This Pharma Stock To Buy For ~46% Upside: HDFC Securities Recommends

Brokerage firm HDFC Securities has recommended to 'buy' Aurobindo Pharma's stock with a potential upside of ~46%.

Target Price

The Current Market Price (CMP) of Aurobindo Pharma is Rs. 677. The brokerage firm sets a Target Price for the stock at Rs. 990, indicating a 46%, with a Target Period of 12 months (1 year).

Stock Outlook
Current Market Price (CMP)	Rs. 677
Target Price	Rs. 990
1 year return	~46%

The company's stock performed well in the previous tie. HDFC informs the company's stock had 23.7% growth(absolute) in the last 3 months, 33.2% in the last 6 months, and had 13.9% growth in the past 1 year.

Company performance

Aurobindo Pharma's net sales stood at Rs. 59,419 in Q2 FY22. According to HDFC Securities, the company had a "Tepid quarter; outlook intact. Aurobindo's Q2 revenue/EBITDA missed estimates by 4%/10%, owing to lackluster performance across businesses (ex-US and EU). The EBITDA margin missed estimates by 143bps due to lower GM. However, its US pipeline provides good growth visibility across injectables, biosimilars, vaccines, and OTC drugs as management remains cautiously optimistic on the near-term outlook due to price erosion (likely to normalise by year-end)."

Comments by HDFC Securities

About Aurobindo Pharma's stock, the brokerage firms stated, "The injectables and Eugia businesses' potential value unlocking, as well as the FDA's resolution of facilities, are key near-term triggers. We cut our FY22/23E estimates by 4%/1% to factor in the Q2 miss and roll forward to Sep'23E EPS to arrive at an SOTP TP of INR990/sh, based on 15x FY23e EPS and NPV of INR40/38 for the PLI/gRevlimid opportunities." HDFC Securities has retained the BUY rating on the company's stock.

About the company

Aurobindo Pharma features among the top 2 Pharmaceutical companies in India in terms of consolidated revenues. Aurobindo exports to over 150 countries across the globe with around 90% of revenues derived from international operations. The company has 3 R&D centers in the USA.

Disclaimer

The above stock has been picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

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