Pharma stocks in focus: Brokerages slash ratings and price targets, Aurobindo downgraded sharply

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Pharma stocks could remain in the spotlight on Tuesday after global brokerage Macquarie downgraded key Indian pharmaceutical companies and slashed target prices, citing margin concerns and weak global visibility. The sector ended Monday on a subdued note, with the S&P BSE Healthcare Index closing 18.23 points lower at 44,877.43, down 0.04 per cent.

Macquarie Turns Bearish on Aurobindo, Cuts Targets Across Sector

Aurobindo Pharma (CMP: Rs 1,185) faced a sharp double downgrade to ‘underperform’ from ‘outperform’, with the target price reduced by over 40 per cent to Rs 1,010 from Rs 1,700. The brokerage flagged limited earnings visibility, regulatory challenges, and pricing pressures as key risks.

Dr Reddy’s Laboratories (CMP: Rs 1,310) was also downgraded — to ‘neutral’ from ‘outperform’ — with the target trimmed to Rs 1,190 from Rs 1,450.

Macquarie said both companies are likely to face sustained headwinds in the US generics market, which may weigh on earnings growth.

Cipla, Lupin, Zydus, Sun Pharma See Target Cuts But Ratings Held

Macquarie retained its ‘outperform’ rating on Cipla, Lupin, Zydus Lifesciences, and Sun Pharmaceutical, but revised down their target prices:

Cipla (CMP: Rs 1,510) – target cut to Rs 1,700 from Rs 1,875

Lupin (CMP: Rs 1,979) – target cut to Rs 2,350 from Rs 2,515

Zydus Lifesciences (CMP: Rs 999) – target cut to Rs 1,110 from Rs 1,365

Sun Pharma (CMP: Rs 1,680) – target held at Rs 2,135

Sector Outlook: Volatility Ahead

The broader S&P BSE Healthcare Index mirrored the cautious sentiment, closing nearly flat. Analysts expect stock-specific action to dominate in the near term, especially as Q1 earnings approach and regulatory news flow remains a key overhang.

While long-term fundamentals for Indian pharma remain intact, brokerages are turning selective, favouring companies with stable US exposure, strong compliance track records, and robust domestic growth.