Pharma Shares Rally: Sai, Gland, Divi’s, Laurus, Glenmark Jump Up to 9%

Strong Earnings Put Pharma CDMO Businesses in the Spotlight

A cluster of better-than-expected quarterly results has lifted drugmakers, while investors weigh whether growth in contract manufacturing can last.

A sector rally gathers pace

Divi’s Laboratories, Laurus Labs, Sai Life Sciences, Gland Pharma, Mankind Pharma and Glenmark Pharmaceuticals rose between 5% and 9% in intraday trading. Divi’s, Laurus, Sai Life Sciences and Glenmark also touched record highs. The moves followed a strong run: over the 12 trading sessions since October 23, the four stocks gained between 18% and 25%, compared with a 15.4% rise in the Nifty Pharma index.

The index reached an intraday record of 29,224.85, rising as much as 3%, and was higher for a sixth consecutive session. At 11:24 a.m., it was up 1.55%, while the Nifty 50 was down 0.30%. This divergence puts the sector’s earnings momentum in focus, though a rising index does not mean every constituent has the same business drivers or outlook.

CDMO growth is driving the earnings case

Divi’s results stood out for growth across its three divisions. Jefferies said CDMO revenue grew 50% year on year in Q2FY27, while generics grew 18%, described as a multi-year high. The brokerage also noted that EBITDA margin reached its highest level since the Covid-era. It linked the performance to validation batches, with several programmes nearing commercial production. Jefferies maintained a Buy rating and a ₹12,550 target price.

Sai Life Sciences also beat estimates, with growth in both clinical research organisation and CDMO operations. Its pipeline included one molecule moving into the commercial phase and another entering Phase 3. Jefferies said a strategic partnership with a large pharma client is expected to become functional from the December 2026 quarter, while new capacity is nearing commissioning. It raised its FY27-29 earnings-per-share estimates by 3% to 19%, retaining Buy and lifting its target to ₹2,050.

Business mix and capacity will test the outlook

Laurus is seeking to move beyond an API-led business towards a CDMO platform. Choice Institutional Equities sees synthesis and biologics as key growth drivers, with their share of revenue projected to rise to 50% by FY29 from 30% in FY26. The brokerage cited late-stage programmes, around 125 active projects and peptide commercialisation. It expects a 30% FY27 EBITDA margin, a 300-basis-point year-on-year improvement, and raised its FY27 and FY28 estimates by 19.9% and 21.3%, respectively. Its revised target is ₹2,500, with an ADD rating.

Gland Pharma’s results beat expectations across parameters, supported by higher volumes despite pricing pressure in its base business. Cenexi recorded an EBITDA loss due to planned annual shutdowns. Management maintained its positive full-year EBITDA guidance, citing higher utilisation, workforce rationalisation and contract renegotiations. It plans more than ₹3,000 crore of capital expenditure over five years as existing facilities operate at 80% to 90% utilisation, and is targeting 18% to 20% compound annual growth over the next three to four years. Those ambitions depend on execution, including complex molecules and new contracts. Its planned GLP-1 fill-finish capacity expansion from 40 million to 140 million cartridges is another element investors will monitor.

Key Highlights

• Pharma stocks gained after strong Q2FY27 earnings, with several CDMO-linked names among the leaders.
• The Nifty Pharma index reached a record intraday high and outperformed the Nifty 50 during the session.
• Divi’s reported strong CDMO and generics growth, while Sai Life’s pipeline and capacity plans drew attention.
• Laurus’s projected shift towards CDMO revenue and Gland’s capacity investment plans are central to their growth narratives.
• Brokerage targets and ratings reflect analyst views, not guaranteed returns; execution and operating assumptions remain important risks.

Investor Note: The rally is supported by earnings and business developments, but recent gains have been substantial. Investors may want to assess each company’s growth, margins, capacity plans and valuation separately rather than treating the sector move as a uniform opportunity.