Buy Aurobindo Pharma target of Rs 1139: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Aurobindo Pharma

This has resulted in marginal decrease of 2% in earnings estimates in FY22E/23E. Given its strong focus on strengthening performance in its global injectable business, we increased assigned PE to 17x (earlier 15x) on FY23 EPS of Rs66.9 and arrive at a TP of Rs1,139 (earlier Rs1,023). We believe that valuation re-rating would be driven by 1) better product mix with higher contribution of injectable exports, as guided to be US$650-700mn in FY23E v/s US$269mn in FY21, 2) Eugia (Oncology) product launches in US & Europe, with currently 52 products under development stage 3) Europe EBITDAM crossed double-digit, despite incorporating lossmaking Apotes, 4) better outlook on Auromedics (Inj) and 5) divestment of Natrol. 4QFY21 Adj. earnings beat our estimates on back of higher than expected revenues from acquired operations of Apotex in EU and higher realisations in API due to global supply constraints. US revenue (comparable post sell-off Natrol) remained muted with 2% QoQ decline, while other export markets (except EU) declined 7% QoQ. ARBP changed its strategy in last few quarters and guided for no big ticket M&A and incremental CAPEX, which can lead to lower debt and better earnings growth with healthy EBITDAM.

Outlook

We maintain Buy rating on ARBP as the core growth drivers of ARBP remains strong and stable except few COIVD related logistical issues delayed revenue realization.

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