FIIs and DIIs are piling into these four pharma stocks. Should you follow?

Gujarat Themis Biosyn (GTBL) was incorporated in 1981 as a joint-sector company with Gujarat Industrial Investment Corporation (GIIC) Limited. It commenced operations by producing the antibiotic erythromycin and its salts. In 1991, Chemosyn Pvt. Ltd. transferred ownership of the company to Pharmaceutical Business Group (India) Ltd. (PBG). Subsequently, Themis Medicare and PBG entered into a technical and financial collaboration with Yuhan Corporation, South Korea.

With Yuhan Corporation’s technical expertise, GTBL became the first company in India to begin commercial production and marketing of rifampicin, an anti-tuberculosis medicine. FIIs more than doubled their stake in the company from 1.76% to 3.8% over the September quarter, while DIIs’ stake jumped from 1.17% to 12.65%. In Q1 FY27, the company’s revenue grew 22.1% year-on-year to ₹43.8 crore; Ebitda increased 49.4% to ₹20.8 crore, and profit after tax (PAT) rose 22.1% to ₹11.1 crore.

Economies of scale from higher volumes helped improve the Ebitda’s margin. The company has made significant strides in inorganic expansion initiatives of late. The acquisition of Sanofi’s brands is expected to give it access to new distribution networks in key overseas markets. The acquisition of MicroBiopharm in Japan complements and strengthens the company’s manufacturing capabilities, technological know-how, and product offerings.

On capex in India, while the new research and development (R&D) and active pharmaceutical ingredient (API) units are up and running, and development of a new fermentation facility is also complete. Construction of a hybrid power plant in Gujarat is well underway, which will be used for captive consumption. This is expected to reduce Gujarat Themis’s power costs and dependence on the grid, and lower its carbon footprint.

Cipla Ltd is one of India's biggest pharmaceutical companies. Established in 1935, it develops, manufactures and markets medicines in India and international markets, with a strong presence in respiratory treatments, generic medicines and specialty therapies. FIIs increased their stake marginally from 20.20% to 20.24% during the September quarter, while DIIs raised their stake from 34.35% to 34.61%.

Management expects the North America business to continue its sequential growth during the year, supported by upcoming product launches and continued commercial execution. The pipeline for the remainder of the year includes four significant launches comprising three respiratory assets, including generic Advair and a key peptide opportunity. On the regulatory front, the US FDA completed a routine good manufacturing practice (GMP) inspection and a pre-approval inspection (PAI) at Cipla’s facility in Verna, Goa, during Q1FY27.

It was subsequently classified as voluntary action indicated (VAI) )—meaning objectionable conditions were found, but the regulator will not enforce administrative or legal action, leaving corrective steps to the company. In July, the US FDA wrapped up a routine GMP audit at Cipla’s Invagen facility in New York, issuing a single Form 483 observation that the company must resolve within the deadline.

Meanwhile, management expects a reinspection of its Indore plant shortly. Torrent Pharmaceuticals is another leading Indian pharmaceutical company and the flagship business of the Torrent Group. It manufactures and markets branded and generic medicines in India and abroad. FIIs increased their stake in the company from 15.44% to 17.22% over the September quarter, while DIIs raised their stake from 9.73% to 13.37%.

On the financial front, consolidated revenue for Q1FY27 was ₹4,921 crore, up 55%, while operating Ebitda was ₹1,664 crore, up 61%. Operating Ebitda margin for the quarter stood at 33.8%. The merger of JB Chemicals with Torrent Pharma was completed on 8 July, with the financial combination taking effect retroactively from 21 January 2026. For FY27, management said it will focus on expanding market share in key therapeutic segments, boosting field force productivity across new divisions, and scaling up the Curatio business.

Rubicon Research is a pharmaceutical formulations company, driven by innovation through focused research and development, with a growing portfolio of specialty products and drug-device combinations targeting regulated markets. FIIs increased their stake in the company from 7.52% to 9.01% over the September quarter, while DIIs raised their stake from 9.43% to 15.73%. The company did well in Q1FY27.

Revenue from operations was ₹534.3 crore, up 52% year-on-year. Gross profit was ₹354.3 crore, up 46% from ₹243 crore in Q1FY26. During Q1FY27, Rubicon had a one-off item under ‘other income’ from an insurance claim for goods lost in transit. Including this, PAT was ₹84.8 crore, up 96% from ₹43.3 crore in Q1FY26. The top five products contributed 39% of revenue in Q1, and the top 10 contributed 55%.

These four pharma stocks may have attracted institutional attention, but that alone does not guarantee good returns. Institutional investors have different investment goals, risk appetites and time horizons than the typical retail investor. You should never buy a stock simply because FIIs or DIIs have increased their holdings. Before considering any of these stocks, you should examine the company’s revenue growth, profit margins, debt, valuations, R&D spending, and regulatory risks.

Pharma companies may also face challenges from pricing pressure, regulatory interventions, and competition from generic drugs. Independent research, careful valuation and an assessment of personal risk tolerance are essential before making any investment decision. This article is syndicated from Equitymaster.com