India’s CRDMO (Contract Research, Development and Manufacturing Organization) sector is poised for robust growth over the next three to five years, global brokerage Jefferies said in its latest note. The US brokerage expects multiple tailwinds to support the sector and highlighted four stocks with potential gains of 17–30 percent, while maintaining a cautious stance on Laurus Labs due to valuation concerns.
Jefferies’ recommendations follow over 50 investor meetings, where key themes such as differentiated capabilities, contract-winning track record, and the China+1 opportunity emerged as critical drivers for investment decisions. However, it flagged high valuations, earnings volatility, and the opaque nature of some B2B businesses as major concerns for investors.
“Most investors agree that there are several structural drivers that can deliver strong mid-term growth for the Indian CRDMO sector,” Jefferies noted, adding that questions remain around whether the China+1 shift is materializing at the expected pace and whether trade tariffs could challenge geographic diversification.
Top Pharma Stock Picks
Divi’s Laboratories: Jefferies sees Divi’s Labs as its top pick, setting a target price of ₹7,150, implying an almost 19 percent upside. The brokerage cited the company’s proven execution record and strong visibility in mid- to long-term growth as key positives. However, it flagged concerns that a significant portion of this growth may already be priced into current valuations, raising the risk that consensus estimates could prove difficult to achieve. The stock has added 10 percent in the last 1 year and 7 percent in last 6 months. However, in the last 3 months, it has shed 9.5 percent.
Cohance Lifesciences: With a target price of ₹1,150, Jefferies projects a 17 percent upside for this smallcap CRDMO player, despite its 17 percent decline in the past year. The brokerage highlighted strong interest in the company’s pipeline and growth prospects, particularly in ADC payload manufacturing. It also noted that the stock has been a multibagger, delivering 105 percent returns over three years and 160 percent in 5 years. However, it has lost 19 percent in last 1 year, 15 percent in last 6 months and 2.5 percent in last 3 months.
Sai Life Sciences: Jefferies recommends buying Sai Life Sciences with a price target of ₹1,100, implying 26 percent upside. Improved project visibility over the last couple of quarters has boosted investor confidence. That said, Jefferies cautioned that the easier re-rating phase may already be behind, suggesting more measured returns going forward. The pharma scrip has risen 25 percent in last 6 months and 14 percent in last 3 months.
Piramal Pharma: This smallcap stock is another preferred pick, with Jefferies setting a target of ₹260, indicating an almost 30 percent potential upside. The brokerage believes the stock’s valuation discount relative to peers makes it an attractive bet, despite a 15 percent drop over the past year. The stock has shed 11 percent in last 1 year but has been flat in recent times, up just 1 percent in last 3 months.
Companies with Concerns
Syngene International: Jefferies observed strong investor interest in Syngene due to its valuation discount but said concerns remain about its operational underperformance, capacity utilization timelines, and ability to secure new RFQs. Still, the brokerage has a price target of ₹720 for the stock, indicating an upside potential of over 8 percent. The stock has lost 28 percent in last 1 year, however, it is flat in recent times, up 1.5 percent in last 3 months and down 0.4 percent in last 6 months.
Laurus Labs: While Laurus Labs has been a midcap multibagger with a five-year return of 256 percent, Jefferies maintained an ‘Underperform’ rating on the stock. The brokerage cited rising risks to its ARV business, lack of forward guidance, and elevated valuations as reasons for its cautious view. The brokerage has a target price of ₹590 for the stock, implying an underperformance of 34 percent. The scrip has also rallied 77 percent in last 1 year, 56 percent in last 6 months and 34 percent in past 3 months.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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