Pharma Emerges As Only Large-Cap Sector Trading Above FY26 Average Valuation

The pharmaceuticals sector has become the only major large-cap space trading above its FY26 average valuation, even as sectors such as IT, FMCG, banking, and real estate continue to remain below historical levels.

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According to JM Financial Institutional Securities’ India Pulse report for April 2026, the NSE Pharma index was trading at 31.5x one-year forward earnings. This is higher than its FY26 average valuation of 28.3x and above its FY25 average of 29x.

The brokerage attributed the premium valuation to sustained demand in the U.S. generics market, improving product pipelines and stable growth in India’s domestic formulations business.

Domestic pharmaceutical demand has remained supported by chronic therapies and higher healthcare spending, while export-focused drugmakers have benefited from steady pricing and recovery in demand across the U.S. market.

IT, FMCG And Banking Valuations Stay Below Historical Levels

In comparison, the NSE IT index was trading at 17x one-year forward earnings, significantly below its FY26 average of 22.7x.

The FMCG sector was trading at 29.5x against its FY26 average valuation of 33.3x, while the NSE Banks index stood at 1.6x one-year forward price-to-book value compared with its FY26 average of 2x.

Valuation multiples for real estate were also lower than their historical long-term averages, with the sector valued at 24.9x compared to an FY26 average of 30.6x.

According to the report, valuations in the IT space are under pressure due to the slowdown in discretionary spending and weak demand trends across the globe.

FMCG firms continue to be pressured due to concerns around the slowdown in urban demand and margin pressures, while valuations of banks are still under pressure amid concerns around deposits and NIM contraction.

Broader Market Valuations Recover In April

The broader market recovered during April after weakness in March. The Nifty 50 one-year forward price-to-earnings ratio rose to 18.6x in April from 17.4x in March, although it remained below the FY26 average valuation of 20.4x.

Midcap valuations improved to 27.5x from 24.6x in the previous month, while smallcap valuations rose to 22.3x from 20.2x.

Among sectors, FMCG, automobiles and real estate recorded the strongest rebound in valuations during April.
Auto stocks were trading at 23.4x, above both FY25 and FY26 averages, while metal stocks continued to trade below historical levels amid concerns around the global commodity cycle.

The report added that investors continue to prefer sectors with stronger earnings visibility and relatively defensive growth characteristics, with pharmaceuticals remaining a key beneficiary of that trend.