Sell Aurobindo Pharma: Motilal Oswal

16150 Investors following Aurobindo Pharm. Share this News with them.

0

Like this story, share it with millions of investors on M3

Sell Aurobindo Pharma: Motilal Oswal

Motilal Oswal has come out with a report on Aurobindo Pharma. It has maintained sell rating on the stock.

Post your opinion here

 

0

Tweet

Share on Tumblr

Aurobindo Pharm BSE | NSE 28/05/12 Are Mutual Funds betting on Aurobindo Pharm?

Motilal Oswal has come out with a report on Aurobindo Pharma. It has maintained sell rating on the stock.

Motilal Oswal report on Aurobindo Pharma

Aurobindo does not declare consolidated quarterly results. This quarterly estimates are standalone, while annual estimates are on a consolidated basis.

Sales are expected to be at Rs 5.2 billion, growth of 13% YoY on account of improved traction in Pen-G based business and incremental contribution from USA as well as higher ARV sales.

Margins are expected to be stable at 15.7%, despite improvement in market and product mix, as the company continues to invest in its regulated generics business.

However, high other income at Rs 259 million (up 131% YoY) and lower tax provisioning (at 20.1% of PBT v/s 31.9% in 4QFY06) would boost PAT growth to 51% to Rs 565 million.

We have upgraded our earnings estimate for FY07E and FY08E by 6-8%, to factor in for higher interest income on account of unutilized FCCB funds.

Despite the progress on regulated market initiatives and slight recovery of Pen G prices, earnings visibility is poor. Given its high leverage and modest return ratios, we believe valuations at 20.4x and 16.2x FY07E and FY08E earnings are expensive. We maintain Sell.