India's pharmaceutical sector is a global powerhouse, renowned as the 'Pharmacy of the World' for its leadership in generic drugs, vaccines, and affordable healthcare. With robust growth (10% YoY in Q2 FY25) and a significant global supply role, the industry presents compelling investment opportunities. This article explores the best pharma stocks, including Sun Pharma and Cipla Ltd, based on their 5-year CAGR, for July 2025.
| Company | Market Cap (₹ Cr) | 5Y CAGR | Net Profit Margin |
| Sun Pharmaceutical Industries Ltd | 4,00,640.95 | 28.32% | 20.04% |
| Zydus Lifesciences Ltd | 98,807.15 | 21.96% | 19.25% |
| Ajanta Pharma Ltd | 32,279.29 | 21.64% | 19.41% |
| Torrent Pharmaceuticals Ltd | 1,09,064.04 | 21.13% | 16.56% |
| Cipla Ltd | 1,22,270.81 | 18.98% | 18.56% |
Note: The best pharma stocks list here is as of June 27, 2025.
In Q4 FY25, Sun Pharma reported 8.5% sales growth, driven by Speciality products despite challenges in the US generics market. Effective cost control led to a 17.3% rise in EBITDA amid higher material costs. The company is investing US$100 million in dermatology and boosting R&D, positioning itself for future growth.
Key Metrics:
Zydus Lifesciences Ltd has delivered a strong fiscal performance, with net income growing at a 5-year CAGR of 15.86%, slightly above the industry average of 15.29%. Its strategic focus on a diversified product portfolio, including speciality and orphan drugs, is expected to strengthen its market presence. Record operating profits and margins, particularly in the US and India, have been driven by solid demand and successful product launches, reinforcing its growth momentum.
Key Metrics:
Over the past five years, Ajanta Pharma Ltd has recorded an average annual revenue growth of 15.64%, compared to the industry average of 9.02%. Its market share has gradually increased from 0.95% to 1.13% during this period. Net income has also seen a yearly growth rate of 16.1%, slightly ahead of the industry’s 15.29%, suggesting steady financial performance and moderate improvement in profitability.
Key Metrics:
In Q3 FY25, Torrent Pharmaceuticals Ltd reported a 12% growth in its India business, supported by the branded market, which accounts for 76% of its total revenue. This reflects the company's steady position in the domestic market. Over the last five years, Torrent's net income has grown at an annual rate of 30.58%, significantly higher than the industry average of 15.29%, indicating consistent earnings improvement and efficient business operations.
Key Metrics:
Cipla Ltd reported strong performance with an 8% year-on-year growth in its One India business and a record US$934 million in North America, driven by new drug approvals. The company plans capital expenditure of 4–5% of revenue to boost production and support growth. Upcoming launches in diabetes and peptide therapies position Cipla well to meet evolving market needs, reflecting a balanced strategy focused on innovation and profitability.
Key Metrics:
Torrent Pharmaceuticals Ltd has the highest cash flow margin at 30.04%, indicating stronger operational efficiency and better ability to convert revenue into actual cash compared to its peers. Ajanta Pharma Ltd and Sun Pharmaceutical Industries Ltd follow closely with margins around 24%.
| Company | Cash Flow Margin |
| Torrent Pharmaceuticals Ltd | 30.04% |
| Ajanta Pharma Ltd | 24.40% |
| Sun Pharmaceutical Industries Ltd | 24.32% |
| Cipla Ltd | 17.62% |
| Zydus Lifesciences Ltd | 16.25% |
Note: The best pharma stocks list here is as of June 27, 2025.
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Based on a comprehensive analysis of 5-year CAGR, profitability, and cash flow, the Indian pharmaceutical sector presents robust investment opportunities. Companies like Sun Pharma, Torrent Pharmaceuticals, Ajanta Pharma, Zydus Lifesciences, and Cipla Ltd demonstrate notable considerations for July 2025. Investors should consider their diverse strengths when evaluating the best pharma stocks.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Published on: Jun 27, 2025, 10:00 AM IST
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