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Aurobindo Pharma: Termination of inorganic bet eases capital allocation worries

We believe termination of the Cronus Pharma acquisition deal should help remove corporate governance/capital allocation fears

August 23, 2021 / 04:48 PM IST
Aurobindo Pharma: Termination of inorganic bet eases capital allocation worries

PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook

Last Friday, Aurobindo Pharma (CMP: Rs 681, Market Cap: Rs 39,908 crore) updated stock exchanges that it has terminated the agreement to acquire 51 percent stake in Cronus Pharma. The agreement to acquire majority stake in Cronus Pharma was declared along with the quarterly result on 12th August and since then stock has tumbled 18 percent. Among the reasons which contributed to weak stock sentiment was street concerns for injudicious capital allocation with respect to Cronus Pharma deal. There were...

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