Motilal Oswal 's research report on Aurobindo Pharma
Aurobindo Pharma (ARBP) has announced the divestment of Natrol, a wholly-owned unit of its US-based subsidiary, for USD550m (~INR40b) as an all-cash deal. Considering Natrol's FY20 sales/PAT at USD157m/USD27m, the deal is attractive at valuation of 3.5x EV/Sales and 20x P/E on FY20 basis. -ARPB is expected to use the funds to further reduce its debt and strengthen future product pipeline. We have reduced our FY22E EPS estimate by 2.5% to INR62.2 to factor in the Natrol divestment and revised our price target to INR985 (from INR1,015 earlier), based on 16x 12M forward earnings. Re-iterate Buy.
We value ARBP at 16x 12M forward earnings to arrive at a target price of INR985. Re-iterate Buy.
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