Buy Aurobindo Pharma; target of Rs 1300: Motilal Oswal

Motilal Oswal's research report on Aurobindo Pharma

Aurobindo Pharma (ARBP) delivered lower-than-expected performance for 1QFY26. While revenue was in line with estimates, EBITDA/PAT missed our estimates by 7%/8% for the quarter. Higher operational costs related to newer plants and pricing headwinds in the API segment impacted earnings for the quarter. That said, the global specialty and injectables sales witnessed QoQ growth in 1QFY26

Outlook

We cut our earnings estimates by 8%/7% for FY26/FY27, factoring in: a) initial operational costs associated with the restarting of the PEN-G and China plants and b) pricing headwinds in the API business. We value ARBP at 16x 12M forward earnings to arrive at a TP of INR1,300.