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*  Aurobindo Pharma's Q1FY26 results came in below our expectations. The company reported a revenue of Rs 7,868 Cr, up 4% YoY but down 6.1% QoQ. This was due to a drop in gRevlimid sales in the US and price erosion in the API segment. Despite the headwinds, performance was supported by momentum in Europe and growth markets, along with incremental Contribution from the ARV market.

*  North America & Europe Business: In North America, Aurobindo recorded revenue of $408 Mn (4.3% YoY degrowth in constant currency), with an estimated $30 Mn contribution from gRevlimid. The decline was driven by gRevlimid erosion, seasonal moderation, and inventory destocking. Despite this, injectable sales rose 11% QoQ, aided by 15 new launches. Europe maintained its growth momentum with a 9% YoY rise to €241 Mn, putting the company on track to cross €1 Bn in annual revenue by FY26-end. API revenues fell 16% YoY to Rs 916 Cr, impacted by pricing pressure and rising import competition. ARV segment posted strong 55% YoY growth, supported by tender wins and volume uptick. Growth markets rose 9% to Rs 772 Cr.

*  Key facilities are poised to drive growth. Aurobindo resumed operations at its Pen-G manufacturing facility in Jul’25 following regulatory clearance, with early signs of improved yields and output. The company received EU approvals for its biosimilar portfolio, with commercial launches expected to begin in H2FY26. Revenue contribution from both Pen-G and biosimilars is expected to start from Q3/Q4FY26. Additionally, the China facility has already commenced invoicing during Q1FY26, while the US-based Dayton site remains a key near-term growth driver, currently awaiting regulatory approval.

*  Outlook: Aurobindo Pharma remains confident in sustaining its growth momentum in FY26. It targets high singledigit revenue growth (excluding one-offs), with continued strength in Europe and North America. The company aims to maintain EBITDA margins at 20–21%, supported by a favourable product mix, stable input costs, and operational efficiencies. Over the past two years, Rs 7,000 Cr has been invested in biosimilars and Pen-G (API), with future valuations expected to hinge on returns from these investments. Margin expansion will be further supported by the injectables and biosimilars scale-up and contributions from the Lannett acquisition. Strategic investments in CMO and biologics are expected to fuel long-term growth. Importantly, no new greenfield capex is planned for the next three years, reflecting a focus on optimising existing assets.

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