Motilal Oswal: Aurobindo Pharma - Development Of Complex Pipeline On Track
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Motilal Oswal Report
The Aurobindo Pharma Ltd. stock has corrected approximately 20% over the past two months. This, we believe, provides a good entry opportunity in the stock.
Multiple factors strengthen our positive stance on the stock, such as:
- The gradual improvement in outlook for the Injectable business
- Ongoing efforts to build a complex product pipeline
- Significantly reduced financial leverage
- Completion of remediation measures at sites under regulatory issues
- Comfortable valuation (at 11.9 times FY22E earning per share of Rs 65 compared to five-year average of 16 times)
We expect Aurobindo Pharma to deliver 15% earnings compound annual growth rate over FY20-22E, led by new launches, increased market share in its key markets of the U.S. and Europe and lower financial leverage.
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