Shares of Aurobindo Pharma Ltd. declined 4.91% on May 22, 2026, following the release of fourth quarter earnings results. According to reports from CNBC TV18, the stock had snapped a three-day losing streak on Friday, with shares trading ₹1,470.45 during the session. Despite the recent decline, the stock remains up 24.49% year-to-date, significantly outperforming the Sensex's decline of 11.30%, generating an alpha of 35.79 percentage points. However, the stock has declined 2.70% over the past week and experienced a sharp drop following the Q4 FY26 results announcement. The stock was among the worst performers in the Nifty 50, falling over 4% as the broader market opened higher on banking sector gains.
The company reported record quarterly and annual revenues for FY26, with profit of ₹921.26 crore, representing a 1.97% decline from ₹923.27 crore in the previous year, which was in-line with CNBC-TV18 poll expectations. As reported by CNBC TV18, revenue grew 5.62% to ₹8,853.34 crore from ₹8,382.12 crore year-ago, surpassing street estimates of ₹8,676 crore. However, EBITDA declined 5% to ₹1,752.78 crore from ₹1,791.92 crore in the previous year, falling short of Street expectations of ₹1,731 crore. EBITDA margins contracted to 20.03% from 21.38% in the year-ago period, representing a 135-basis-point erosion and marking the weakest operating performance in the recent seven-quarter period. Employee costs surged 18.17% to ₹1,373.98 crore, consuming a significantly larger share of revenues and directly impacting operational leverage.
According to the latest earnings call highlights, Aurobindo Pharma achieved a significant milestone with its European formulation business reaching EUR 1 billion in annual revenues. The API business saw a 25% quarter-on-quarter revenue improvement, contributing 14% to the total revenue. The company is on track to achieve a $2 billion revenue milestone in the US business, driven by acquisitions and new product launches, though the US formulation revenue decreased 18% year-on-year on a constant currency basis due to pricing pressures in some markets. The company is focusing on biosimilars and biologic CMO strategies as long-term growth drivers, with plans to expand its product portfolio and geographic reach, though the biosimilar business is entering a competitive market with multiple players which may impact market share and pricing.
Operating costs, excluding R&D, increased by 11% quarter-on-quarter and 17% year-on-year, primarily due to higher power and fuel expenses. The company faced delays in closing certain acquisitions, such as the Leonard deal, due to external factors like government shutdowns. The US business declined 13% to ₹3,543 crore from ₹4,072 crore in the previous year, while the EU business increased 30.2% to ₹2,795 crore from ₹2,147 crore last year. The growth markets segment increased 24.7% in the fourth quarter to ₹980 crore from ₹786 crore. Management indicated that $400 million is a reasonable base assumption for the US business compared to $387 million in the fourth quarter.
Despite margin pressures, Aurobindo Pharma maintains a net cash position with negligible debt (net debt-to-equity of -0.03), demonstrating disciplined capital allocation. Cash and cash equivalents reached ₹5,563 crore as of March 2026, providing ample liquidity for operational requirements and strategic investments. Long-term debt stood at ₹1,561.65 crore, down from ₹2,134.90 crore a year earlier. The company's interest coverage remains robust at 25.26 times EBIT, reflecting the company's conservative financial structure and strong debt servicing capability. However, the company's price-to-earnings ratio of 25.43x and price-to-book value of 2.56x trade below most comparable peers, reflecting market scepticism about its ability to improve returns on capital.
