Buy Aurobindo Pharma; target of Rs 208: Angel Broking

Angel Broking is bullish on Aurobindo Pharma and has recommended buy rating on the stock with a target of Rs 208 in its November 15, 2012 research report.

“For 2QFY2013, Aurobindo Pharmaceuticals Ltd (APL) posted results above expectations on the top-line as well as the net profit front. The OPM came mainly in line with expectations (15.1%) at 15.6%. However, on back of lower taxation and higher OPM, the company posted higher than expected adj. net profits, which came in at Rs136cr. On back of improvement on the financial front and possible clearance of facilities by the USFDA, we recommend a Buy view on the stock.”

“Net sales grew modestly by 40.9% yoy to Rs1,481cr, led by a robust growth in the formulations and active pharmaceutical ingredient (API) segment. The API segment grew by 26.9% yoy. On the other hand the formulation segment grew by 52.5% yoy only. But formulations in the key geographies like the US, and Europe and rest of world (RoW) grew by 50.0%, and 82.0% respectively. Gross margin came in at 48.9% (43.0% in 2QFY2013), on back of a favourable product mix, thus impacting the OPM which came in at 15.6% vs 8.6%. This led the company to post an adj. net profit of Rs136cr.”

“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 FY2012–14E 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 Buy recommendation with a price target of Rs208,” says Angel Broking research report.  

Bodies Corporate holding more than 50% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More