Stocks to buy: Lupin, Aurobindo, Max Healthcare among Axis Sec's top pharma & hospital picks post strong Q4
The brokerage noted that the pharmaceuticals industry appears well-positioned for FY26 and beyond, supported by a strong product pipeline in biosimilars, GLP-1, and peptides. It highlighted that chronic therapies continue to outperform the overall Indian Pharmaceutical Market (IPM), contributing to sustained growth.
Additionally, margins are expected to remain stable to improving, aided by a favorable product mix and easing input costs. The US generics business also shows continued strength, with leading players like Lupin and Aurobindo Pharma maintaining meaningful market shares despite ongoing competitive pressures and anticipated low single-digit price erosion.
Stock Name Rating Latest closing price Target price Upside Potential Aurobindo Pharma Buy ₹ 1,138 ₹ 1,500 31.2% Lupin Buy ₹ 1,944 ₹ 2,500 28.6% Max Healthcare Institute Buy ₹ 1,147 ₹ 1315 15% Fortis Healthcare Buy ₹ 729 ₹ 775 6.3%
Axis believes that companies with a differentiated portfolio and greater exposure to complex generics are likely to outperform in this environment. Consequently, it maintained 'buy' on Aurobindo Pharma and Lupin with a 'buy' rating and has a target price of ₹ 1,500 and ₹ 2500, respectively.
In the hospital space, Axis Securities observed that the growth trajectory remains strong, backed by structural tailwinds. These include increased surgical volumes, an improved payer mix, and rising demand for high-growth therapies such as cancer and cardiac care—all of which are contributing to higher ARPOB (average revenue per occupied bed) and occupancy rates.
The brokerage expects industry ARPOB to grow at 6–7% annually, with a 100-basis-point improvement in occupancy rates, supporting further margin expansion. Max Healthcare and Fortis Healthcare are viewed as well-positioned to benefit from these secular growth trends, given their scalable operations and strong execution across key metrics. Therefore, it retained a 'buy' recommendation on both the stocks, with a price target of ₹ 1,315 on Max Healthcare shares and ₹ 775 apiece on Fortis Healthcare shares.
The pharmaceutical sector delivered a healthy performance in Q4FY25, with revenue growth of 12.3% YoY and 2.3% QoQ, driven primarily by the India business (11.2% YoY). The US generics business recorded 7.7% YoY growth in CC terms, aided by the launch of niche products and price stability.
Improvement in gross margins to 66.1% (up 95 bps YoY) was underpinned by a favourable mix shift, muted price erosion, and stable input costs, said Axis Securities.
In the hospital sector, revenue grew by 20% YoY and 2% QoQ, supported by higher occupancy rates (+60 bps YoY), an ARPOB increase of 6% YoY, and an 18% rise in operational bed days. Notably, the brokerage stated that the contribution of insurance payers rose to 33%, indicating deeper penetration and improved affordability.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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