Brokerage firm Macquarie continues to remain underwhelmed by the growth prospects of Aurobindo Pharma Ltd., flagging that the company still leans heavily on China for a key antibiotic input, with its own Pen-G antibiotic capacity yet to meaningfully scale up.
Aurobindo continues to be rated 'underperform' by the brokerage, with a target price of Rs 1,010.
The company continues to import 6-amino penicillanic acid (6-APA), a Penicillin-G derivative, averaging around 3,000 tonnes annually. In the first half of the current fiscal alone, Aurobindo has already brought in around 1,500 tonnes of 6-APA, signalling that internal Pen-G production remains insufficient even for in-house needs, notes the brokerage.
Compounding concerns, import prices for Pen-G and its salts have slid sharply from a peak of $34/kg in 2023 to $14/kg in Oct. 2025. Prices of 6-APA have also dropped 44% over the same period, from $43/kg to $24/kg.
Macquarie estimates Aurobindo's optimum production cost for Pen-G at $12/kg, translating to $25/kg for 6-APA, implying that any meaningful Minimum Import Price (MIP) would have to be set well above $25/kg to make domestic production profitable.
The brokerage also points to precedent: recent MIPs on soda ash and paper failed to curb imports, fuelling scepticism that similar measures for Pen-G or 6-APA would materially shift dependence away from China.
Post its September quarter results, Macquarie has trimmed FY26 earnings by 4% while keeping FY27/28 estimates unchanged, though its forecasts for those years remain below Bloomberg consensus.
The brokerage also highlights key drags ahead: the gRevlimid cliff, a slower-than-expected Pen-G ramp-up, and intensifying US generics price erosion. Potential catalysts include the December quarter results, regulatory developments and the trajectory of US pricing.
Aurobindo Pharma's scrip rose as much as 1.25% to Rs 1,223.10 apiece, paring gains to trade 0.93% higher at Rs 1,219.20 apiece, as of 11:22 a.m. This compares to a 0.97% advance in the NSE Nifty 50 Index.
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