Accumulate Aurobindo Pharma target of Rs 1475: Prabhudas Lilladher

Prabhudas Lilladher's research report on Aurobindo Pharma

Aurobindo Pharma’s (ARBP) Q2FY25 EBITDA of Rs15.6bn (down 3% QoQ) with OPM of 20.1%, was 9% below our estimate. The miss was largely because of higher PenG related operational cost and shipping disruptions. We expect margins to improve with ramp up in PenG facility, Vizag pant commercialization and launches in US. Pick up in US sales hinge on timely niche approvals along with stabilization of pricing pressure in the base business. We believe ARBP has multiple growth drivers in place with investments in vaccines, injectables, biosimilars and PLI which are expected to be reflected from FY26. Our FY26/27E EPS estimates broadly remains unchanged.

Outlook

At CMP, the stock is trading at 17x FY26E P/E. We value company at 20x FY26E EPS and assign a TP of Rs1,475/share. Maintain ‘Accumulate’ rating.