6 hours ago
Shares of Aurobindo Pharma Ltd. were trading with gains of over 3% on Monday, May 12, after brokerage firm Motilal Oswal upgraded the stock, citing attractive valuations.
The brokerage upgraded Aurobindo Pharma to 'Buy', with a price target of ₹1,360 on the stock. This target implies a potential upside of 17% from Friday's closing levels.
However, Motilal Oswal's price target is well below Aurobindo Pharma' recent peak of ₹1,592. The stock is down nearly 25% from those levels.
With the stock correcting 12-13% over the past six months, current valuations appear attractive, the brokerage wrote in its note.
According to Motilal, Aurobindo Pharma is actively investing across multiple high-potential segments to drive sustained growth over the next 3-5 years.
The company's Penicillin 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, Aurobindo Pharma continues to strengthen its position by 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.
Aurobindo Pharma stands out for having the most diversified US generics portfolio, demonstrating resilience against pricing pressure despite a robust $2.1 billion revenue base.
Additionally, its investments in differentiated capabilities and facilities for regulated markets position the company well for continued momentum.
After a strong FY24, the company is expected to post a moderate 10% year-on-year earnings growth in FY25, partly due to operational losses from the PEN-G product and disrupted production at Eugia III caused by regulatory issues.
Key risks, as per the brokerage, include any adverse policies with respect to US tariffs on imports could impact Motilal's estimates. Additionally, delays in key approvals may keep earnings growth under check.
Shares of Aurobindo Pharma Ltd. are currently trading 2.69% higher at ₹1,195.70. The stock is down 12% so far in 2025.
