Buy Aurobindo Pharma; target of Rs 1532: Sharekhan

Sharekhan's research report on Aurobindo Pharma

Quarterly revenue reached Rs. 7,796 crore, up 8% y-o-y and 3% q-o-q, exceeding our estimates by 1%, while PAT was Rs. 817 crore, showing a 9% y-o-y increase but an 11% q-o-q decrease, falling 19% below our estimates. EBITDA stood at Rs. 1,566 crore, reflecting a 14% y-o-y increase and a 3% q-o-q decline, missing our estimates by 12%, while margins stood at 20%, up 106 basis points y-o-y but down 131 basis points q-o-q. Company anticipates lower performance for the special product in Q2 and Q3 due to UGR3 supply issues.

Outlook

We believe that the Eugia WL will not affect injectable sales and that the lack of pricing pressure in oral solids will drive US growth. A breakeven for penicillin is expected by Q4 FY26, with profitability anticipated in FY26. Therefore, we are upgrading our recommendation to Buy. At the current market price, the stock is trading at premium valuations of around 19x/15x its FY2026E/FY2027E EPS, with a price target of Rs. 1532.