Hold Aurobindo Pharma; target of Rs 540: ICICI Direct

ICICI Direct's research report on Aurobindo Pharma

Aurobindo is a significant global generics player with 28 manufacturing facilities, including eight key formulations facilities in India and abroad along with three R&D centres. The current employee strength is more than 8000, which includes more than 750 scientists. FY22, API: formulations ratio was at 15:85. US formulations constitute 47% of revenues followed by Europe (28%), APIs (15%), RoW (6%) & ARV (4%) • Aurobindo is setting up a plant for production of Penicillin-G with capacity of 15,000 MT for Rs 1850 crore, under the PLI scheme.

Outlook

We maintain HOLD as US base business outlook is far from stable besides elongated margins recovery due to pressure on GPM and higher R&D. The non-business related legacy CG issues are likely to weigh in the near term. Valued at Rs 540 at 12x P/E on FY24E EPS of Rs 44.8.