The stock of pharma major Aurobindo Pharma has an upgrade from broking firm Sharekhan with a price target of Rs 975, against the current market price of Rs 777.
According to the brokerage firm Aurobindo Pharma Limited (Aurobindo) is witnessing improved traction in its US business, which constitutes around half of overall sales.
"Aurobindo is one of the few pharmaceutical companies reporting an impressive performance in the US as compared to others, which have been facing challenges. The US business is expected to grow in double digits going ahead. A combination of factors, including a sturdy new product pipeline, easing of pricing pressures, opportunities arising from shortage of products in the US, and an expected recovery in the injectable business would be key drivers for the US business," the brokerage firm has stated.
According to Sharekhan, Aurobindo Pharma has a sturdy ecosystem in generics (vertically integrated model, lower product concentration) to withstand volatility in the US. According to it, Strong traction in the US and gradual pick up in the other geographies would support topline growth, while steady margin improvement would result in double-digit earnings growth.
"At the current market price of Rs 777, the stock trades at an attractive valuation of 13.1x/11.6x its FY2022/FY2023E EPS, which is lower than its peers.
Improving growth prospects, better earnings visibility, and strengthening balance sheet would support P/E multiple expansion. Further, the stock price has corrected by around 16% in a little over the past one month. This would provide a good entry point for investors. We upgrade our recommendation on Aurobindo to Buy from Hold and retain our PT of Rs. 975.
The stock of Aurobindo Pharma was last seen trading at Rs 777 on the National Stock Exchange.
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