Moneycontrol BureauThough the market has rewarded Aurobindo Pharma with 6 percent returns intraday Wednesday on its Q1 performance, ace investor Rakesh Jhunjhunwala is a bit unimpressed.
In earnings' conference call, Jhunjhunwala who currently holds 1.12 percent stake in the company threw a volley of questions to the management. The big bull raised questions on Aurobindo Pharma's finance cost, capex, rationale behind investment in vaccines, product launch, potential revenue growth and its fund raising plans.
"We don't expect revenue from vaccines business for next 2-2.5 years. Even Oncology Hormones and Steroids won't yield revenue for next 2 years while four Peptide-based products have USD 3 billion topline opportunity," N Govindarajan, MD of the pharma company replied.
He was answering Jhunjhunwala's questions on "Initiatives which may not give revenue this year, next year but may show results in 2018-19?"
Govindarajan also said the drug company has been working towards achieving USD 500 million of net debt after sharp reduction in loans on sequential basis.
The drug firm has reduced its net debt by 16.4 percent to Rs 3,546.5 crore (USD 525.2 million) in June quarter compared with Rs 4,240.3 crore (USD 640 million) in preceding quarter."We are not raising any funds for capex or improving cashflows," Govindarajan said, adding the company will have additional Rs 500-600 crore capex commitment next year.
Govindarajan assured Jhunjhunwala that the company will re-look at working capital accounting.Aurobindo during the quarter reported a 24 percent growth in profit at Rs 584.17 crore and 13 percent rise in revenue at Rs 3,726 crore on yearly basis. Operating profit grew by 22.6 percent and margin expanded by 200 basis points.The growth was largely driven by exports that constituted 90 percent to revenue. US business grew by 20.5 percent, Europe 12 percent and emerging markest 17.6 percent with formulations reporting 16 percent growth.
In April-June quarter, Aurobindo launched 7 products in the US market while it received approval from the US Food & Drug Administration for 20 abbreviated new drug applications (ANDAs). It filed 5 new ANDAs with the US health regulator in Q1.
It received establishment inspection report from the USFDA for unit 7 & unit 12, so there is no material pending observations on units, he said.
Unit 4 may be inspected by US FDA soon. The unit was last inspected by USFDA 3 years ago.
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