Buy Aurobindo Pharma; target of Rs 1165: ICICI Direct

ICICI Direct's research report on Aurobindo Pharma

Revenues grew 8.0% YoY to Rs 6365 crore led by 13.2% YoY growth in Europe formulations business to Rs 1671 crore. US business grew 6.8% YoY to Rs 3172 crore. ARV segment grew 41.5% YoY to Rs 443 crore. RoW markets posted growth of 14.5% YoY to Rs 396 crore. However, API segment de-grew 13.6% YoY to Rs 682 crore. EBITDA margins grew 101 bps YoY to 21.5% with higher gross margins being partly offset by higher other expenditure. EBITDA grew 13.3% YoY to Rs 1369 crore. Adjusted PAT grew 16.4% YoY to Rs 836.5 crore in line with operational performance and higher other income. Exceptional items of Rs 2814 crore included 1) gain on Natrol business sale, 2) equity interest re-measurement gains in Eugia and 3) impairment charges.

Outlook

We maintain BUY and arrive at a target price of Rs 1165 (vs. earlier Rs 1025) at 16x FY23E EPS of Rs 72.8.