Indian Pharma stocks to buy: These are BNP Paribas’ recommendations

BNP Paribas shared its top stock picks, stating that it still favours Sun Pharma and Aurobindo Pharma.


BNP Paribas, a global brokerage and research organisation, forecasts that its Indian pharmaceutical and healthcare coverage universe will experience overall year-over-year (YoY) revenue growth and a c3 percent y-y profitability reduction in the first quarter of FY23.

Due to the high base of Covid-related sales in the India business for some firms, it anticipates company-specific revenue growth during the quarter, with US sales improving just c2 percent quarter-on-quarter or QoQ (+6 percent y-y), despite new releases partially offsetting price erosion.

BNP Paribas revealed its top stock picks, stating that it continues to favour Dr. Lal Path Labs and Fortis Healthcare in the healthcare sector and Sun Pharma and Aurobindo Pharma in the pharma sector.


While BNP Paribas has a Hold attitude on Cipla and Zydus Lifesciences, it has Buy recommendations on the pharmaceutical firms Sun Pharma, Aurobindo Pharma, Apollo Hospitals, Divi’s Laboratories, Metropolis Healthcare, and Torrent Pharma.

“In Sun Pharma, we see a structural story, with ramp-up in specialty sales and a strong India business. Aurobindo Pharma offers us valuation comfort with its strong product portfolio and a possible trigger from the restructuring of its injectable business,” the note stated.

Due to its steady volume growth, market leadership, and long-term value accretion following the purchase of Suburban Diagnostics, the brokerage said it liked Dr Lal Path Labs. In the meanwhile, it believes that Fortis Healthcare is a turnaround story with a growth-oriented emphasis that trades at a fair value.

“In the healthcare space, hospitals should recover from the 4QFY22 low, with occupancy improvement as the Omicron wave is over now. Diagnostic companies’ revenue should decline y-y due to the high base of Covid-related revenue, which is tapering off with lower volume and reduced pricing. Non-core (ex-Covid) revenue should likely see a decent recovery, led by better volumes,” BNP Paribas’ note on Indian pharma and healthcare sector added.