We value Aurobindo Pharma shares at Rs1,140 on 16x Sept'26E ex-Revlimid EPS and an NPV of Rs25/sh for gRevlimid. Our target PE  of 16x is a c10% premium to the company’s 10-year mean, which we think is justified based on an improved balance sheet, progress on medium-term growth drivers, like biosimilars, as well as a broader sector/market re-rating.

Upside risks that could sustain the shares above our target price include: a) sustained improvement in the US generic pricing environment; b) better-than-expected upside from Pen-G; and c) positive surprises from the US generics pipeline.