Buy Aurobindo Pharma; target of Rs 1440: Prabhudas Lilladher

Prabhudas Lilladher's research report on Aurobindo Pharma

Aurobindo Pharma’s (ARBP) Q4FY25 EBITDA of Rs17.9bn (up 6% YoY) was in line with our estimate. FY26 guidance of high single digit revenue growth ex gRevlimid with flat margins was below our estimate. Resultant our FY26 and FY27E EPS stands reduced by 4-5%. Other expenses remained elevated on the back of higher PenG-related operational cost and supply disruptions due to ongoing remediation. However, 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 / 14.5x P/E on FY27E), we maintain our “Buy” with revised TP of Rs1,440/share; valuing at 18x FY27E EPS.