Buy Aurobindo Pharma, target Rs 770: Angel Broking

Angel Broking has a buy call on Aurobindo Pharma Ltd. with a target price of Rs 770.0 . The current market price of Aurobindo Pharma Ltd. is Rs 616.65 Time period given by the brokerage is a year when Aurobindo Pharma Ltd. price can reach defined target. Aurobindo Pharma Ltd., incorporated in 1986, is a largecap company with a market cap of Rs 36510.83 crore.

Investment Rationale by Angel Broking

Aurobindo Pharmaceuticals is an India-based leading global generic company. It’s predominately formulations export company, with USA & Europe contributing ~70% of sales (FY2018). Amongst the Indian pharmaceutical companies, we believe that Aurobindo Pharmaceuticals is well placed to face the challenging generic markets, given its focus on achieving growth through productivity.

We expect Aurobindo to report net revenue CAGR of ~13% & net profit to grow at ~5% CAGR during FY2018-20E, due to increased R&D expenditure. However, valuations of the company are cheap V/s its peers and own fair multiples of 17-18x. We recommend BUY rating.