Aurobindo Pharma Ltd's Q4FY18 consolidated net profit declines 0.65% yoy to Rs528.76cr : Misses Estimates

The company’s consolidated revenue stood at Rs4,049.09cr, up 11.19% yoy but down 6.62% qoq.

May 29, 2018 03:05 IST India Infoline Research Team

Aurobindo Pharma Ltd Q4FY18

Consolidated Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 4,049.09 11.2
EBITDA 788.11 9.3
EBITDA Margin (%) 19.5 [35]
Net Profit (adjusted) 528.76 [0.7]
***EBITDA margin change is bps
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Reco. Price

580.75

Last updated on

25-May-2018



Aurobindo Pharma’s revenue from operations for Q4FY18 rose 11.2% yoy to Rs4,049.1cr. EBITDA for Q4FY18 rose by 9.3% yoy to Rs788.1cr. EBITDA margins in Q4FY18 were at 19.5% vs. 23.7% in Q3FY18 and 19.8% in Q4FY17. PAT declined by 0.7% yoy to Rs 528.8cr in Q4FY18.
  • The US revenue for Q4FY18 witnessed a growth of 5.8% yoy to Rs1,738.8cr, accounting for 43% of consolidated revenue.
  • On constant currency basis, US revenue grew by 10.1% yoy to $271mn
  • Aurobindo has filed 11 ANDAs with USFDA including 2 injectables in Q4FY18 and 47 ANDAs including 16 injectables in FY18.
  • The EU revenue in Q4FY18 witnessed a robust growth of 48.2%yoy to Rs1,151.6cr, accounting for 28% of consolidated revenue.
  • On constant currency basis, EU revenue grew by 33.7% yoy.
  • Growth Markets' revenue increased by 6.4% yoy to Rs209.6cr in Q4FY18 and accounted for ~5% of revenue.
Concall highlights
  • Unit-4 and Unit-12 have received clear status EIR but Unit 16 (antibiotics and injectables) has received three observations.
  • Plant utilization in oral segment is at optimal level while that in injectables is optimal at Unit-12, while Unit-15 (Non antibiotics, Solid & Liquid Orals) is catching up.
  • Revenue of the injectables business was $124mn/$35mn in FY18/Q4FY18, impacted due to the product recall.
  • ARV business should do well from H2FY19E with orders of combination ARV drugs (such as DTG).
  • Ex-Generis Farmaceutica, growth in the European markets was 7% yoy in Q4FY18. European business is expected to show higher profitability on the back of the continued shifting of manufacturing base to India.
  • US price erosion was 8% yoy and 1% qoq, management believes that the direction of price erosion is changing, historically price erosion was 5% yoy.
  • Management does not expect injectable to become commoditized over next 3-3.5 years.
  • Management has said that they need more time to evaluate the situation before providing guidance of the US business.
  • Queries on Ertapenem (Carbapenem antibiotic) have been addressed and approval is expected. Ertapenem is sensitive product which requires cold storage.
  • Omeprazole approval is expected by end H1FY19E and company has addressed queries on Toprol.
  • Management expects 12-14 OTC product launches in FY19E, will focus on low competition products supporting Rx-OTC switch. Double digit growth in Natrol (OTC division) expected.
  • R&D cost ~5% of sales, phase III trial its biosimilar may take the R&D expenses to 8-9% of sales in FY19E. API imports from China in FY18 at $400mn (65-70% of the FY18 COGS).
  • Customer consolidation has no material impact at this time and will have to watch the Rite aid - Albertsons merger.
  • The total gross debt is Rs4,771cr and interest cost is 2% in FY18 as almost all debt (Rs4,766.9cr) is FX denominated. Company maintains 40% of sales as working capital.
Technical View:

Aurobindo Pharma Ltd ended at Rs. 605.10, up by 11.1 points or 1.87% from its previous closing of Rs. 594 on the BSE.
The scrip opened at Rs. 600 and touched a high and low of Rs. 613.75 and Rs. 596.95 respectively. A total of 22,24,266 (NSE+BSE) shares were traded on the counter. The stock traded below its 200 DMA.

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