Aurobindo Pharma: revenue accelerated to +23.4%, but net debt rose by INR 15.2 bn in six months

Aurobindo Pharma reported results for the second quarter of fiscal 2027 (July-September 2026): revenue of INR 102,272.8 mn, EBITDA of INR 23,210.3 mn and net profit of INR 11,260.8 mn. Revenue growth accelerated year on year to +23.4% from +16.9% a quarter earlier, and the EBITDA margin rose to 22.7% from 21.1%. Our conclusion: rather attractive – the portal model puts upside to fair value at +14%, even though the EV/EBITDA multiple of 13.8 is 21% above its own three-year average of 11.4. Our view: the share is rather attractive at the current price; upside on the portal model +14%.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue grew 23.4% year on year, and the pace accelerated from 16.9% a quarter earlier

— The EBITDA margin rose to 22.7% from 21.1%, lifting EBITDA by 32.5%

— Net profit added 32.7%, and its margin rose to 11.0% from 10.2%

— Net debt rose from INR 4.8 bn to 20.0 bn over six months but stays at 0.26x trailing-twelve-month EBITDA

— The EV/EBITDA multiple of 13.8 is 21% above its own three-year average of 11.4

— On the portal's model the share trades at +14% upside to fair value

— The trailing twelve-month dividend yield is just 0.38% – the payout plays no role in valuation

Key figures, INR bn

Revenue grew 23.4% year on year, and the pace accelerated from 16.9% a quarter earlier

Revenue for the second quarter of fiscal 2027 was INR 102,272.8 mn, up 23.4% year on year. That is the fastest growth in recent quarters: it was 16.9% in the prior quarter, 4.4% in the first quarter of 2026, and did not exceed 8% on average over the four preceding quarters.

The acceleration of 6.5 percentage points from the prior quarter means the company did more than hold its base – it grew sales. Quarterly revenue exceeded INR 100 bn for the first time; the previous peak was INR 91,058.2 mn in April-June 2026.

For valuation, what matters is that growth has accelerated for two consecutive quarters: from 4.4% in the first quarter of 2026 to 16.9% in the second and 23.4% in the reported quarter. That momentum supports both profit and cash flow, on which the debt load rests.

The EBITDA margin rose to 22.7% from 21.1%, lifting EBITDA by 32.5%

EBITDA for the reported quarter was INR 23,210.3 mn, up 32.5% year on year. EBITDA growth outpaced revenue growth by 9.1 percentage points – the EBITDA margin rose to 22.7% from 21.1%.

Operating profit was INR 16,246.0 mn. The gap between EBITDA and operating profit – INR 6,964.3 mn – is depreciation, which grew with revenue but more slowly.

A 1.6 percentage point margin expansion alongside accelerating revenue means the company converts sales growth into profit with room to spare. That combination – faster revenue and a wider margin – is what makes the quarter strong, not merely large in absolute terms.

Net profit added 32.7%, and its margin rose to 11.0% from 10.2%

Net profit for the quarter was INR 11,260.8 mn, up 32.7% year on year. Profit growth almost matched EBITDA growth (32.5%), meaning no additional pressure emerged below operating profit – neither interest expense nor taxes ate into the gain.

The net margin rose to 11.0% from 10.2%. On revenue of INR 102,272.8 mn that yields INR 11,260.8 mn of profit – roughly INR 800 mn more than the prior-year margin would have produced.

Trailing twelve-month profit was INR 39,901.9 mn. That level is the base for the P/E of 26.4 and for assessing the dividend burden, but by itself it says nothing about one-off items: the facts identify none.

Net debt rose from INR 4.8 bn to 20.0 bn over six months but stays at 0.26x trailing-twelve-month EBITDA

Net debt at 30 September 2026 was INR 20,022.4 mn, against INR 4,848.0 mn at 31 March 2026 – an increase of INR 15.2 bn over six months. A year earlier, at 30 September 2025, the company had net cash of INR 78,528.7 mn, so over twelve months net debt rose by INR 98.6 bn.

Despite the increase, leverage remains low: net debt equals 0.26x trailing-twelve-month EBITDA (INR 76,795.2 mn). At that level interest expense does not weigh on profit – which is visible in net profit growing almost in line with EBITDA.

The shift from net cash to net debt means the company spent its accumulated cash. Whether on capex, acquisitions or working capital, the facts do not say, so we limit ourselves to the observation: debt rose but remains moderate.

The EV/EBITDA multiple of 13.8 is 21% above its own three-year average of 11.4

At an EV/EBITDA of 13.8 the share trades 21% above its own three-year average of 11.4. That means the market has already priced in part of the acceleration: over the past three years the company was cheaper relative to its EBITDA.

The trailing-twelve-month P/E is 26.4 on profit of INR 39,901.9 mn and a market cap of INR 1,051,503.3 mn. Return on equity is 11.7%, modest for a company with such low leverage.

A valuation above its own history is the main argument against. But it rests on trailing-twelve-month profit, which includes the reported quarter's 23.4% growth only partly: if the acceleration holds, the multiple's denominator will grow and today's price will look less rich.

On the portal's model the share trades at +14% upside to fair value

Our value-creation model – EBITDA growth times the target multiple, against current market cap – puts upside to fair value at +14%. This is the portal's own estimate, not a market consensus and not a target price.

The +14% upside is obtained at a multiple above the historical one: the model relies on EBITDA growth, which was 32.5% in the reported quarter. If growth slows to the earlier 8%, the model would no longer offer such a cushion.

The two yardsticks disagree: the model shows +14% upside, while the multiple is 21% above its own history. For this share we treat growth as decisive: the acceleration in revenue and margin in the reported quarter is a fresh fact, whereas the three-year average multiple was formed in a period of slower growth.

The trailing twelve-month dividend yield is just 0.38% – the payout plays no role in valuation

The trailing twelve-month dividend yield is 0.38%. On a market cap of INR 1,051,503.3 mn that is roughly INR 4 bn of payouts – a sum not comparable with profit of INR 39,901.9 mn and not material to the investment case.

For a company with quarterly net profit of INR 11,260.8 mn and low leverage, such a yield looks modest. But the facts give neither the declared dividend nor the payout ratio, so it is impossible to judge whether the payout will rise.

Against the key rate, a 0.38% yield does not compete for capital. The dividend here is neither an argument for nor against: it is too small to affect the decision, and we do not rely on it in the verdict.

Valuation on the latest reported figures

Bottom line

A strong quarter on all three levels: revenue grew 23.4% with acceleration, EBITDA 32.5%, net profit 32.7%, and the margin widened. Debt rose but remains low at 0.26x trailing-twelve-month EBITDA, and the dividend is too small to matter. The key question for a holder is valuation: EV/EBITDA of 13.8 is 21% above its own three-year average, and the portal model's upside is +14%. Our conclusion: rather attractive – the +14% upside on the portal's model outweighs the premium to history, but only as long as revenue acceleration holds. Our view: the share is rather attractive at the current price; upside on the portal model +14%.