Buy Aurobindo Pharma; target of Rs 1654: Angel Broking

Angel Broking's report on Aurobindo Pharma

"For 4QFY2015, Aurobindo Pharma posted better-than-expected results; sales came in at Rs 3,144cr V/s an expected Rs 2,807cr and V/s Rs 2,306cr in 4QFY2014, a yoygrowth of 36.4%. Sales were driven by the ARV segment coupled with a good performance of the acquisitions. On the operating front, the EBITDA margin came in at 20.3% V/s an expected 14.5% and V/s 31.2% in 4QFY2014, a dip of 10.9 percentage points yoy. The OPM came in better than expected led by higher than expected sales. Thus, the Adj. PAT came in at Rs 403.8cr V/s an expected Rs 187cr and V/s Rs 511cr in 4QFY2014, a dip of 21.1% yoy."

"We estimate the company’s net sales to log a 11.3% CAGR over FY2015–17E to Rs 16,600cr, on back of supply agreements in the US and ARV formulation contracts, which will be supplemented through the recent acquisitions of the Western European formulation business of Actavis and US’s Natrol. The acquisitions have also led Aurobindo Pharma to become a >~US$2bn sales company, with around 80% of sales accounted by formulations. We recommend a Buy on the stock with a target price of Rs 1,654", says Angel Broking research report.

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