Accumulate Aurobindo Pharma; target of Rs 1120: Prabhudas Lilladher

Prabhudas Lilladher's research report on Aurobindo Pharma

Our FY25/26E EPS est. stands increased by ~8-12% as we now built in revenues from PLI. Aurobindo Pharma’s (ARBP) Q3FY24 EBITDA of Rs16bn (up 14% QoQ) with OPM of 21.8% (up 240 bps QoQ) was 7% above our estimate. We expect margins to sustain. Pick up in US sales hinge on timely niche approvals along with stabilization of pricing pressure in the base business. We believe ARBP has multiple growth drivers in place with investments in vaccines, injectables, biosimilars and PLI which are expected to be reflected from FY25.

Outlook

At CMP, the stock is trading at 16x FY25E P/E. We value company at 15x FY26E EPS and assign a TP of Rs1,120/share (Rs1065 earlier). Maintain ‘Accumulate’ rating. Any adverse effect to recent FDA inspection to Eugia 3 facility will be key risk to our call.

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Aurobindo Pharma - 14022024 - prabhu