KR Choksey's research report on Aurobindo Pharma
Aurobindo Pharma’s revenue beat our estimate due to strong growth across geographies especially in the US and growth markets. The EBITDA beat our estimate due to lower than expected cost of goods sold and better product mix. Currently, the stock is trading at 19.2x/16.6x, based on FY25E/FY26E EPS respectively. We increase the target price to INR 1,295/share (previously: INR 1,090) and maintain our ACCUMULATE rating on the stock, implying an FY26E PE multiple of 17.6x. To mitigate risks associated with Eugia 3's OAI (Official Action Indicated) status, the Company is preparing its Vizag plant as a backup, having completed the audit and expecting product approval soon. Key areas to watch include the ramp-up of the Penicillin-G project in FY25E and the pipeline of 14 biosimilar products, poised to drive growth in the medium term.
Outlook
The stock has increased 22.3% since our last update. Currently, the stock is trading at 19.2x/16.6x, based on FY25E/FY26E EPS respectively. We expect the revenue to grow at 8.6% CAGR and Adj PAT to grow at 13.2% CAGR over FY24-FY26E. We increase the target price to INR 1,295/share (previously: INR 1,090) and maintain our ACCUMULATE rating on the stock, implying an FY26E PE multiple of 17.6x.
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