Aurobindo Pharma Jumps Over 3% on Q1 Profit Beat as HDFC Securities Reaffirms 'Add' Rating

Aurobindo Pharma Jumps Over 3% on Q1 Profit Beat as HDFC Securities Reaffirms 'Add' Rating​

Aurobindo Pharma shares surged, climbing over 2.8% in late-morning trading on Friday after the company delivered a strong quarterly performance. The stock reached Rs 1,633.50, continuing an earlier session gain of up to 3.13%. This significant rise was fueled by the Q1FY27 results, which significantly outperformed analyst expectations from CNBC-TV18.

Stellar Q1 Performance Drives Share Surge​

The company reported exceptional figures across profitability and revenue streams in the first quarter of fiscal year 2027. Net profit rose a substantial 25.2% year-on-year to Rs 1,032 crore. This figure surpassed the CNBC-TV18 poll estimate of Rs 982 crore.

Revenue also saw healthy growth, increasing by 16.3% year-on-year from Rs 7,868 crore to Rs 9,150.3 crore. Crucially, this revenue growth managed to exceed the CNBC-TV18 poll estimate of Rs 9,030 crore.

EBITDA demonstrated robust improvement, climbing 17.3% year-on-year from Rs 1,603 crore to Rs 1,881 crore. This was ahead of the consensus poll estimate of Rs 1,848 crore. The EBITDA margin improved impressively, rising to 21%, up from 20% a year ago and exceeding the polled expectation of 20.5%.

HDFC Securities Upgrades Target Price Following Q1 Results​

Following the announcement of these strong results, HDFC Securities maintained its 'Add' rating on Aurobindo Pharma stocks. The brokerage further raised its target price to Rs 1,730 from its previous projection, citing sustained growth momentum across various business units.

HDFC Securities noted that EBITDA grew 20% year-on-year (YoY), which was approximately 4% ahead of their consensus estimates. This performance was supported by a 16% YoY increase in sales. Furthermore, the Gross Margin (GM) improved by 153 basis points (bps) year-on-year.

The brokerage specified that this positive momentum was partially offset by a double-digit rise in staff costs and SG&A expenses. Despite these headwinds, HDFC Securities retains confidence in the company's outlook.

Strategic Business Focus and Future Growth Drivers​

HDFC Securities reiterated its guidance for Aurobindo Pharma, projecting continued double-digit revenue growth. They also expect EBITDA to exceed Rs 8,000 crore and margins to remain at 21% or higher throughout FY27.

The US business is expected to be a solid foundation for sustained growth, with the quarterly sales run rate in the US segment estimated around $400 million. This strong base is slated to continue through new product launches.

Regarding manufacturing efficiency, the ramp-up of the Pen-G/6-APA plant has significantly improved supply chain efficiencies. Aurobindo Pharma plans to target 10,000 MT for this facility in FY27, supporting both captive and external sales needs.

Outlook Brightens with International Expansion​

The brokerage highlighted that Lannett is expected to contribute substantially towards the company's ambition of reaching $2 billion in US sales over the next two to three years. The European business segment is also anticipated to maintain its growth trajectory, with an improved EBITDA margin from more than 20% in FY26.

HDFC Securities emphasized that steady mid-to-long-term growth is likely, driven by the strong US base and EU market expansion. This outlook is further bolstered by biosimilar scale-up initiatives and the planned ramp-ups of plants in China and the US markets.