Buy Aurobindo Pharma; target of Rs 230: Unicon Investment

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Buy Aurobindo Pharma; target of Rs 230: Unicon Investment

Unicon Investment is bullish on Aurobindo Pharma and has recommended buy rating on the stock with a target of Rs 230 in its May 10, 2011 research report.

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RELATED NEWS Accumulate Hindustan Unilever; target of Rs 312: Emkay Reduce Adani Power; target of Rs 103: Emkay Buy Jyothy Labs; target of Rs 280: PINC Research ALSO READ See previous views by Unicon Investment See what other Experts & Brokerages are saying about Aurobindo Pharm See messages about Aurobindo Pharm Aurobindo Pharm BSE | NSE 31/05/12 Are Mutual Funds betting on Aurobindo Pharm?

Unicon Investment is bullish on Aurobindo Pharma and has recommended buy rating on the stock with a target of Rs 230 in its May 10, 2011 research report.

"Aurobindo Pharma Ltd (APL) posted strong result in Q4 FY11 broadly inline Unicon estimates. Topline grew by ~19% YoY to INR 11,544mn. For FY11, revenue stood at INR 43,815mn up 22.5% on YoY basis. Healthy growth in US business (51%) and ARV formulations (33%) helped APL in topline expansion. Strong growth in formulations and dossier income helped APL's growth trajectory. Formulations sales grew by ~31% YOY against 29.3% YoY growth in dossier income. Active Ingredients segment also posted decent growth of 12.5% in the same period. Exports and domestic sales grew by 26% and 22% YoY respectively."

"APL filed 37 ANDAs and 227 dossier filings in USA and Europe in FY11. EBITDA (excl. Other income) increased by 47.1% YoY to INR 2,561mn with 338bps expansion in EBITDA margin to 22.2%. Increase in material and employee cost was partially offset by decline in other expenditure. Net profit rose by 11% YoY to INR 1,351mn while Profit Margin remained flat at 12%. Increase in depreciation and financial charge was offset by drop in tax provision."

"APL has suffered on account of import alert posed by US FDA on its cephalosporin manufacturing plant (unit VI) and recall of the generic drugs in US due to mislabelling (APL is third party manufacturer for these products to Pfizer). We don't expect any major impact on the financials and expect strong revenue numbers till FY13. The company has undertaken major transformation on its way of becoming a formulation player from an API manufacturer. Besides increase in capacities, strong ANDA pipeline and MNC deals (Pfizer & AstraZeneca) would also support APL's growth trajectory. Stock is trading at 8.4x its FY12E earnings. We recommend BUY with a reduced price target of INR 230," says Unicon Investment research report.

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