Aurobindo Pharma (Q3 FY13)

India Infoline News Service | Mumbai |

Aurobindo pharma recorded revenue growth of 22.2% yoy and 4.6% qoq to Rs15.7bn.

CMP Rs183, Target Rs218, Upside 19.1%

  • Aurobindo pharma recorded revenue growth of 22.2% yoy and 4.6% qoq to Rs15.7bn. The growth in top-line was largely in-line with our expectations (expected Rs16.3bn). The miss in growth was attributable to lower than the expected growth in ARV business. In Q3 FY13, total formulation growth advanced by 23.3% yoy and 1% qoq to Rs9.2bn. API business recorded strong growth of 15.5% yoy to Rs6.3bn.

  • Operating income scaled up by 35.5% yoy to Rs2.6bn led by better than expect operating performance along with favorable business mix. EBITDA margins improved by 162bps yoy and marginally declined qoq (-18bps) to 16.5%. Resultantly, the adjusted PAT margin improved by 157 bps yoy to 8.3%. The company incurred forex loss of Rs734mn (related to translation of long-term foreign borrowings) compared with a forex loss of Rs1445mn in Q3 FY12. Resultantly the reported PAT was at Rs919mn during the quarter (Adj PAT of Rs1.3bn).

Quarterly Business mix
QUARTERLY -(Rs mn) Q3FY13 Q3FY12 % yoy Q2FY13 % qoq
Formulations 9,118 7,389 23.4 9,028 1.0
US 5,134 3,254 57.8 4,249 20.8
Europe & Row 2,233 2,050 8.9 2,257 (1.1)
ARV 1,751 2,085 (16.0) 2,522 (30.6)
API 6,333 5,483 15.5 6,221 1.8
SSP 2,130 1,572 35.5 1,846 15.4
Cephs 2,452 1,937 26.6 2,255 8.7
ARV & others 1,751 1,974 (11.3) 2,120 (17.4)
Dossier Income 386 228 69.3 117 229.9
Total 15,837 13,100 20.9 15,366 3.1
Source: Company, India Infoline Research

  • Update on USFDA issues: USFDA has inspected Unit VI (Import alert) and Unit IV (newly operational injectable facility) during Q2 FY13. During the current quarter (Q3 FY13), the USFDA cleared the liquid injectable facility at unit-4 and semi synthetic penicillin oral and injectable facility at unit-12. The company has started approving products from these facilities. The management did not specify any timeline for the approval of Unit VI.

  • Aurobindo Pharma (APL), in the past one year has seen many highs and lows led by uncertainties about USFDA clearance and setbacks at operational front. But, now with the clarity over USFDA resolution emerging and the approval of unit IV and Unit XII, the company is set to report robust growth. At CMP of Rs183, APL trades at 8.9x FY14E EPS, which is at a deep discount to its peers (Industry average PE is 14x for mid-caps) and even to its historical PE multiple of 12x (~6 yrs avg). We expect valuations to catch up and maintain Buy with a 9-month price target of Rs218.

Results table
QUARTERLY -(Rs mn) Q3FY13 Q3FY12 % yoy Q2FY13 % qoq
Net Sales 15,701 12,845 22.2 15,004 4.6
(Inc)/Decrese in stock (926) 363 - (1,140) (18.7)
Material consumption (7,843) (5,574) 40.7 (7,505) 4.5
Purchase of Traded Goods (905) (1,118) (19.0) (1,200) (24.6)
Staff Cost (1,668) (1,408) 18.5 (1,670) (0.1)
Other Expenditure (3,620) (2,471) 46.5 (3,266) 10.8
Operating Profit 2,591.2 1,911.6 35.6 2,503 3.5
OPM (%) 16.5 14.9 162 bps 16.7 (18) bps
Depreciation (607) (552) 10.0 (598) 1.5
Interest (331) (274) 21.1 (335) (1.1)
Other Income 56 49 14.2 66 (14.4)
PBT 1,709 1,135 50.5 1,635 4.5
Forex (Gain)/Loss 734 1,445 (49.2) (1,177) (162.3)

***Note: This is a NSE Chart

 

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