/581

0.18

Divi’s Labs

0.75

358

14.8

19.4

-1,045

106,626

480

75.4

7

4,100/3,051

0.00

Sun Pharma

0.75

2523

15.13

16.02

115

369,725

233

41.26

7

1,639/922

0.11

Cipla

0.9

1,038

15.43

21.79

-55

116,457

289

27.4

8

1,519/911

0.01

Dr. Reddy’s Labs

1.8%

1,307

19.74

25.13

132

96,414

1,395

17.29

6

6,505/4,384

0.06

Note: This blog is only for informational purposes; we are not SEBI registered, and we are not promoting any company or pushing you to buy stocks of a specific company; please do your research before purchasing the stocks.

1. Aurobindo Pharma

With top analyst recommendations, Aurobindo Pharma is consistently on the ‘buy’ list— for good reason. This company is a powerhouse in the generic pharmaceutical industry, boasting a market cap exceeding ₹70,000 crores.

The company’s recent 52-week high reflects strong market confidence. With significant investments in R&D and a growing biosimilar portfolio, Aurobindo Pharma offers promising returns for investors.

2. Divi’s Laboratories

This company specializes in APIs and nutraceuticals and has a market cap exceeding ₹1,00,000 crores. In Q3FY24, the company reported an impressive net profit of ₹358 crores, marking a 17% year-on-year (YoY) increase.

That’s not all. With an ROE of almost 15% and a zero debt-to-equity, Divi is one of the best pharma stocks in India. These vital metrics highlight the firm’s excellent profitability and commitment to quality.

3. Sun Pharmaceuticals Industries Ltd

Sun Pharma is a market leader in the Indian pharma industry. It is known for its diverse product portfolio, including generics, APIs, and speciality medicines. With a market cap of ₹350,000 crores, it boasts strong financials that underline its dominance. 

In Dec 2023, Sun Pharma reported a significant net profit of ₹2,523 crores, marking a 16.5% YoY increase. These impressive numbers reaffirm Sun Pharma’s growth, making it an enticing investment avenue.

4. Cipla

Cipla is renowned for its affordable medicines and strong presence in domestic and international markets. With a market cap of ₹116,000 crores and zero promoter pledges, it shows strong financial stability and governance.

In March 2024, Cipla reported a quarterly net profit of ₹1,038 crores, showcasing a remarkable 192.1% YoY growth. The company’s debt-to-equity ratio is healthy 0.01, indicating that the company is almost debt-free.

5. Dr. Reddy’s Laboratories

Dr Reddy’s Laboratories is another major player, offering many pharma products and services. In Q4FY24, the company reported a net profit of ₹1,307 crores, a 36% YoY increase driven by robust sales in the U.S. market.

The company also declared an impressive 800% dividend, translating to ₹40 per share. These strong financials and strategic market presence make Dr Reddy’s Laboratories a compelling choice for investors.

Factors to Consider Before Investing in Pharma Stocks in India

Before you start investing in the given pharma stocks list, consider the following crucial factors:

1. Market Capitalisation

Market capitalization reflects a company’s valuation – its size and stability. Large-cap companies, with a market cap over ₹20,000 crores, are more stable and less volatile. If you are a cautious investor, investing in a large-cap pharma company can be perfect for you.

2. Financial Health

Target companies with solid financials. Asses metrics like net profit, Return on Equity (ROE), Return on Capital Employed (ROCE), and net cash flow. Pharma stocks with good ROE and consistent profit growth are financially robust.

3. Product Portfolio

A diverse product portfolio helps mitigate risks associated with market fluctuations and regulatory changes. Companies offering various medications across diverse therapeutic areas can better weather industry changes. 

4. Regulatory Compliance

Adherence to regulatory standards ensures smooth operations and market access. Pharma companies with a strong compliance record are less likely to face product bans or costly recalls. 

Bottom Line

Investing in pharma stocks offers significant potential for growth and profitability. Focus on market leaders to capitalize on the sector’s growth and enhance your portfolio. Understanding the industry’s dynamics and carefully assessing individual stocks can help you make informed choices. 

Ready to invest in the best pharma stocks in India? Armed with these insights, you can reap the rewards of this thriving sector. Happy investing!

FAQs

1. Should I Invest in Pharma Stocks?

Indeed! Investing in pharma stocks can be a smart move. Here’s why

  • The pharmaceutical industry is expanding rapidly, promising substantial returns.
  • Healthcare products are always in demand, ensuring steady revenue.
  • Constant advancements and breakthroughs open new investment opportunities.

2. Are Pharma Stocks Suitable for Long-Term Investment?

Absolutely! These stocks can be a great long-term investment choice. Continuous progress in drug development and biotechnology opens up new market opportunities.

3. What Are the Risks Associated with Pharma Stocks?

Investing in the best pharma stocks in India can be rewarding. But you must be aware of these potential risks:

  • Strict regulatory challenges can lead to delays in product approvals and increased compliance costs.
  • Manufacturing issues or unexpected side effects can result in costly recalls and harm a company’s reputation.
  • Fierce competition within the market can impact a firm’s market share and profitability.

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping investors diversify their investments beyond traditional investment instruments ever since.


LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping lenders diversify their investments beyond traditional investment instruments ever since.

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