Buy Aurobindo Pharma; target of Rs 1300: ICICI Securities

ICICI Securities's research report on Aurobindo Pharma

Aurobindo’s Q1FY26 result was dragged by lower revenue of gRevlimid (impact of 2% YoY/~7% QoQ) and API (-16% YoY). Gross / EBITDA margins at 58.8%/20.4% were impacted by lower gRevlimid and PLI income and Pen-g plant cost (INR 500mn). While gRevlimid’s revenue for next two quarters may be soft, management has maintained its EBITDA margin guidance of 20-21% for FY26 (20.8% in FY26). Manufacturing at Pen-G plant resumed in Jul’25 and a pick-up is likely in Q3FY26. Acquisition of Lannett could complete in nine months and may add 6-7% to revenue and ~2% to EPS (not factored in our estimates) in FY27E. Timeline for other growth projects like biosimilars and biologic CDMO is intact for H2FY26. Cut FY26E EPS by ~7% to factor in lower gRevlimid sales and other income. Upgrade to BUY but trim TP to INR 1,300, based on 16x FY27E EPS.

Outlook

We cut FY26E EPS by ~7% to factor in lower gRevlimid revenue and other income and maintain our FY27 estimates. The stock currently trades at 16.7x FY26E and 13.1x FY27E earnings, and EV/EBITDA multiples of 8.4x FY26E and 6.8x FY27E. We upgrade to BUY (earlier Add) but lower target price to INR 1,300 (INR 1,330 earlier), based on 16x FY27E EPS (unchanged).