Centrum's research report on Aurobindo Pharma
We maintain our Buy rating on Aurobindo Pharma (APL) and revise TP to Rs1,030 (earlier Rs970) based on 18x March’19E EPS of Rs57.1. The company’s Q2FY18 results exceeded our and consensus expectations. APL’s sales grew 18% YoY, margin improved 60bps to 25.2%, and net profit grew 29% YoY. Its specialised segments such as injectables, penam, microspheres, hormones, oncology, neutraceutical, depot injections and peptides would improve margins due to complexity in the manufacturing. APL has developed a robust pipeline of 463 ANDAs for the US market through differentiated products. APL is among our top picks in the pharma sector.
Outlook
We maintain our Buy rating on the scrip, with a TP of Rs1,030 based on 18x March’19E EPS of Rs57.1, and with an upside of 30.5% from CMP. APL is among our top picks in the pharma sector. Key risks to our assumptions include slower growth in the US business and regulatory risks for its manufacturing facilities.
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