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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