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Aurobindo Pharma Ltd Research Report - 25th Aug 2016

Pharmaceutical | Published on Aug 25th 2016

IT

For 1QFY2017, the company’s sales came in at Rs3,664cr V/s Rs3,900cr expected and V/s Rs3,664cr in 1QFY2017, a yoy growth of 13.0%, mainly driven by formulations. Formulations (Rs3,032cr) posted a yoy growth of 15.9% and constituted around 80% of overall sales, while API (Rs735cr) posted a yoy growth of 1.6%. On the operating front, the EBITDA margin came in at 22.6% V/s 22.8% expected and V/s 20.6% in 1QFY2016. The yoy improvement in the operating margin was on the back of gross margin expansion (55.3% in 1QFY2017 V/s 53.4% in 1QFY2016). Thus, the Adj. net profit came in at Rs585cr V/s Rs576cr expected and V/s Rs472cr in 1QFY2016. We maintain our Accumulate rating. Sales marginally lower than expected: For 1QFY2017, the company’s sales came in at Rs3,664cr V/s Rs3,900cr expected and V/s Rs3,664cr in 1QFY2017, a yoy growth of 13.0%, mainly driven by formulations. Formulations (Rs3,032cr) posted a yoy growth of 15.9% and constituted around 80% of overall sales, while API (Rs735cr) posted a yoy growth of 1.6%. On the operating front, the EBITDA margin came in at 22.6% V/s 22.8% expected and V/s 20.6% in 1QFY2016. The yoy improvement in the operating margin was on the back of gross margin expansion (55.3% in 1QFY2017 V/s 54.6% in 1QFY2016). Thus, the Adj. net profit came in at Rs585cr V/s Rs576cr expected and V/s Rs472cr in 1QFY2016. Outlook and valuation: We estimate the company’s net sales to log a 15.1% CAGR over FY2016–18E to Rs18,078cr on back of US formulations, which will be supplemented through the recent acquisitions of the Western European formulation businesses of Actavis and US’ Natrol. The acquisitions have also led Aurobindo Pharma (APL) to become a >US$2bn sales company, with ~80% of sales being accounted by formulations. We recommend a Accumulate rating.

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Accumulate

CMP 788
Target Price 877
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)42,313.61
MCAP NSE (Rs in Cr)42,360.43
P/E (x)18.49
EPS (Rs.)39.11
BV (Rs.)130.18
Div Yield (%)0.35
FV (Rs.)1.00
P/BV (x)5.01
EV/Sales (x)3.33
EV/EBITDA (x)14.89

Shareholding Pattern (%)

Promoter54.0
Foreign27.0
Public & Others9.0
Institution8.0
Corporate2.0
Grand Total100.0

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