Aurobindo Pharma stock drops 4.5% after USFDA flags 10 observations for arm Apitoria's API unit

With today's losses, Aurobindo Pharma stock is already down over 6 percent for the month.

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26 Aug, 2025 12:21

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Shares of Aurobindo Pharma dropped 4.5 percent on September 30 after the Telangana manufacturing unit of the drugmaker's arm Apitoria Pharma was issued 10 observations by the US Food and Drug Administration.

The US drug regulator conducted its inspection of the Telangana API (Active Pharmaceutical Ingredient) manufacturing unit on September 23-27. The company further stated that these observations are procedural in nature and will be responded to within the stipulated time.

At 2.18 pm, shares of Aurobindo Pharma were trading at Rs 1,472.75 on the NSE. With today's losses, the stock is already down over 6 percent for the month.

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Last week, brokerage firm UBS Securities also initiated a 'sell' call on the stock, assigning it a price target of Rs 1,333, forecasting a 12 percent downside from current levels due to high valuations in the face of low growth.

"High exposure to the US and EU generics markets (85 percent of net profit) have resulted in a low earnings growth trajectory for Aurobindo at a mid-single digit CAGR," UBS wrote in a note.

The firm also expects to see a growth moderation for pharma companies in the US generics market, a space where Aurobindo has the highest exposure, making it a major downside risk for the stock.  Meanwhile, UBS Securities expects 12 percent EBITDA CAGR for Aurobindo Pharma over FY25-27.

According to UBS, business diversification would be needed to boost the growth trajectory for Aurobindo, and that may require more investment. "Aurobindo has made a start by diversifying into biosimilars, large API/intermediate projects like Penicillin G, and its entry into new markets like India and Indonesia. However, given the high base (FY25 expected revenue of $3.7 billion), it would take time to boost overall growth," the brokerage stated.

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