奥罗宾多制药（ARBP IN）：买入：核心业务板块前景稳固

Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it.In-line revenue in 4QFY25 though EBITDA miss on higheroperating costs (including one-offs of INR1.05bn)Company guides for steady y-o-y EBITDA margin in FY26despite gRevlimid loss; outlook intact for theUS and EuropeRetain Buy, raise TP to INR1,415 (from INR1,395); expeditedpick-up in supplies from Eugia 3 and newer plants key aheadIn-line revenue in 4Q:Revenue at INR83.8bn grew10.6% y-o-y and5.1% q-o-q (inlinewith HSBCe). Sales fromthe US segmentat USD470m (c49% of total sales) grew8.8%y-o-y and8% q-o-qin constant currency (cc) basis. Wegatherit bookedgRevlimid salesof USD45-50m in 4Q vsUSD10-12min US sales.Momentum sustained for its Europesegment where it recordedsales of INR21.5bn,or EUR236m(c26% of4Q sales), up17.2% y-o-y led by volume expansion, and new launches.It booked one-offs ofINR1.05bn (1.3% of revenue), equally spread in CoGS and other operating costs andthis impacted profitability in 4Q.Gross margins at 59.1% grew 110bpq-o-q helped bygRevlimid sales(flat y-o-y).EBITDA margins at 21.4%(-88bp y-o-y)were 215bp belowHSBCe on higher operating costs and one-off as mentioned.R&D spend wasINR4bn(5% of sales) in 4Q vsINR4.5bn (5.7% of sales)in 3Q.It booked FXgainof INR116min4Q. Adjusted for FX, PATwasINR8.9bn(-14.7% y-o-y), c19% miss vs our estimates.Steady margins in FY26:For FY26, Aurobindo guides for mid-to-high single digitrevenue growth (excluding transient products) and EBITDA margins at similar level toFY25. It expectsimproved supplies from newer plants (in Vizag and China), recovery ininjectables sales fromtheEugia 3 plant, continued traction in the Europe segment, andnew launches in the US to largely offset for lower gRevlimid sales in FY26, resulting insteady EBITDA margins y-o-y.Regarding supplies of generic injectables from Eugia 3,Aurobindoexpects recovery to pre-disruption levels from 1QFY26.Its FY26 guidanceinclude supplies of 6-8 months from the Penicillin G (Pen G) plant which it had shut aftera fireincident in April 2025.It expects to start the plant postgovernmentclearance.Outlook remains intact:We think the outlook for US salesremainssteadyon newlaunches and market tailwinds (i.e., sturdy demand, stable pricing). It expects its USsales in FY26 to be similar to FY25 and assumes higher pick-up in FY27 led by newlaunches.Aurobindowaits for official announcement ofUStariffs.It is making progressin long-term drivers (e.g. biosimilars, GLP-1 products) for global markets, and we thinkthese efforts should yield notable results starting FY27.Retain Buy, raise TP to INR1,415:Post 4QFY25, we adjust our FY26-27 estimatesto account for lower gRevlimid sales and a gradual recovery in supplies fromtheEugia 3 plant. These changes led toa4.5% cut in our FY26 EPS estimate (changesto FY26 EPS is minor).Our revised TP of INR1,415 (fromINR1,395) implies upsideof18.8%and we retainaBuy ratingbased onthe company’sintact outlook for keysegmentsof the US and Europe.Aurobindo Pharma(ARBP IN)Buy:Intact outlook for the core segments ◆◆◆ Find out more48%ARBP INARBN.BO03/2027e03/2028e75.7780.4774.80-4.51.380.6983.5417.115.714.81.21.39.48.511.911.711.4980.001340.001700.0005/25 2Financial statementsYear to03/2025a03/2026e03/2027e03/2028eProfit & loss summary(INRm)Revenue317,237339,882363,587385,341EBITDA66,05571,06276,19281,308Depreciation & amortisation-16,494-16,884-18,063-19,143Operating profit/EBIT49,56054,17858,12962,165Net interest-4,572-4,000-3,200-2,700PBT50,98056,58361,52666,260HSBC PBT50,98056,58361,52666,260Taxation-15,827-15,843-17,227-19,215Net profit34,85940,70044,24946,995HSBC net profit35,08640,70044,24946,995Cash flow summary(INRm)Cash flow from operations33,21043,76150,51452,549Capex-25,196-23,000-27,000-30,000Cash flow from investment-18,758-23,000-27,000-30,000Dividends-235-8,140-8,850-9,399Change in net debt-3,307-19,027-21,262-19,945FCF equity8,01520,76123,51422,549Balance sheet summary(INRm)Intangible fixed assets36,20736,20736,20736,207Tangible fixed assets154,554160,670169,607180,464Current assets271,625292,765313,374338,837Cash & others82,35594,381108,643121,588Total assets497,850525,106554,652590,972Operating liabilities80,26881,92483,02188,695Gross debt79,41772,41765,41758,417Net debt-2,938-21,965-43,226-63,171Shareholders' funds326,533359,093394,492432,088Invested capital299,763313,337327,524345,224Ratio,growth and per share analysisYear to03/2025a03/2026e03/2027e03/2028eY-o-y % changeRevenue9.47.17.06.0EBITDA13.07.67.26.7Operating profit14.79.37.36.9PBT15.911.08.77.7HSBC EPS5.516.08.76.2Ratios (%)Revenue/IC (x)1.11.11.11.1ROIC11.812.713.113.1ROE11.211.911.711.4ROA8.18.58.68.5EBITDA margin20.820.921.021.1Operating profit margin15.615.916.016.1EBITDA/net interest (x)14.417.823.830.1Net debt/equity-0.9-6.1-11.0-14.6Net debt/EBITDA (x)-0.0-0.3-0.6-0.8CF from operations/net debtPer share data(INR)EPS Rep (diluted)59