Aurobindo Pharma Gets 'Buy' Upgrade From Motilal Oswal On Attractive Valuations

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Motilal Oswal Report

After a strong FY24, Aurobindo Pharma Ltd. is expected to post a moderate 10% YoY earnings growth in FY25, partly due to:

1. operational losses from the PEN-G product and

2. disrupted production at Eugia III caused by regulatory issues.

With the above issues largely behind, we expect Aurobindo Pharma to witness an uptrend in earnings growth, led by-

1. better profitability from backward integration in antibiotic products through the PEN-G project,

2. the launch of niche products, and

3. scale-up in injectable production.

We estimate 10%/13%/17% revenue/Ebitda/PAT CAGR over FY25-27.

We value Aurobindo Pharma at 16x 12M forward earnings to arrive at a target price of Rs 1,360.

Considering the earnings upside potential and recent correction in the stock price, we upgrade to Buy.

Key Risks: Any adverse policies with respect to US tariffs on imports could impact our estimates. Additionally, delays in key approvals may keep earnings growth under check.

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