The analyst pointed to strong fundamentals, steady debt reduction, and upcoming US and European product launches as key drivers, while cautioning on margin pressure, raw material costs, and regulatory risks.
Aurobindo Pharma shares swung sharply on Wednesday after the company clarified in a filing that talk of a potential $5–5.5 billion buyout of Prague-based Zentiva is “premature” and no binding agreement has been made. If this deal goes through, it will become the largest-ever acquisition made by an Indian pharmaceutical company.
SEBI-registered analyst Deepak Pal said the stock is facing resistance at the 14-day exponential moving average (EMA) and has not been able to close above ₹1,080, leaving no short-term buy signal for now.
Technical View
Pal pointed out that on the weekly chart, the stock is holding support near the 200-day EMA and the crucial ₹995 zone. He said that if the stock dips into the ₹1,000–1,020 range, it could offer a buy-on-dips opportunity.
Over the next six to eight months, he expects it may retest levels of ₹1,250–1,300 if support continues to hold.
Fundamental View
According to Pal, Aurobindo is among India’s leading pharmaceutical companies with a strong presence in generic drugs, formulations, and APIs across regulated markets such as the U.S. and Europe.
He said U.S. formulations and API exports support revenue growth, though margins are under pressure from pricing challenges in U.S. generics and higher R&D spending.
The analyst added that debt levels are gradually coming down, strengthening the balance sheet, while the stock is currently trading below its historical P/E average, which makes it attractive for long-term investors.
Outlook and Risks
Pal drew attention to the positives like USFDA-approved manufacturing facilities, growth in injectables and biosimilars, and cost optimization.
He also expressed caution over near-term margin pressure due to rising raw material costs and pricing erosion.
On the sector front, Pal said that the global drive for affordable generics is a positive for the pharma sector, and a weakening rupee supports companies with a significant export business like Aurobindo.
However, the regulatory risk from USFDA audits remains a major overhang. The increasing spend on healthcare in the emerging markets, he said, is another positive for growth.
For the future, Pal said sentiment would be boosted if the company reports improving traction in its US business in the second quarter (Q2) results due in November. He also highlighted product launches in the US and Europe that will drive revenue visibility.
Meanwhile, USFDA inspection results and global pricing trends for drugs will significantly impact profitability, he added.
On Stocktwits, retail sentiment was ‘bearish’ amid ‘normal’ message volume.
Aurobindo Pharma’s stock has declined 22.4% so far in 2025.
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