ICICI Securities has downgraded Aurobindo Pharma to Add (from Buy earlier) with a revised target price of Rs 1,330 (earlier Rs 1,445). The current market price of Aurobindo Pharma Ltd. is Rs 1147.95. Aurobindo Pharma, incorporated in 1986, is a Large Cap company with a market cap of Rs 66664.41 crore, operating in the Pharmaceuticals sector.
Aurobindo Pharma’s key products/revenue segments include Pharmaceuticals, Sale of services, Export Incentives and Scrap for the year ending 31-Mar-2024.
Financials
For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 8516.93 crore, up 4.68 % from last quarter Total Income of Rs 8135.81 crore and up 10.38 % from last year same quarter Total Income of Rs 7715.77 crore. The company has reported net profit after tax of Rs 935.02 crore in the latest quarter.
The company’s top management includes Mr.M Ramasubramanian Kumar, Mr.Santanu Mukherjee, Mrs.Savita Mahajan, Mr.Girish P Vanvari, Mr.P Sarath Chandra Reddy, Dr.Satakarni Makkapati, Mr.P V Ramprasad Reddy, Mr.M Madan Mohan Reddy, Mr.K Nithyananda Reddy, Dr.Deepali Pant Joshi. Company has Deloitte Haskins & Sells as its auditors. As on 31-03-2025, the company has a total of 58 Crore shares outstanding.
Investment Rationale
Aurobindo Pharma?s US sales growth (up 8.8% YoY to $470 million) in Q4FY25 was driven by gRevlimid; however, sales run-rate is likely to come down in FY26 as pricing competition intensifies, manufacturing at Pen-G plant has been temporarily halted due to fire in the coal yard near conveyor belt. However, production may resume soon post approval from Andhra Pradesh Pollution Control Board which the management expects in next couple of months. Europe business continues to grow at a faster pace and going ahead new launches may boost growth. Management expects traction in Europe to improve ahead led by new product launches and will launch biosimilars in Europe and UK in Q2FY26.
Aurobindo has signed a definitive agreement with Merck Sharpe and Dohme (MSD Singapore) for contract manufacturing of innovative biologics, civil work on this plant is on and in FY27 it expects to commission this plant; revenue generation to start in FY28. ICICI Securities lowered its FY26/27E EBITDA by ~12%/8%, respectively, to factor in lower sales from Eugia. The stock currently trades at 17.1x FY26E and 14.3x FY27E earnings, and EV/EBITDA multiples of 9.1x FY26E and 7.6x FY27E. They have lowered rating on the stock to ADD (from Buy) with lower target price of Rs 1,330 (Rs 1,445 earlier), based on 16x FY27E EPS (18x FY26E EPS earlier). Key downside risks include regulatory hurdles, currency volatility and delay in US launches.
Promoters held 51.82 per cent stake in the company as of 31-Mar-2025, while FIIs owned 15.33 per cent, DIIs 26.23 per cent.
