This Pharma Stock Could Give you Exponential Returns

  • Stock Market Analysis

After Deep diving into the pharmaceutical industry, it becomes apparent that Aurobindo Pharma Ltd (NS: ARBN ) checks all the right boxes. Below are some of the notable and to-the-point observations, on the basis of which an investment decision can be taken.

1. On the market cap basis, it ranks 7th among its peers.
2. Aurobindo Pharma Ltd (NS: ARBN ) is the second-largest pharmaceutical company by revenue in India.
3. Revenues in the last 5 years grew by around 12% compounded annually.
4. Net profits in the last 5 years grew by around 21% compounded annually.
5. The highly contested transaction where Aurobindo will be divesting a part of its Subsidiary, is anticipated to value the Subsidiary, Eugia Pharma Specialties ltd. (which houses the crown jewel of the company, i.e. Injectable business) at around 30,000 crore rupees.  
6. At the current market price, the company is priced at 1.6x Market Cap to sales ratio. However, its peers are priced at:

  • Sun Pharma (NS: SUN ) – 6.3x
  • Divi's Laboratories Ltd. (NS: DIVI ) – 16.4x
  • Cipla (NS: CIPL ) – 4.1x
  • Dr. Reddy’s Laboratories Ltd (NS: REDY ) – 3.7x
  • Gland Pharma Ltd (NS: GLAD ) – 15.2x

Considering all of the above points, AurobindoPharma appears to be grossly undervalued.

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  • Sourabh Bhattacharya @Sourabh Bhattacharya
    Why Sun and Arbinndo undervalued, they play with shareholders money....Pledging INCREASED (Dec-2021: 22.97 %, Sep-2021: 22.98 %, Mar-2021: 22.81 % )
    Like 0

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