Hold Aurobindo Pharma; target of Rs 630: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss's research report on Aurobindo Pharma

Aurobindo Pharma (ARBP) reported muted Q4FY18 results. Adjusted PAT grew 5% YoY against our 16.5% expectation. The weak performance was due to product recall in injectables and erosion in key products like gRenvela. One‐time receivables securitization made in FY17 was not sustainable as gross debt grew to USD731mn (FY17: USD439mn) to fund increase an in working capital and the Generis acquisition.

Outlook

Over FY18-20E, we estimate R&D cost to increase by ~80%, margin to decline ~270bps and earnings to remain almost flat. We maintain ‘HOLD/SP’ and cut TP to INR630 (15x FY20E EPS).

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