APLLTD - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:14 pm

Fundamental Rating: 3.4

📊 Core Financials:

- Profitability: PAT improved from 104 Cr. to 179 Cr. (+15.6% QoQ), showing recovery momentum.

- Margins: ROCE at 11.3% and ROE at 9.68% are modest, below industry leaders.

- Debt: Debt-to-equity at 0.27 → manageable leverage.

- EPS: 22.6 ₹, moderate earnings relative to valuation.

💹 Valuation Indicators:

- P/E: 38.0 vs Industry PE of 30.6 → trading at a premium.

- P/B: 859 ₹ / 267 ₹ ≈ 3.22, above book value.

- PEG Ratio: -11.5 → negative, indicating weak growth alignment with valuation.

- Intrinsic Value: Estimated fair value ~780–820 ₹, suggesting mild overvaluation at current price.

🏢 Business Model & Competitive Advantage:

Aurobindo Pharma Ltd (APLLTD) operates in pharmaceuticals, focusing on generics, APIs, and specialty formulations. Competitive advantage lies in its diversified product portfolio, global presence, and strong R&D capabilities. However, profitability metrics remain modest compared to peers, limiting valuation appeal.

📈 Entry Zone & Long-Term Guidance:

- Entry Zone: Attractive accumulation range between 780–820 ₹.

- Long-Term Holding: Suitable for cautious investors; moderate fundamentals and sector tailwinds support stability, but valuations are stretched.

Positive

• Quarterly PAT growth (+15.6%) shows operational recovery.
• Dividend yield of 1.29% provides shareholder returns.
• Debt-to-equity at 0.27 indicates manageable leverage.
• FII holdings increased slightly (+0.08%), showing foreign investor confidence.

Limitation

• P/E ratio (38.0) above industry average (30.6), suggesting premium valuation.
• ROCE (11.3%) and ROE (9.68%) are modest compared to sector leaders.
• PEG ratio (-11.5) reflects weak growth alignment with valuation.
• Trading below DMA 50 (904 ₹) and DMA 200 (938 ₹), showing weak technical momentum.

Company Negative News

• Valuation concerns with premium multiples.
• DII holdings decreased (-0.16%), showing reduced domestic institutional support.
• Technical indicators (MACD -16.4, RSI 30.5) reflect bearish sentiment.

Company Positive News

• Quarterly PAT recovery indicates improving performance.
• Dividend yield supports investor returns.
• FII holdings increased slightly, showing foreign investor confidence.

Industry

• Pharmaceutical sector supported by global demand for generics and specialty drugs.
• Industry PE at 30.6 indicates moderate valuation compared to APLLTD’s premium.
• Sector growth driven by exports, R&D, and healthcare demand worldwide.

Conclusion

⚖️ APLLTD shows moderate fundamentals with improving profitability and manageable debt, but valuations remain stretched. While dividend yield and global presence are positives, weak ROCE/ROE and bearish technicals limit near-term attractiveness. Investors should consider entry near 780–820 ₹ for value-conscious positioning, with long-term holding viable for cautious investors seeking exposure to pharmaceuticals.