Aurobindo Pharma: Most Preferred, And Cheapest

Aurobindo Pharma: Most Preferred, And Cheapest
Tablets are arranged for a photograph in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Aurobindo Pharma Ltd. is currently India's most preferred pharmaceutical stock, with 36 of 38 analysts tracked by Bloomberg recommending a ‘buy' rating.

The Bloomberg consensus 12-month price target of Rs 916 per share implies an upside potential of 36 percent, the highest among its peers. And yet, it is India's cheapest listed drug manufacturer among the top ten pharmaceutical companies with the highest market capitalisation.

Aurobindo Pharma's shares currently trade at forward price to earnings ratio of 16.5 times for financial year 2016-17. The next in line is Glenmark Pharmaceuticals Ltd. which trades at price to earnings ratio of 17.6 times.

Compared to a 4 percent year-to-date rise on the Nifty Pharma Index, Aurobindo Pharma has advanced less than a percent. Can the combination of high upside potential and cheap valuations take the stock higher?

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