Aurobindo Pharma (Q1 FY13)

India Infoline News Service | Mumbai |

Aurobindo pharma recorded revenue growth of 12.8% yoy and 2% qoq at Rs12.1bn.

CMP Rs111, Target Rs120, Upside 8.1%

  • Aurobindo pharma recorded revenue growth of 12.8% yoy and 2% qoq at Rs12.1bn. The growth was below our expectation by 10% led by lower than expected growth in formulations and dossier income. Excluding dossier income the growth was fairly strong (14.8% yoy and 1.9% qoq). In Q1 FY13, formulation grew at 5.1% yoy and 0.8% qoq to Rs6.5bn.  API recorded strong growth of 27.9% yoy to Rs5.8bn but qoq growth of 3% disappointed us. Dossier income being lumpy in nature; it sharply declined to Rs68mn from Rs1899mn in Q1 FY12.

  • Operating income declined by 14.8% yoy to Rs1.4bn and remained almost flat qoq. Poor product mix (higher contribution from bulk business which is lower margin), Import alert at manufacturing unit along with rise in staff cost (new hires in EU and US for setting up own distribution) and power and fuel cost led the decline in operating margin. Resultantly, the bottom line impacted by higher operating expenses, unfavourable currency movements and higher interest cost. Aurobindo reported APAT (adjusted for forex loss of Rs2bn) of Rs383mn.

Business mix
Particulars (Rs mn) Q1FY13 Q1FY12 % yoy Q4FY12 % qoq
 Formulations  6,546 6,226 5.1 6,486 0.9
 US  3,283 2,740 19.8 3,009 9.1
Europe & RoW 1,861 1,370 35.8 1,718 8.3
 ARV  1,402 2,116 (33.7) 1,759 (20.3)
 API  5,871 4,590 27.9 5,702 3.0
 SSP  1,791 1,567 14.3 1,648 8.7
 Cephs  2,230 1,943 14.8 1,933 15.4
 ARV & others  1,850 1,080 71.3 2,121 (12.8)
Dossier Income 68 189 (64.0) 29 134.5
Total 12,485 11,005 13.4 12,217 2.2
Source: Company, India Infoline Research

  • In Q1 FY13, sales from Pfizer and other partners declined due to lower pickup. Along with the margin improvement, the uncertainty over USFDA issues resolution remains the key for future performance. Other triggers include higher sales regulated market with the own distribution efforts and the pick up in supply agreements with Pfizer and AstraZeneca, which will drive revenue growth in FY13 onwards.

  • We expect the company to report 13.7% revenue growth in FY13 and 14.7% growth in FY14 along with expansion in operating margin. While maintaining our market performer rating, we slightly tweak our estimates and revise our target price to Rs120. The valuation looks attractive but gazing the uncertainty, we believe stock price to remain under pressure. We maintain our Market performer rating on Aurobindo Pharma with a revised 9-month target price of Rs120.

Results table (consolidated)
Quarterly - (Rs mn) Q1FY13 Q1FY12 % yoy Q4FY12 % qoq
Net Sales 12,144 10,769 12.8 11,907 2.0
(Inc)/Decrese in stock (575) 221 (360.7) (680) (15.3)
Material consumption (5,684) (5,236) 8.5 (6,220) (8.6)
Purchase of Traded Goods (1,366) (276) 394.6 (876) 56.0
Staff Cost (1,543) (1,232) 25.2 (1,391) 10.9
Other Expenditure (2,730) (2,165) 26.1 (2,697) 1.2
Operating Profit 1,397.5 1,639.3 (14.8) 1,404 (0.5)
OPM (%) 11.5 15.2 (372) bps 11.8 (28) bps
Depreciation (588) (452) 30.3 (539) 9.1
Interest (331) (146) 127.4 (352) (6.0)
Other Income 22 29 (24.0) 59 (62.5)
PBT 500 1,071 (53.3) 572 (12.5)
Forex (Gain)/Loss 2,065 (32)
 

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