Although the threat of US tariffs on Indian pharmaceutical imports has created uncertainty and market volatility, so far, the sector has been largely exempted, as it plays a critical role in the US healthcare. However, the risk lingers on companies specifically with higher US exposure. India and the US are engaged in negotiations, and the long-term outlook will depend on the evolution of trade policies and the ability of Indian pharma to adapt and diversify.
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DRChoksey Report
Nifty Pharma is currently trading at 30.2x FY26E P/E, nearly its three-year average next twelve months price/earnings. We believe the sector has priced in majority of the risks on the US front and should perform well, once the tariff uncertainty looms away.
We expect upside potential would be stock-specific, led by stronger domestic growth, new product launches and expansion across geographies.
Laurus Labs (positive outlook with robust pipeline), Supriya Lifesciences (consistent revenue and profit growth), and Divi’s Labs (strong margin growth led by commercialization of Custom Synthesis contracts) remains our top pick in the pharma sector.
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