Aurobindo Pharma is looking strong at current levels of around 190 and posts a good upside. Aurobindo Pharma posted net sales of 4381 cr as against 3575 cr, up 22.5% YoY and net profits of 563 cr as against 563 cr, up 0%. The net profits did not rise this year and thus the stock has also underperformed this year. Aurobindo Pharma has posted an EPS of 19.5 for FY11 which relates to a P/E of 9.84 on current year earnings.

Aurobindo Pharma is expected to grow it’s earnings by 15% in FY12 and thus the expected EPS by brokerages for FY12 is around 22.5. One year forward P/E comes to 8.5 which is looking very attractive. Aurobindo Pharma is also expected to post a good growth of 20-25% in FY13, although we are not looking so far away right now. I feel this stock will be re rated in FY12 to a bit higher P/E as it used to enjoy in the past. I believe if market conditions improve, Aurobindo can easily get re rated to a higher P/E multiple. I value Aurobindo around a P/E of 12 and derive a target price of 270.

Buy Aurobindo Pharma(cmp: 192) with a target price of 270.

Related posts:

1. Buy Surya Pharma Stock