ET Intelligence Group: The stock of Aurobindo Pharma has shown resilience in a volatile market, gaining nearly 9% in a month compared with a 4.3% fall in the ET Pharma Index. The stock currently trades near its 52-week high, buoyed by improving sales in Europe, new launches in the US generics market, and improving injectables momentum. The company is also focusing on the development of APIs and formulations for the GLP-1 weight loss category. Analysts expect Aurobindo’s growth to be driven by expanding product launches, margin support from backward integration and the integration of Lannett, a newly acquired US-based complex generics manufacturer.

The drug maker’s Pen G and 6-APA backward-integration project has reached break-even, with output ramping up to an annualised 9,000-10,000 tonnes. With the government set to reset minimum import price (MIP) on Pen G, 6-APA and Amoxicillin, which are antibiotics used to treat bacterial infections, from the first quarter of FY27, pricing is expected to improve, offering a further boost to profitability.

The US business, after reporting a 3% drop year-on-year in the December 2025 quarter, is expected to pick up, led by ramp-up in sterile capacity, execution of the specialty pipeline and synergies from the integration of Lannett Company, acquired in July 2025. In addition, the Dayton facility in the US has moved into the commercial phase and is expected to start contributing meaningfully from FY27, while the Raleigh sterile facility awaits regulatory clearance. The drug maker expects the pace of the US launches to remain healthy amid intense competition.

Europe remains the strongest region for Aurobindo, supported by a steady flow of launches across key markets such as Germany, France and Southern Europe. The region’s revenue share improved to over 31% in the December quarter from nearly 27% in FY25. The company has retained the guidance of crossing 1 billion in annual revenue for FY26 compared with 921 million in FY25. It has begun launches of key products such as bevacizumab and trastuzumab, used in cancer treatment, in parts of Europe. The oral solid dosage facility in China is expected to breakeven at the operating level in the March 2026 quarter helped by production gradually scaling towards two billion units annually and EU approvals for 10 products. The unit is likely to start contributing to the bottomline in FY27.

Motilal Oswal Financial Services expects Aurobindo to deliver 21% earnings growth annually over FY26-28. The broker has maintained a buy rating on the stock with a target price of ₹1,500, implying an upside of around 13% from Tuesday’s closing price of ₹1,329.6 on the BSE.