Angel Broking is bullish on Aurobindo Pharma and has recommended accumulate rating on the stock with a target of Rs 208 in its February 08, 2013 research report.
“For 3QFY2013, Aurobindo Pharmaceuticals Ltd (APL) posted above-expectation numbers on the top-line front, while the bottom-line came slightly below our expectation. The OPM came mainly lower than our expectation (of 17.0%) at 15.5%. However, on back of lower taxations during the quarter, the net profit came in at Rs137cr, mostly in line with expectations at Rs152cr. On back of the improvement on the financial front and possible clearance of the facilities from USFDA, we a accumulate view on the stock.”
“Net sales grew modestly by 22.8% yoy to Rs1,552cr, led by a robust growth in the formulations and active pharmaceutical ingredient (API) segment. The API segment grew by 21.7% yoy. On the other hand the formulation segment grew by 22.5% yoy. But formulations in the key geographies like the US and Europe & rest of world (RoW) grew by 57.8%, and 9.3% respectively. Gross margin came in at 49.6% (44.2% in 3QFY2012) on back of favourable product mix, thus impacting the OPM, which came in at 15.5% vs 13.5% in 3QFY2012. This led the company to post an adj. net profit of Rs137cr.”
“The commencement of operations at the Hyderabad SEZ and incremental contribution from the Pfizer deal would boost APL’s earnings and provide better growth visibility going forward. We estimate net sales to log a 17.5% CAGR to Rs6,279cr over FY2012–14 on the back of supply agreements in the US and antiretroviral (ARV) formulation contracts. Even after factoring in lower profitability going forward, the stock trades at an attractive valuation. Hence, we maintain our Accumulate recommendation with a price target of Rs208,” says Angel Broking research report.
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