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ICICI Securities Report
Aurobindo Pharma Ltd.'s Q1 FY25 result came in short of our expectations amid lower U.S. sales and a surge in costs. U.S. sales dipped 1.4% QoQ as supplies from Eugia unit three were lower ($15–20 million impact) due to Official action indiacted at plant; over-the-counter biz saw a seasonal dip. The company incurred a cost of ~Rs 1 billion from plant remediation ($9 million) and overheads of new plants (Rs 250 million); adjusting for it, Ebitda margin was at 22.7%.
Remediation cost should ease to ~$2 million in Q2 FY25 while operational overheads are likely absorbed gradually. Development of biosimilars is on track. Its India foray is envisaged in H2 FY25 and Europe/U.S. in FY26/27.
Aurobindo may soon re-initiate the listing of Eugia. FY25 Ebitda guidance of 21–22% may be revised post Q2 FY25. We downgrade to Add and raise the target price to Rs 1,620, based on 18 times FY26E earnings per share.
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