Buy Aurobindo Pharma; target of Rs 909: Prabhudas Lilladher

Prabhudas Lilladher's research report on Aurobindo Pharma

Aurobindo’s (ARBP) adj. sales, adj. EBITDA and margin sequentially grew by 2%, 8% and 110bps, in spite of revenue from major US product, gRenvela contracting due to strong competition and high price erosion . ARBP’s revenues from US injectable (Auromedics) business had sequentially similar revenues of US$46m, falling short on our expectation of US$60m/quarter in H2FY18E due to delay in approvals of Ertapenem, delay in launch of Vancomycin and lower supply of Pantoprazole post recall of few batches in US. Branded business in emerging markets grew by 15% QoQ and guided for a robust growth of 15 ‐ 20% in FY19E. With integration of sales (US$18m) from Generis Farma and procurement of govt ‐ tender, revenues in EU were maintained at Rs11.7bn up 37% YoY

Outlook
We rolled forward our earnings estimates to FY20E and derive our new TP at Rs909 (from Rs877) on PE 18x of FY20E. We maintain ‘Buy’.

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