Aurobindo Pharma: Nuvama raises target to ₹1,753

FTC clearance puts Lannett deal on the closing track

Aurobindo Pharma Ltd moved into focus after its wholly-owned subsidiary, Aurobindo Pharma USA, received clearance from the US Federal Trade Commission (FTC) to proceed with the acquisition of Lannett Company LLC. The transaction is valued at $150 million and is structured on a cash-free, debt-free basis. The deal includes normalized working capital, according to the company’s exchange filing. Aurobindo said it expects the acquisition to close before the end of June 2026. The FTC decision removes a major regulatory hurdle, though the clearance was described as conditional and linked to minor drug divestitures.

The company said the acquisition would expand Aurobindo USA’s product offering and add a US-based manufacturing facility to its network. It also flagged near-term financial benefits, including expected immediate earnings-per-share accretion. Alongside this, Aurobindo expects cost efficiencies, SG&A synergies, and operational integration benefits as Lannett’s portfolio is integrated into its US commercial platform.

Nuvama reiterates ‘Buy’ and raises target price

Nuvama Institutional Equities reiterated its ‘Buy’ call on Aurobindo Pharma and raised its target price to ₹1,753 from ₹1,680. Nuvama said the new target implies a 17.17% upside from the prevailing price. The brokerage’s note also argued that more than half of the investments Aurobindo has made in the last five years are now “ready to deliver”.

Nuvama added that Aurobindo appears to be at an inflection point as it pivots towards complex modalities such as Penicillin G (Pen-G), biologics contract manufacturing (CMO), and biosimilars. It also expects the Pen-G block, the recently concluded Lannett M&A, and the company’s existing Europe and rest-of-world base to support growth.

Market reaction and recent stock levels

After the FTC clearance disclosure, Aurobindo Pharma’s stock rose in early trade, with reports noting a gain of over 1.7%. On 19 June, the shares touched a day high of ₹1,474.90 on the NSE. At 11:24 am that day, AUROPHARMA traded at ₹1,466.90, up 1.61% versus the previous close of ₹1,443.70. The stock was also reported to be up 22.97% year to date and 35.52% over the past year.

Lannett acquisition: capacity headroom and respiratory pipeline

Aurobindo said Lannett’s manufacturing site in Seymour, Indiana, has the capacity to scale production to about 4 billion doses annually. Nuvama highlighted that Lannett’s Seymour unit had capacity utilisation of about 40% when the acquisition agreement was signed in 2025, implying significant headroom to scale. The brokerage said this could translate into a meaningful uplift in revenue generation as utilisation rises.

On revenue potential, Nuvama said Lannett can reach $100 million in revenue, while another estimate in the note placed the Seymour plant’s contribution at $100 million to $150 million in annual revenue. The respiratory portfolio is a key strategic element, with references to generics of Advair, Spiriva, and Flovent, alongside an upcoming launch of gAdvair.

Penicillin G project: near-term trigger with PLI support

Nuvama called Aurobindo’s Pen-G unit a near-term earnings trigger. It expects utilisation rates to reach 60% to 80%, which can trigger revenue of ₹700 crore, including a ₹240 crore PLI pay-out. Separately, Nuvama also estimated sales of ₹700 crore from the Penicillin G project in 2026-27 (Apr-Mar).

The brokerage said the Penicillin G project is expected to be in a healthier condition from the September quarter as inventory levels are seen stabilising. The combination of higher utilisation and stabilising inventory was positioned as an operational setup that could improve visibility on ramp-up.

Europe and rest-of-world base: scale already in place

Nuvama said Aurobindo’s European business clocked €1.0 billion in revenue and described operations as robust. It expects this to grow further to €1.2 billion by FY28E. Alongside Europe, Nuvama expects the company’s existing European and rest-of-world base to continue to grow, supporting the overall shift toward higher-value products.

Pipeline: Adquey launch, biosimilars, and biologics CMO

The note pointed to Aurobindo’s first novel asset, Adquey, which is expected to be launched “within the next few months”. Nuvama estimates the product can clock peak sales of $150 million to $100 million.

Over a longer horizon, Nuvama expects the biosimilar platform to offer upside through Omalizumab and Denosumab. It also said the biologics CMO business has an MSD manufacturing contract. According to the report, meaningful biosimilar and CMO contribution is expected in FY29E, and both are described as high-margin businesses that could support margin expansion.

China unit, Eugia 5, and US unit III compliance overhang

Nuvama said Aurobindo’s China unit is expected to move from loss-making in FY26 to recording $10 million EBITDA in FY27E, supported by strong export momentum. It added that Aurobindo plans to expand China capacity by 3.5 times to service local demand as well as exports to the US and Europe.

On manufacturing updates, Nuvama said Eugia 5 has started production, which can support growth in FY28E. However, it flagged that continued OAI at unit III delays some launches. Nuvama also noted that US revenue from this unit has a 3% contribution.

Capex cycle and brokerage projections

Nuvama said Aurobindo has proactively incurred capex of ₹15,500 crore in the past five years. It estimates about half of this is ready to deliver now, with the rest expected to start delivering in FY29.

On financial trajectory, the brokerage projected revenue and PAT CAGRs of 15% and 24%, respectively, along with a 200 bps expansion in RoCE by FY28. It also said the stock trades at 16x FY28E EPS. In a separate observation, Nuvama said Aurobindo could see a 10% to 15% EPS upgrade in FY27E on the back of the Lannett acquisition and a potential MIP announcement by the government.

Key numbers at a glance

What investors may track next

The immediate milestone is the transaction close before the end of June 2026, as guided by the company. After closing, the operational ramp-up at Seymour and the pace of respiratory launches, including gAdvair, will be key integration markers highlighted in the brokerage note.

On the domestic and export manufacturing side, Nuvama’s near-term focus remains the Penicillin G ramp, with utilisation and PLI-linked payouts central to its revenue expectations. Over the medium term, the timeline for biosimilars and biologics CMO to contribute meaningfully by FY29E, and the trajectory of the China unit moving to positive EBITDA in FY27E, are the other signposts explicitly outlined in the report.

Conclusion

Nuvama’s upgraded target for Aurobindo Pharma comes alongside FTC clearance for the $150 million Lannett acquisition and a focus on near-term drivers such as Penicillin G utilisation and US manufacturing scale-up. The brokerage has also linked the next phase of growth to Europe’s expansion and a longer-dated contribution from biosimilars and biologics CMO by FY29E. The next confirmed event on the calendar is the expected closing of the Lannett transaction before the end of June 2026, followed by integration progress and production ramp-up milestones.