Buy Aurobindo Pharma; target of Rs 1445: ICICI Securities

ICICI Securities's research report on Aurobindo Pharma

Aurobindo Pharma’s Q3FY25 performance was below our expectation due to lower-than-anticipated sales in US while Europe (up 22.7% YoY) and growth markets (up 39.2% YoY) maintained traction. EBITDA margin was 20.4% despite lower gRevlimid sales and INR 600mn cost of Pen-G plant. We believe from Q4 higher revenue of gRevlimid, lower losses of Pen-G plant and normalisation of supplies from Eugia Unit 3 may boost growth and margins. It also plans to launch 3 biosimilars in UK and Europe by Jul’25. Timeline for CMO biologics (FY28 opportunity) and GLP-1 projects is on track. Management maintained EBITDA margin guidance of 21-22% in FY25. Reduce FY25/26E EPS by ~2-4% to factor in lower US sales. Maintain BUY but cut TP to INR 1,445, based on 18x FY26E EPS.

Outlook

We maintain BUY on the stock with lower target price of INR 1,445 (INR 1,470 earlier), based on 18x FY26E EPS (unchanged).