Pharma Stock to Buy Now for 25% Upside Potential; Recommended by Goldman Sachs

Synopsis: Aurobindo Pharma drew brokerage attention after strong Europe-led growth and steady Q4 FY26 performance, with analysts highlighting margin stability and positive medium-term outlook.

The article outlines brokerage rationale on Aurobindo Pharma following its Q4 FY26 performance, where analysts highlighted strong Europe-led growth, stable margins, and improving visibility on medium-term earnings driven by expansion and new product launches. 

With a market capitlaization of Rs 83,238 crore, Aurobindo Pharma Ltd’s share closed at Rs 1,435.65 per share, down by 1.92 percent from the previous close. The share of this company has given a return of 40 percent over the last five years.

ELARA ON Aurobindo Pharma

Elara Capital maintained its ‘Buy’ rating on Aurobindo Pharma and raised the target price to Rs 1,805 from Rs 1,568, implying an upside potential of nearly 25.7 percent from current market levels. 

Elara Capital highlighted that Aurobindo Pharma reported Q4 EBITDA ahead of estimates by 8 percent, supported by a favourable product mix and improved operational performance. The brokerage noted that the company continued to deliver strong profitability across its key business segments.

The brokerage further noted that Aurobindo Pharma’s US business, excluding Revlimid sales, grew 15.3 percent YoY during the quarter. In addition, Europe revenue increased 30.2 percent YoY, helping the company cross the EUR 1 billion annual revenue milestone, reflecting strong traction across international markets.

Elara Capital also highlighted that the Pen-G project turned EBITDA positive in Q4 FY26, marking a key operational milestone for the company. Following the strong quarterly performance, the brokerage raised its FY27 and FY28 core EPS estimates for Aurobindo Pharma by 8 percent and 13 percent, respectively.

DAM Cap on Aurobindo

Brokerage firm DAM Capital maintained a ‘Buy’ rating on Aurobindo Pharma with a target price of Rs 1,767, citing steady operating performance, improving growth visibility across key segments, and expected benefits from recent strategic investments and acquisitions. 

DAM Capital highlighted that Aurobindo Pharma has delivered steady operating performance across multiple quarters, reinforcing its position to benefit from improving generic drug industry tailwinds. The brokerage believes the company remains well-placed due to its strong execution capabilities and diversified product portfolio.

The brokerage also noted that Aurobindo Pharma is accelerating investments across high-growth segments including biosimilars, peptides, and injectables. In addition, the company’s innovative biologics contract manufacturing partnership with Merck & Co. is expected to emerge as a meaningful medium-term growth driver.

DAM Capital further stated that the recent acquisition of Lannett Company appears value accretive for the company. It expects the benefits from large investments in PenG, China operations, granulation, and injectables to become more visible in the coming quarters as capital expenditure intensity gradually moderates.

Goldman Sachs on Aurobindo

Goldman Sachs maintained a ‘Buy’ rating on Aurobindo Pharma with a target price of Rs 1,550, citing stable margins, strong growth in Europe and growth markets, and a healthy earnings outlook for FY27. 

Goldman Sachs stated that Aurobindo Pharma reported Q4 FY26 results broadly in line with estimates, with revenue and EBITDA growing 6 percent and 1 percent YoY, respectively. The performance was supported by strong growth in Europe and other growth markets during the quarter.

The brokerage highlighted that European business revenue increased 29 percent YoY, while growth markets delivered 25 percent YoY growth. However, the US business declined 13 percent YoY due to the continued impact of the gRevlimid ramp-down, which partially offset strong performance in other regions.

EBITDA margin remained stable at 20.3 percent in Q4 FY26, slightly below Goldman Sachs estimates by 16 basis points. Higher gross margins, which expanded 216 basis points YoY, were offset by increased employee costs. The company is targeting high single-digit revenue growth excluding gRevlimid, while aiming to maintain EBITDA margins above 21 percent in FY27.

CLSA on Aurobindo

CLSA downgraded Aurobindo Pharma to ‘Hold’ while raising its target price to Rs 1,490, citing steady earnings visibility but limited near-term upside despite expectations of margin and growth improvement over the medium term.

CLSA noted that Aurobindo Pharma reported an in-line quarter, supported by strong revenue growth in Europe, while the US business declined year-on-year. Margins were broadly stable but slightly lower due to higher operating expenses.

The brokerage expects the US business to reach $2 billion revenue in the next two years versus $1.6 billion in FY26, along with double-digit growth in Europe in FY27. It also sees consolidated margins improving to 21 percent in FY27, driven by new launches, portfolio expansion, and acquisitions, with full benefits expected from FY28 onwards.

About the Company

Aurobindo Pharma is a leading Indian multinational pharmaceutical manufacturing company headquartered in Hyderabad, Telangana. Founded in 1986, it is the second-largest listed pharmaceutical company in India by revenue, specializing in generic pharmaceuticals, branded specialty drugs, and Active Pharmaceutical Ingredients.

Financial Highlights: The revenue from operations grew by 6 percent to Rs 8,853 crore in Q4 FY26 (Mar 2026) from Rs 8,382 crore in Q4 FY25 (Mar 2025), while EBIDT decreased by 1 percent to Rs 1,750 crore in Q4 FY26 from Rs 1,760 crore in Q4 FY25. 

This was accompanied by a net profit growth of 2 percent to Rs 921 crore in Q4 FY26 from Rs 903 crore in Q4 FY25, resulting in an EPS growth of 2 percent to Rs 15.86 per share in Q4 FY26 from Rs 15.56 per share in Q4 FY25. 

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