Aurobindo Pharma Share Price Target at Rs 1,440: Prabhudas Lilladher
Prabhudas Lilladher has reiterated a BUY call on Aurobindo Pharma with a revised target price of Rs 1,440, underpinned by robust growth in U.S. formulations, improved margin trajectory, and positive developments across key business segments. With a Q4 earnings beat and an outlook fueled by U.S. injectables and specialty launches, the stock is emerging as a solid defensive in the pharma pack. Aurobindo Pharma remains poised for mid-to-high teens earnings growth in FY25–26, anchored by improved capacity utilization and focused R&D allocations.
Strong U.S. Formulations Drive Revenue Upside
Quarterly revenue rose 17.4% YoY to Rs 7,215 crore, surpassing street estimates due to a broad-based recovery in U.S. formulations, which grew 26% YoY to Rs 3,568 crore.
Aurobindo's performance benefited from sustained traction in injectable and oral solid segments alongside incremental gains from niche launches. The injectable pipeline, in particular, is gaining momentum with approvals flowing steadily from its Vizag facility. The firm’s diversified U.S. portfolio also helped in partially offsetting price erosion in certain oral generics.
EBITDA Margins Expand on Better Product Mix
EBITDA stood at Rs 1,511 crore with margins expanding 330 bps YoY to 20.9%, as the company benefitted from improved capacity utilization, increased share of high-margin injectables, and cost control initiatives.
The management has guided for EBITDA margins to sustain between 21–23% in FY25, driven by new launches, better product mix, and backward integration in key APIs.
Net Profit Growth Supported by Operating Leverage
Net profit surged 79% YoY to Rs 905 crore in Q4FY24, largely due to higher operating leverage and reduced finance costs.
Despite a higher base in the prior year, Aurobindo delivered impressive bottom-line growth which exceeded analyst expectations, signaling healthy operating efficiency and control over input costs.
Robust Outlook on U.S. Injectables and Specialty Launches
Management commentary emphasized continued traction in U.S. injectables and steady product approvals from multiple facilities. The firm expects 15–17 new product launches in FY25, including high-value sterile products and complex generics.
Additionally, Aurobindo is targeting U.S. specialty revenues to contribute 10% of total sales by FY26, reinforcing long-term growth visibility in regulated markets.
ARV Segment Recovers but Remains Cautious
After recent setbacks in antiretroviral (ARV) therapies, the segment witnessed a 7% YoY uptick, attributed to stabilization in institutional pricing. However, the management remains cautious and sees only moderate upside from this business in the near term.
ARV volumes may remain volatile due to unpredictable global procurement cycles and funding uncertainties across emerging markets.
API Business Recovery Remains on Track
The active pharmaceutical ingredients (API) vertical showed signs of stabilization with revenues improving modestly. Aurobindo's focus on vertical integration is expected to enhance backward supply chain control and improve overall margin profile in FY25 and beyond.
The company is also exploring CRAMS opportunities from global innovators, though contributions are expected to be meaningful only from FY26.
Financial Snapshot
Here’s a tabular breakdown of Q4 performance:
| Financial Metric | Q4 FY24 | YoY Change |
|---|---|---|
| Revenue | Rs 7,215 crore | +17.4% |
| EBITDA | Rs 1,511 crore | +38% |
| EBITDA Margin | 20.9% | +330 bps |
| Net Profit | Rs 905 crore | +79% |
| EPS (Diluted) | Rs 15.46 | +78.5% |
Target Price and Valuation Metrics
Prabhudas Lilladher raised the target price for Aurobindo Pharma to Rs 1,440, reflecting a significant upside from current market price levels. The stock is currently trading at 16.8x FY26E earnings, which is attractive given the earnings visibility, high-margin portfolio mix, and normalized capex trajectory.
Management aims to deploy Rs 2,000 crore in capex over FY25–26, majorly toward injectables, biosimilars, and digital infrastructure.
Investor Takeaways
Aurobindo Pharma has reaffirmed its position as a frontrunner in the Indian pharma export space, particularly through a resilient U.S. business and cost-efficient operations.
The firm's shift toward specialty launches, U.S. injectables, and vertical integration places it on a strong footing for sustainable growth. Risks include regulatory overhangs, currency volatility, and delays in high-value launches.
That said, with improving profitability, a healthy balance sheet, and strong cash flow generation, the company remains a solid pick in the mid-to-large-cap pharmaceutical segment.
