Aurobindo Pharma’s stock rises 4% after a global research firm maintains its outperform call

CLSA believes that the cancellation of the Cronus Pharma acquisition alleviates capital allocation concerns, and that the key near-term trigger is value unlocking from the ongoing injectable portfolio demerger.

The share price of Aurobindo Pharma increased by more than 4% in the morning session on August 23 after global research firm CLSA maintained an outperform rating on the stock.

The brokerage firm has maintained its outperform rating and set a target price of Rs 830 per share. It believes that the cancellation of the Cronus Pharma acquisition alleviates capital allocation concerns, and that the key near-term trigger is value unlocking from the ongoing injectable portfolio demerger.

On August 20, the pharma firm announced that its Rs 450-crore deal to acquire a 51 percent stake in Cronus Pharma Specialities India Pvt Ltd (Cronus) had been cancelled.

On August 12, the company announced that it had entered into definitive agreements to subscribe for new equity shares in Cronus, a generic veterinary pharmaceutical products firm based in Hyderabad that develops, manufactures, and sells these items.

The company had signed binding agreements with Cronus to acquire 51 percent ownership by subscribing to 95,059,963 equity shares of Rs 10 each at a premium of Rs 34.18 per equity share, totaling Rs 420 crore.

Aurobindo Pharma stated in a regulatory filing on Friday, “The board of directors in its meeting held today approved the termination of the aforesaid agreements, and the parties have mutually agreed and terminated the said agreements.”

At 09:33 a.m., the stock was trading at Rs 710.60, up Rs 29.15, or 4.28 percent. It reached an intraday high of Rs 725.90 and a low of Rs 703.85.

Disclaimer: The information in the preceding report was compiled from publicly available sources. Moneycontrol recommends that users consult with certified experts before making any investment decisions.

By:  Divyanshi Jaiswal