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Nuvama bullish on Aurobindo Pharma, sees 15% profit CAGR through FY27
By Markets Desk Published on June 20, 2025, 07:30 IST
Nuvama Institutional Equities has reiterated a 'Buy' call on Aurobindo Pharma, with a target price of ₹1,460, as it sees the stock poised for a strong recovery led by new product launches, capacity expansions, and normalization of regulatory and operational issues.
The brokerage notes that Aurobindo has invested over ₹10,000 crore in recent years toward growth-oriented assets including its Pen-G API facility, injectable plants, and biologics and peptide capabilities. While these investments have temporarily diluted return ratios, Nuvama believes they position the company strongly for medium- to long-term growth, especially in high-margin, non-oral dosage categories.
Key triggers that could unlock value in FY26–27 include: Resumption of production at its Pen-G unit , which could improve vertical integration and cost competitiveness.
New launches in Europe from the company's Chinese facility.
Ramp-up of injectables business through the Eugia-5 plant and normalization of supply issues from Eugia-3.
Volume growth in oral solids, which continue to be the company's bread and butter in regulated markets like the US.
Nuvama is building in a revenue CAGR of 7%, EBITDA CAGR of 8%, and PAT CAGR of 15% over FY25–27. Despite the recent recovery in pharma stocks, Aurobindo continues to trade at 13.9x FY27E EPS, which represents a 16% discount to its 5-year historical average valuation.
This makes the stock attractive not only from a growth and margin recovery standpoint but also on relative valuation terms, especially considering that many of its operational headwinds now appear to be easing.
Aurobindo has also stepped up its focus on specialty and complex generics, including biosimilars, peptides, and depot injections, which can provide earnings durability beyond FY27. The company's recent USFDA approvals and steady ANDA filings also indicate improving regulatory momentum.
Nuvama's thesis remains that execution of these strategic pivots—especially monetization of recent capex—could drive a meaningful re-rating of the stock over the next 6–8 quarters.
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