At a Glance: AstraZeneca Pharma India rode the COVID wave and came out a star, posting a 5-year profit CAGR of 19% and ROCE of 33%. But with a P/E of 150x, falling net margins, and muted EPS growth, is this truly Big Pharma royalty — or a classic case of imported overvaluation?

1. 💊 Business Snapshot: Imported Excellence

• Subsidiary of AstraZeneca Plc, UK — holds 75% stake
• Indian arm focuses on:
  • Cardiovascular & Metabolic diseases
  • Oncology
  • Respiratory and Immunology
• Known for patented molecules, imported drugs, and premium pricing
• Doesn’t manufacture most products domestically — relies on global supply chain

2. 📈 5-Year Financials (FY21–FY25)

• Sales CAGR: 16%
• Profit CAGR: 19%
• But net profit has dropped 28% YoY in FY25

3. 🧪 Operating Trends: From Vaccine Fame to Margin Blame

• FY21–22: High COVID vaccine buzz — but short-term gain
• Margins fell from 17% to 11% in FY22 due to input cost spikes
• FY25 margins remain stuck at 15% despite 32% YoY sales jump
• High marketing, regulatory, and royalty costs = low operating leverage

4. 📉 EPS + Dividend: Shareholders Are Paying… for What?

• EPS trend is not consistent:
  • FY23: ₹39.7 → FY25: ₹46.3 = 8% CAGR
• Dividend payout:
  • FY22: 41%
  • FY25: 0% (!)
• Despite stable earnings, AstraZeneca paid no dividend in FY25

5. 🔬 R&D & Product Pipeline

• R&D is mostly global; Indian arm is a distributor
• Not a generic player — relies on patented drugs
• Oncology portfolio seeing traction (Tagrisso, Lynparza)
• But India-facing growth lags behind Sun, Cipla, DRL

6. 🏥 Business Model Risks

• Imported products = currency risk
• Dependence on regulatory approvals
• Low domestic manufacturing → weak cost control
• No blockbuster India-first drug launches in years

7. 💰 Balance Sheet & Cash Flow

• Almost debt-free
• ROCE: 33%, ROE: 24% = impressive efficiency
• Cash Flow from Ops (FY25): ₹65 Cr
• Capex negligible, free cash flow positive
• But reserves now at ₹765 Cr = retained earnings not being reinvested visibly

8. 🌏 Shareholding & Institutional Mood

• DII stake grew from 1.3% to 4.6% in 2 years = some optimism
• Public shareholding down = exit by retailers at high valuations?

9. 🔍 Valuation Check: P/E is Astronomical

• CMP: ₹10,510
• TTM EPS: ₹46.3 → P/E = 150x 😳
• P/B = 34.1x vs sector median of ~5x
• Fair Value Estimate:
  • Forward EPS (FY26E): ₹55
  • P/E Band: 40x – 60x
  • Fair Value Range = ₹2,200 – ₹3,300
• CMP is 3x above upper FV → pricing in perfection + more

10. ⚖️ Peer Comparison

• AstraZeneca has best ROCE, but worst valuation mismatch

11. ⚠️ Red Flags

• EPS down 28% YoY
• Zero dividend
• High royalty payouts = suppressed net margins
• No visible India-based innovation
• Corporate governance risk if MD exit in FY25 leads to strategy shift

12. 🧠 EduInvesting Verdict

AstraZeneca Pharma India is a great brand… but not a great stock at current levels.

The business is healthy, balance sheet is clean, and global parentage is strong. But at 150x earnings, you’re paying biotech unicorn prices for a pharma distributor.

Unless EPS triples or they launch a breakthrough drug in India, this is a case of valuation fever with no paracetamol in sight.

Tags: AstraZeneca Pharma India, Nifty 500 Pharma Stocks, Overvalued Pharma Stocks, ROCE Kings, No Dividend Stocks, EduInvesting Recap, High P/E Pharma

✍️ Written by Prashant | 📅 14 June 2025