Insights

Aurobindo Pharma Ltd

March 14, 2018 . Equities Desk

Aurobindo Pharma Ltd (Auro) is one of the largest vertically integrated pharmaceutical companies. Over the past few years, the company has drastically shifted its focus from APIs business to generic formulations.

Outlook and Valuation: We believe Aurobindo Pharma is better placed as compared to its peers on the back of relatively better performance despite pricing pressure in the US. We expect revenue and PAT to grow at a CAGR of 9.5%/7% over FY17-20E on the back of new product launches mainly in complex generics, volume growth in existing products and ramp-up in Europe business. Importantly, recent observations of the USFDA to its unit-IV facility (which makes injectables) at Hyderabad, remains a concern. The USFDA has issued Form 483 with 9 observations to the company’s unit 4, citing deficiencies in maintaining manufacturing standards. However, none of the observations are related to data integrity or are repetitive in nature. We recommend ‘BUY’ rating on the stock with a target price of Rs 644 based on 13.5x FY20E EPS

Research Report – Aurobindo Pharma

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3 thoughts on “Aurobindo Pharma Ltd

  1. Thanks for the heads-up on Aurobindo Pharma.
    Wondering… can you do a comparative piece on pharma/bio-tech stocks? Which are most likely to appreciate in coming 1 to 2 yrs? Thanks!
    Sincerely,
    Bharat

    1. Hi Bharat Shahane,

      Thanks for writing to us. Following are the stocks which are under coverage in the pharma space.

      Cipla Ltd : Target Price – 653
      View : We expect revenue/Adj. Pat CAGR of 12%/37% over FY17-20E on the back of key product approvals in the US along with improved domestic, South African and Europe business

      Glenmark Pharma : Target Price – 584
      View : While EBITDA margin is expected to remain under pressure in FY19E, it is expected to recover in FY20E on expectations of new product launches in complex generics and innovative drugs.

      Torrent Pharma : Target Price – 1412
      View : We believe Unichem acquisition to help improve market standing of Torrent Pharma going ahead.

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