Aurobindo Pharma (APL)’s results for 4QFY2016 have come in marginally lower than our expectations. Sales grew by 16.9% yoy to Rs3,675cr (vs Rs3,800cr expected), driven by formulations (which grew by 34.6% yoy; constitute ~79.5% of sales). The key geographies in terms of formulations – US, Europe & ROW- and the ARV segment posted a yoy growth of 24.3%, 32.2% and (-19.5%) respectively. The API on the other hand grew by 14.4% yoy. The OPM for the quarter stood at 22.1% (v/s 20.8% expected), ie a yoy expansion of 176bp. The Adj. net profit came in at Rs562cr V/s Rs403cr in 4QFY2015, a yoy growth of 39.2%. We recommend an Accumulate rating on the stock.
Marginally lower than expected numbers: The company posted a revenue of `3,675cr for the quarter (v/s Rs3,800cr expected), ie a growth of 16.9% yoy. Sales grew by 16.9% yoy to Rs3,675cr (vs Rs3,800cr expected), driven by formulations (which grew by 34.6% yoy; constitute ~79.5% of sales). The key geographies in terms of formulations – US, Europe & ROW- and the ARV segment posted a yoy growth of 24.3%, 32.2% and (-19.5%) respectively. The API on the other hand grew by 14.4% yoy. The OPM for the quarter stood at 22.1% (v/s 20.8% expected), ie a yoy expansion of 176bp. The Adj. net profit came in at Rs562cr V/s Rs403cr in 4QFY2015, a yoy growth of 39.2%.
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 APL to become a >~US$2bn sales company, with ~80% of sales being accounted by formulations. We recommend an Accumulate on the stock.
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