Aurobindo Pharma up 3% on zero observations for Hyderabad unit; Jefferies retains buy

It is one of the important and largest facilities for the company. As per company's presentation to investors on June 26, it has, so far, filed 158 ANDAs (abbreviated new drug application) from this facility, of which 88 drugs received final approvals and 20 drugs have tentative approvals from the USFDA as of March 2017.

Meanwhile, Jefferies said despite the recent run-up, the stock is still trading at 12.8x FY19E P/E, a 20 percent discount to peers.

The research house has retained buy rating on the stock, with increased target price at Rs 780 (from Rs 750 earlier) based on a target 15x FY19 P/E (10 percent discount to peers).

Aurobindo remains its preferred pick in the large cap space, as it feels the company has much better visibility and growth in earnings.

Its diversified portfolio, large product pipeline and better quality filings lend support to the topline, while its cost leadership makes it best suited to mitigate US pricing pressures, according to the research house.

It has adjusted EPS for company's recent launches and raised FY18-19 EPS by 5-2 percent.

Aurobindo Pharma has, in Q1FY18 YTD, launched more 7 products (against 5 in Q4FY17) including 3 complex products - Meropenem, Strattera and Renvela suspension.

Two of these were positive surprises in terms of competition and timing. Approval pace also remains one of the highest among peers with 16 approvals in FY18 YTD, the brokerage house said.

The only risk, it sees, is delays in approvals or deterioration in the balance sheet.

At 12:31 hours IST, the stock price was quoting at Rs 674.40, up Rs 3.05, or 0.45 percent on the BSE.

Posted by Sunil Shankar Matkar