By Ekta Sonecha Desai
The pharmaceutical sector is one of the most important and rapidly growing industries in India. It plays a crucial role in providing affordable medicines and generic drugs globally. India’s strong manufacturing capabilities and increasing healthcare demands contribute to its steady expansion. The sector is expected to grow significantly in the coming years.
However, in recent times, pharma stocks have been under pressure, drawing investor attention. Several factors have contributed to this decline. Concerns over potential US tariffs on Indian pharma exports have created uncertainty in the market. Additionally, stretched valuations led to corrections as stocks had been trading at higher-than-usual price levels.
While stock price declines can be concerning, they also create potential entry points for long-term investors. A common way to assess whether a stock is available at an attractive valuation is by analyzing its Price-to-Earnings (P/E) ratio.
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A low P/E ratio can indicate that a stock is undervalued relative to its earnings potential. However, low valuation alone does not guarantee a good investment—it is crucial to consider the company’s fundamentals, growth prospects, and industry trends.
In this article, we will examine five pharmaceutical companies with low P/E ratios. For this study, we have considered only those stocks with positive earnings (P/E greater than zero) and a market capitalization of more than Rs 5,000 crore.
#1 Natco Pharma
Natco Pharma is a research and development oriented, vertically integrated pharmaceutical firm involved in the development, manufacturing, and marketing of complex products for niche therapeutic areas.
The company has made its presence felt in all three business segments i.e. finished dosage formulations (FDF), active pharmaceutical ingredients (APIs), contract manufacturing business.
The company is trading at a PE multiple of 7.7 times currently. It is considerably below its 10-year median PE of 27.4 times.
10-Year PE Chart of Natco Pharma Source: Screener.in
ICICI Securities has placed a target price of Rs 1,675 on Natco Pharma, which reflects an enormous 111.2% appreciation from its current market price. The brokerage sees this target being reached in October 2025.
Natco Pharma is gearing up for a post-gRevlimid period by targeting niche,
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