Q2FY26 results in line; Aurobindo Pharma could gain 25%, says Nuvama

Analysts at Nuvama Institutional Equities have maintained their ‘Buy’ rating on Aurobindo Pharma, noting that the company’s second-quarter performance for FY26 was largely in line with their expectations.

 

In a note co-authored by Shrikant Akolkar, Aashita Jain, Gaurav Lakhotia, and Tanay Parab, Nuvama analysts said they have cut their FY26E EPS estimate by 5 per cent, while retaining their FY27 projections.  The brokerage has accordingly revised its target price to ₹1,420 (from ₹1,445 earlier), which is 25.11 per cent higher than the company’s previous close of ₹1,135 per share on the NSE logged on Thursday, November 6.

Q2FY26 performance largely steady

Aurobindo Pharma’s net profit for Q2FY26 rose 3.8 per cent year-on-year (Y-o-Y) to ₹848 crore, compared with ₹817 crore in the same quarter last year. Revenue from operations increased 6.3 per cent YoY to ₹8,286 crore, driven by growth across the US, Europe, and emerging markets, the company said in an exchange filing. 

 

 

Ebitda before forex and other income stood at ₹1,678 crore, up 7.1 per cent YoY from ₹1,566 crore in Q2FY25. The Ebitda margin improved by 16 basis points to 20.3 per cent, compared with 20.1 per cent in the year-ago period.

 

In terms of segments, US formulations revenue rose 3.1 per cent YoY to ₹3,638 crore ($417 million), while Europe formulations revenue surged 17.8 per cent YoY to ₹2,480 crore (EUR 243 million).

‘Beat on revenue, miss on PAT’

According to Nuvama, Aurobindo’s Q2FY26 revenue and Ebitda were ahead of consensus estimates by 2 per cent and 1 per cent, respectively, though PAT missed expectations by about 5 per cent.

 

“The Ebitda margin came in at 20.3 per cent, in line with consensus. The US base business performance has been stable, while the European operations have done well. Breakeven in China and the Pen-G ramp-up are awaited,” the analysts said.

Key triggers: MIP announcement, Eugia-III inspection

The brokerage highlighted that the MIP announcement and a successful inspection at Eugia-III are among the near-term catalysts that could drive a re-rating for the stock.

 

“Over the medium term, biosimilars and CDMO remain key growth drivers. We are pencilling in 7 per cent revenue CAGR and 14 per cent EPS CAGR for FY25–27E,” the note said. Nuvama values Aurobindo Pharma at 18x FY27E EPS.

 

The analysts expect the company to file multiple biosimilars with the EMA and USFDA by FY27, including denosumab, omalizumab, tocilizumab, bevacizumab, and trastuzumab, which should support the next leg of growth in the medium to long term.

 

“In the near term, the MIP announcement and subsequent Pen-G ramp-up are key events to watch. Aurobindo anticipates a re-inspection of Eugia-III in H1CY26; a positive outcome could trigger a multiple re-rating,” the note added.

 

Nuvama also termed the expanded scope of Aurobindo’s biologics CDMO partnership with Merck as an encouraging development, while noting that it is awaiting FTC approval for the Lannett deal.