Aurobindo Pharma’s subsidiary Acrotech Biopharma has acquired portfolio Outlook & Valuations: On valuation front, the company paid almost 1.6xMarketCap/sales (on upfront payment), which we believe is very attractive. The addition whole US$140mn will be paid up if the sales for the two said above products reach US$800mn; which we believe is attractive. On the Operating front, the company guided that the acquired business has OMP is better than company’s current OPMs (around 20-22%). It’s an all cash deal and company has guided that it will take 90 days for such deals to be integrated, so mostly it will start reflecting in FY2020. We believe that the deal can add almost ~`3% on EPS growth in FY2020, with major benefits reflecting in FY2021 (when the ramp-up of sales can enhance the profitability of the company). Given the opportunity and Aurobindo Pharmaceuticals position in the global generic, we believe that the company still should give decent upsides on the stock. Hence, we maintain our buy with a price target of `890.
Download Full Report
View Full Report in Browser 
