Aurobindo Pharma zooms on good numbers, growth potential

Aurobindo Pharma’s scrip zoomed 6.94 per cent to end at Rs.771.55 on the BSE on Monday.

The Hyderabad-based company’s stock closed at Rs.721.50 on Friday while the company announced its numbers after the trading hours on the same day.

Above estimates

The better-than-expected performance of the company, positive rating by the analysts and a strong pipeline of products were possibly behind the surge in the stocks of the company.

Its net profit increased significantly to Rs.414 crore in the first quarter ended June 30, compared with Rs.17.46 crore in the corresponding quarter of the previous year.

Driven by higher sales of formulations in the US and other markets, revenue had gone up 70 per cent to Rs.2,911 crore (Rs.1,715 crore). This was higher than the street expectation which was around Rs.2,450 crore.

On the operating front, the EBITDA margin too crossed expectations at 22.2 per cent registering an increase of 548 bps year-on-year.

Way forward

The integration of Western European business led to growth of formulations sale in Europe by 359 per cent, followed by 78.6 per cent and 24.5 per cent increases in the US and the rest of the world, respectively.

Going forward, Aurobindo plans to bring some products of Actavis into the domestic market to take advantage of its lower active pharmaceutical ingredients (APIs) and manufacturing costs over the next 18 months. It also hopes to grow its revenue in Europe at about 10 per cent by putting together Actavis in its portfolio and operational optimisation.

“Long-term scale benefits outweigh near-term consolidation challenges. US base business excluding Cymbalta remains strong and EU turnaround to add to the bottom line in FY16,” said an analyst. Business Line