Buy Aurobindo Pharma; target of Rs 1300: Prabhudas Lilladher

Prabhudas Lilladher's research report on Aurobindo Pharma

Aurobindo Pharma’s (ARBP) Q1FY26 EBITDA of Rs16.1bn (down 1% YoY) was 5% below our estimate led by lower US sales. Resultant our FY26 and FY27E EPS stands reduced by 5-10%. The company has maintained its 20-21% OPM guidance for FY26E despite gRevlimid sales loss. We expect margins and revenues to improve from H2FY26/FY27 with ramp up in PenG facility, Vizag pant commercialization and launches in US. 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.

Outlook

Given attractive valuations (8x EV/EBITDA / 14x P/E on FY27E), we maintain our “Buy” with revised TP of Rs1,300/share; valuing at 17x (18x earlier) FY27E EPS.