Khambatta Securities is bullish on Aurobindo Pharma has recommended buy rating on the stock with a target price of Rs 800 in its research report dated May 30, 2018.
Khambatta Securities's research report on Aurobindo Pharma
Aurobindo’s revenues decreased 6.2% q-o-q but increased 11.7% y-o-y to Rs 40,929 mn in 4Q FY18 broadly in-line with our expectations. Revenue growth was driven by 5.8% y-o-y growth in US and 39.7% y-o-y growth in Europe during the quarter. API business posted 4.8% y-o-y during the quarter. Revenues increased 9.6% y-o-y to Rs 166,018 mn in FY 2018.
We assume a target EV/EBITDA multiple of 10.0x for FY 2020E EBITDA, to arrive at a target price of Rs 791 per share. Aurobindo’s DCF valuation is Rs 796 per share. Consequently, using a weighted average methodology we arrive at a share price of Rs 800, generating a 38.2% upside potential in the medium term. Hence, we reiterate our “Strong Buy” rating for Aurobindo Pharma common stock.
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