Hold Aurobindo Pharma; target of Rs 975: Sharekhan

Sharekhan's research repor on Aurobindo Pharma

Q1FY2021 results were mixed. Revenues grew 8.8% y-o-y led by a 9% rise in formulations sales, while API sales were up by 6.5% y-o-y. PAT was up 20.6% y-o-y to Rs 770 cr. US business is gradually gaining traction driven by a sturdy new product launch pipeline. Successful resolution of USFDA observations would be a key parameter to watch and will be a trigger for an earnings upgrade. Sales and PAT are expected to grow by a 9% and 11% CAGR respectively over FY2020-FY2022. In the past three months the stock price has run up 49%, thus leaving limited upside.

Outlook

We maintain our Hold rating on the stock with a revised PT of Rs. 975.

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