Aurobindo Pharma: 1QFY2018 Result Update - Angel Broking

For 1QFY2018 Aurobindo Pharma (APL) posted numbers lower than expectations on sales, OPM and net profit fronts. On sales front, the company posted sales of Rs. 3621cr (v/s. Rs. 3,900cr expected) v/s. Rs. 3,664cr in 1QFY2017, posting a yoy de-growth of 1.2%. On the operating front, the EBITDA margin came in at 21.1% (v/s. 22.9% expected) v/s. 22.6% in 1QFY2017. Consequently, the Adj. PAT came in at Rs. 519cr (v/s. Rs. 641cr expected) v/s. Rs. 585cr in 1QFY2017, a yoy de-growth of 11.4%. We maintain our Buy rating on the stock.

Results less than expectation: Aurobindo Pharma posted numbers which were lower than expectations on sales, OPM & net profit fronts. On sales front, the company posted sales of Rs. 3621cr (v/s. Rs. 3,900cr expected) v/s. Rs. 3,664cr in 1QFY2017, posting a yoy de-growth of 1.2%. The formulation sales (Rs. 3,051cr) posted a yoy growth of 0.6%, while API (Rs. 625cr) posted a yoy de-growth of 14.9%. Europe (Rs. 918cr), posted a yoy growth of 10.4%, while its key market USA (Rs. 1695cr), posted almost flat growth with a dip of 0.5% yoy. On the operating front, the EBITDA margin came in at 21.1% (v/s. 22.9% expected) v/s. 22.6% in 1QFY2017. Consequently, the Adj. PAT came in at Rs. 519cr (v/s. Rs. 641cr expected) v/s. Rs. 585cr in 1QFY2017, a yoy de-growth of 11.4%.

Outlook and valuation: We estimate the company's net sales to log a CAGR of 14.5% over FY2017-19E to Rs. 19,478cr on the back of US formulations, which will be supplemented through the acquisitions of the Western European formulation businesses of Actavis and US' Natrol. The acquisitions have also led APL to become a >US$2bn sales company, with ~80% of sales being accounted by formulations. We recommend a Buy rating with a target price of Rs. 823.

Shares of AUROBINDO PHARMA LTD. was last trading in BSE at Rs.703.5 as compared to the previous close of Rs. 714.2. The total number of shares traded during the day was 170611 in over 2988 trades.

The stock hit an intraday high of Rs. 725 and intraday low of 700. The net turnover during the day was Rs. 121534352.

Source : Equity Bulls

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