Buy Aurobindo Pharma; target of Rs 1430: Motilal Oswal

Motilal Oswal's research report on Aurobindo Pharma

With considerable investment (INR35b) done till date by Aurobindo Pharma (ARBP) in the Pen-G/6-APA project and support from the government under the PLI scheme, ARBP is scaling up the production to enhance self-sufficiency of India in bulk drugs/intermediates to be used for Beta-Lactum antibiotics. The minimum import price (MIP), if implemented by the Government of India, would further strengthen the prospects of ‘Make in India’ and reduce the dependence on Chinese suppliers. Biosimilars remain another long-term growth engine, underpinned by a) CuraTeQ’s late-stage pipeline, b) EU GMP-certified integrated manufacturing, c) multiple Phase-3 programs with efforts to have waivers from regulators, and d) approved products already commercial in Europe, with a significant monetization inflection expected from FY27-28.

Outlook

In addition to Pen-G, biosimilars and EU prospects, the injectables pipeline and the integration of Lannett will enable ARBP to deliver a CAGR of 9%/14%/21% in revenue/EBITDA/PAT over FY26-28. We value ARBP at 16x 12M forward earnings to arrive at a TP of INR1,430. Maintain BUY.