Centrum Research is bullish on Aurobindo Pharma has recommended buy rating on the stock with a target price of Rs 1070 in its research report dated June 04, 2018.
Centrum Research's research report on Aurobindo Pharma
We maintain our Buy rating on Aurobindo Pharma (APL) and revise TP to Rs1,070 (earlier Rs1,170) based on 18x March’20E EPS of Rs59.3. The company’s Q4FY18 revenues and net profit were in-line with our expectations. However, EBIDTA margin was below expectation. APL’s sales grew 11% YoY, margin improved 10bps to 19.9%, and net profit declined by 1% YoY. APL’s two manufacturing units IV and XII have been cleared and received EIR from US FDA. Its specialised segments such as injectables, penam, microspheres, hormones, oncology, vaccines, neutraceutical, depot injections and peptides would improve margins due to complexity in the manufacturing. APL has developed a robust pipeline of 478 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 Rs1,070 based on 18x March’20E EPS of Rs59.3, and with an upside of 99.9% from CMP. We have revised our FY19E and FY20E EPS downwards by 14% and 8% respectively. 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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