Target: ₹1,360

CMP: ₹1,206

Aurobindo Pharma (ARBP) is actively investing across multiple high-potential segments to drive sustained growth over the next 3-5 years. The company’s Penicillin G (PEN-G) project is scaling up meaningfully, effectively curbing operational losses, and is expected to contribute materially to profitability in FY26 and FY27.

In the US generics market, ARBP continues to strengthen its position by consistently adding limited competition products to its portfolio. Beyond generics, the company is expanding into peptides and biosimilars, while simultaneously building the necessary manufacturing capacities to support long-term growth.

We raise our earnings estimate by 4/3 per cent to factor in a faster scale-up in PEN-G, niche launches and improved operating leverage. We value ARBP at 16x 12M forward earnings to arrive at a TP of ₹1,360.

ARBP stands out for having the most diversified US generics portfolio, demonstrating resilience against pricing pressure despite a robust $2.1b revenue base. Additionally, its investments in differentiated capabilities and facilities for regulated markets position the company well for continued momentum.

With the stock correcting 12-13 per cent over the past six months, current valuations appear attractive.

Published on May 12, 2025