Alpha | Aurobindo Pharma Ltd. – Equity Research Desk

May 6, 2024 . Equities Desk

Aurobindo Pharma Ltd. – Committed to healthier life!

Aurobindo Pharma Ltd., established in 1986 and headquartered in Hyderabad, is a global pharmaceutical company focusing on generic pharmaceuticals, branded specialty pharmaceuticals, and active pharmaceutical ingredients (APIs). With a diverse portfolio and a strong international presence, Aurobindo serves key therapeutic segments across 150 countries, backed by extensive R&D capabilities.

Product Portfolio of AUROPHARMA

Aurobindo’s service segments include formulations and APIs. Its diverse product portfolio consists of biosimilars, dermatology, respiratory, vaccines, peptides, oncology, hormones, and sterile products.

Subsidiaries: Aurobindo boasts 85 subsidiaries, 6 joint ventures, and 2 associate companies, enhancing its global footprint and diversification efforts.

Growth Strategies of Aurobindo Pharma Ltd

  • Diversification into injectables with a focus on EU and emerging markets.
  • Expansion into untapped global markets like China.
  • Clinical trial studies for biosimilar products.
  • Strong focus on the domestic formulation market.
  • Enhancing manufacturing capacity with specialized facilities:
    • Commissioning a specialized injectable facility in Vizag to meet rising demand.
    • Installation of the Lyfius plant for Pen-G and the 6-APA plant.
  • Aggressive product expansion in the US market:
    • Filed 7 ANDAs and received approval for 16 products in Q3FY24.
    • Launched 21 products, including 4 specialty and injectable products.

Financial Highlights of Aurobindo Pharma Ltd

Q3FY24 Performance

  • Revenue: Rs.7,352 crore (15% YoY increase).
  • Operating profit: 68% YoY growth to Rs.1,601 crore.
  • Net profit: Surged by 91% YoY to Rs.936 crore.
  • EBITDA margin: 22% (highest ever).
  • Gross margin: 57%.

Financial Performance

  • Revenue and PAT growth: 15% and 30% respectively over the last twelve months.
  • ROE & ROCE: Average of 14% and 16% respectively for FY18-23.
  • Debt-to-equity ratio: 0.24, indicating a robust capital structure.

Industry Outlook

  • Indian pharmaceutical industry poised to reach US$ 57 billion by FY25.
  • Projected CAGR of over 10% to reach US$ 130 billion by 2030.
  • Favorable regulatory environment with up to 100% FDI allowed for pharmaceutical projects.
  • Increasing focus on research and development, with government allocation for research and healthcare.
  • Growing emphasis on innovation and technology adoption to meet global healthcare demands.

Growth Drivers

  1. Government Allocation:
    • Rs.3,201 crore (US$ 419.2 million) allocated for research.
    • Rs.83,000 crore (US$ 10.86 billion) allocated for the Ministry of Health and Family Welfare in Union Budget 2022-23.
  2. Global Demand for Generic Drugs:
    • Indian pharmaceutical industry projected to grow at a CAGR of over 10% to reach US$ 130 billion by 2030.
    • India supplies over 40% of generic demand in the US.
  3. Cost Advantage and Efficient R&D:
    • India offers medicines at costs 30%-35% lower than the US and Europe.
    • R&D costs in India are approximately 87% less than in developed markets.

Competitive Advantage

Compared to competitors like Lupin Ltd, Mankind Pharma Ltd, etc, Aurobindo Pharma Ltd has the following advantages

  • Undervalued stock with potential for P/E expansion.
  • Strong margin and earnings growth compared to competitors like Lupin Ltd. and Mankind Pharma Ltd.


  • Aurobindo is poised for robust growth amidst US drug shortages.
  • Diverse product portfolio meets market needs.
  • Targeted FY24 EBITDA margin: 20%.
  • New facilities in China and Vizag enhance market presence.
  • Pipeline includes high-margin biosimilars and peptides.
  • Strategic initiatives ensure sustained success.


  • Aurobindo Pharma Ltd. is positioned for growth amidst heightened drug shortages, particularly in the US market.
  • With its expansion initiatives and optimization of product mix, Aurobindo Pharma Ltd. is poised to capitalize on market opportunities, warranting a BUY rating with a target price (TP) of Rs.1,361 by 28x FY25E EPS.


  • Forex Risk: Exposure to forex fluctuations due to significant operations in foreign markets.
  • Regulatory Risk: Vulnerability to regulatory changes, especially scrutiny by agencies like USFDA, impacting operations.

Recap of our previous recommendations (As on 03 May 2024)

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