Five medium-term triggers that can contribute to a 35% upside in Aurobindo Pharma shares

Aurobindo Pharma Ltd. shares have the potential to rise nearly 35% from its previous closing price, as per brokerage firm Nuvama's note on Friday, June 20.

The brokerage has a "buy" rating on the stock with a price target of ₹1,460 per share. The stock ended the previous trade session at ₹1,082.5 apiece.

Nuvama said investments topping ₹10,000 crore in new assets have diluted Aurobindo Pharma's returns ratios.

These investments pertain to Pen-G, injectables, biologics contract manufacturing organisation (CMO), biosimilars, peptides, etc and are a better value proposition than regular oral products, Nuvama said.

Over the medium term, Nuvama has cited triggers such as resumption of the Pen-G unit, launches in Europe from China unit, injectable drug launches from Eugia-5, normalisation of supplies from Eugia-3 and volume growth in oral products, that can bode well for Aurobindo Pharma.

It has estimated building in a revenue, earnings before interest tax depreciation and amortisation (EBITDA) and profit after tax (PAT) to grow at a  compounded annual growth rate (CAGR) of 7%, 8% and 15%, respectively, over financial year

The stock is trading 13.9 times its FY27 earnings per share, which is a 16% discount to its five-year average, the brokerage added.

Of the 29 analysts that have coverage on the stock, 23 have a "buy" rating, two have a "hold" rating and four have a "sell" rating.

Shares of Aurobindo Pharma gained nearly 2% to hit an intraday high of ₹1,103 apiece on Friday, June 20. The stock was up 1.1% at ₹1,094.4 apiece around 2pm. It has declined 19.11% this year, so far.

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