Aurobindo Pharma (Q2 FY13)
Aurobindo Pharma (Q2 FY13)
Nov 16, 2012 09:11 IST India Infoline News Service
CMP Rs174, Target Rs215, Upside 23.3%
Source: Company, India Infoline Research
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Aurobindo pharma recorded revenue growth of 40% yoy and 24% qoq to Rs15bn. The growth was ahead of our expectation led by better than the expected growth in international formulations business. Even excluding dossier income the growth was fairly strong. In Q2 FY13, formulation grew at 52% yoy and 38% qoq to Rs9bn, API business recorded strong growth of 27% yoy to Rs6.2bn. Growth in constant currency terms was 31% yoy. For the full year company has guided for double digit growth (in dollar terms).
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Operating income climbed by 1.2x yoy to Rs2.5bn led by better than expect operating performance along with favorable business mix (launch of Singulair and ramp-up in Combivir & Plavix in US). EBITDA margins improved by 600 bps to 16.7% (higher than our estimates of 14.0%). Resultantly, the adjusted bottom line also improved to Rs1.2bn.
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Update on USFDA: USFDA has inspected Unit VI (Import alert) and Unit IV (newly operational injectable facility) during the quarter. USFDA has not found any observation in Unit IV and the company expects to get approval for the facility very soon. Whereas at Unit VI, USFDA has found some minor observations for which company has submitted clarification. The management did not specify any timeline for the approval of Unit VI.
| QUARTERLY -(Rs. in Mn.) | Q2FY13 | Q2FY12 | % yoy | Q1FY13 | % qoq |
| Formulations | 9,028 | 5,919 | 52.5 | 6,546 | 37.9 |
| US | 4,249 | 2,833 | 50.0 | 3,283 | 29.4 |
| Europe & Row | 2,257 | 1,342 | 68.2 | 1,861 | 21.3 |
| ARV | 2,522 | 1,744 | 44.6 | 1,402 | 79.9 |
| API | 6,221 | 4,901 | 26.9 | 5,871 | 6.0 |
| SSP | 1,846 | 1,502 | 22.9 | 1,791 | 3.1 |
| Cephs | 2,255 | 1,704 | 32.3 | 2,230 | 1.1 |
| ARV & others | 2,120 | 1,695 | 25.1 | 1,850 | 14.6 |
| Dossier Income | 117 | 153 | (23.5) | 68 | 72.1 |
| Total | 15,366 | 10,973 | 40.0 | 12,485 | 23.1 |
- We revise estimates over the next two years incorporating growth expected in US business and EM market. The company’s performance has been impacted by import alert. In addition to this, the slower ramp up of the MNC supply also impacted growth in FY12. But, now, we believe the company would continue to report strong yoy earnings (though on a lower base in FY13) on back of strong performance expected in US led by approval of Unit VI and Unit IV around the corner. We upgrade the stock to Buy from MP with a revised 9-month price target of Rs215.
| QUARTERLY -(Rs. in Mn.) | Q2FY13 | Q2FY12 | % yoy | Q1FY13 | % qoq |
| Net Sales | 15,004 | 10,753 | 39.5 | 12,144 | 23.6 |
| (Inc)/Decrese in stock | (1,140) | 36 | - | (575) | 98.1 |
| Material consumption | (7,505) | (5,225) | 43.7 | (5,684) | 32.1 |
| Purchase of Traded Goods | (1,200) | (734) | 63.5 | (1,366) | (12.2) |
| Staff Cost | (1,670) | (1,327) | 25.9 | (1,543) | 8.3 |
| Other Expenditure | (3,266) | (2,286) | 42.9 | (2,730) | 19.6 |
| Operating Profit | 2,502.8 | 1,146.7 | 118.3 | 1,398 | 79.1 |
| OPM (%) | 16.7 | 10.7 | 602 bps | 11.5 | 517 bps |
| Depreciation | (598) | (462) | 29.4 | (588) | 1.7 |
| Interest | (335) | (207) | 61.8 | (331) | 1.2 |
| Other Income | 66 | 60 | 10.4 | 22 | 196.8 |
| PBT | 1,635 | 537 | 204.4 | 500 | 226.9 |
| Forex (Gain)/Loss | (1,177) | 1,854 | (163.5) | 2,065 |
