Aurobindo Pharma (Q2 FY13)

India Infoline News Service | Mumbai |

Aurobindo Pharma (Q2 FY13)

CMP Rs174, Target Rs215, Upside 23.3% 
  • 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).

  • 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.

  • 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 Business mix
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
Source: Company, India Infoline Research 
  • 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.
Results table
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
 

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