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Prabhudas Lilladher Report
Our FY24/25E earnings per share estimate of Aurobindo Pharma Ltd. stands increased by 7-12% to factor in higher margins.
Aurobindo Pharma's Q1 FY24 Ebitda of Rs 11.5 billion (up 15% QoQ) with operating profit margin of 16.8% (up 130 basis points QoQ) was 8% above our estimate.
We expect margin trajectory to further improve. Pick up in U.S. sales hinge on timely niche approvals along with stabilization of pricing pressure in base business.
We believe Aurobindo Pharma has multiple growth drivers in place with investments in vaccines, injectables, biosimilars and production linked incentive which are expected to be reflected from FY25.
At current market price, stock is trading at 16 times FY25E price/earning. We value company at 16 times FY25E EPS (13 times earlier) and assign a target price of Rs 900/share (Rs 660 earlier).
Given a sharp 20% appreciation in stock price in less than one month and limited upside, we cut our rating from 'Buy' to 'Accumulate'.
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