Motilal Oswal 's research report on Aurobindo Pharma
The Aurobindo Pharma (ARBP) stock has corrected ~20% over the past two months. This, we believe, provides a good entry opportunity in the stock. Multiple factors strengthen our positive stance on the stock, such as: (a) the gradual improvement in outlook for the Injectable business, (b) ongoing efforts to build a complex product pipeline, (c) significantly reduced financial leverage, (d) completion of remediation measures at sites under regulatory issues, and (e) comfortable valuation (at 11.9x FY22E EPS of INR65 compared to 5-year average of 16x).
We expect ARBP to deliver 15% earnings CAGR over FY20-22E, led by new launches/increased market share in its key markets of the US/EU and lower financial leverage. We value ARBP at 16x 12M forward earnings to arrive at a target price of INR1,030. Re-iterate Buy.
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