Buy Aurobindo Pharma; target of Rs 1540: Geojit Financial Services

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26 Aug, 2025 12:21

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Aurobindo Pharma Ltd (ARBP) is a leading vertically-integrated pharmaceuticals company. Its business units comprise formulations, custom synthesis, peptides, aurozymes, research and development (R&D) and active pharmaceutical ingredients (API). In Q2FY25, consolidated revenue rose 8.0% YoY to Rs. 7,796cr, driven by strong base product sales in the U.S., continued growth trajectory in Europe, and growth markets. The company’s U.S. revenue increased to Rs. 3,530cr, (+4.3% YoY, excluding revenue of Puerto Rico), aided by volume gains and new product launches. Europe revenue rose to Rs. 2,105cr (+19.0% YoY) on a robust performance across all key geographies within the region. Growth markets grew to Rs. 812cr (+44.0% YoY), supported by sales across markets and expansion into new geographies. EBITDA increased 11.6% YoY to Rs. 1,566cr, driven by stable raw material prices. Along with an EBITDA margin expansion of 70bps YoY to 20.1%. The company expects FY25 EBITDA margin to be in the range of 21-22%. The company’s reported PAT increased 8.6% YoY to Rs. 817cr. However, PAT growth was partly offset by higher total tax expense. Aurobindo expects a tax rate of ~30% for FY25.

Therefore, we maintain our rating on the stock to BUY, with a revised target price of Rs. 1,540, based on 20x FY26x Adj. EPS.

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