February 14, 2017 / 18:33 IST
Aurobindo reported consolidated revenue of INR 39.1b (up 12% YoY; 1% above estimate). However, EBITDA of INR 8.9b (up 8.7%) was 5% below our estimate and adjusted PAT of INR 5.6b (up 7.4% YoY) was 7.5% below our estimate. Miss in numbers can largely be attributed to 4% lower growth in the US due to one-time charge-backs / rebates and one-off item of USD4m in other expenses.
Outlook
ARBP trades at 14x FY18E EPS, at >25% discount to peers. The valuation gap is expected to narrow on account of the company’s increasing profitability, strong earnings growth trajectory (19% CAGR till FY19E), and improving free cash flow. ARBP remains one of our top picks in the sector, with a target price of INR 1,050 (20x 1HFY19E EPS).
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