Centrum bullish on Aurobindo Pharma has recommended buy rating on the stock with a target price of Rs 1010 in its research report dated August 13, 2018.
Centrum's research report on Aurobindo Pharma
We maintain our Buy rating on Aurobindo Pharma (APL) and revise TP to Rs1,010 (earlier Rs1,070) based on 18x March’20E EPS of Rs56.2. The company’s Q1FY19 revenue was in-line with our expectations. However, EBIDTA margin and net profit were below expectation. APL’s sales grew 16% YoY, margin declined 460bps to 18.3% and net profit declined by 12% YoY. Its specialised segments such as injectables, penam, microspheres, hormones, oncology, vaccines, neutraceutical, depot injections, OTC and peptides would improve margins due to complexity in the manufacturing. APL has developed a robust pipeline of 487 ANDAs for the US market through differentiated products. APL is among our top picks in the pharma sector.
We maintain our Buy rating on the scrip, with a TP of Rs1,010 based on 18x March’20E EPS of Rs56.2, and with an upside of 65.4% from CMP. We have revised our FY19E and FY20E EPS downwards by 9% and 5% respectively. Key risks to our assumptions include slower growth in the US business and regulatory risks for its manufacturing facilities. APL is among our top picks in the pharma sector.
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