MOSL: AUROBINDO PHARMA (Buy)-Robust US biz and higher API sales drive earnings
Aurobindo Pharma: Robust US biz and higher API sales drive earnings
(ARBP IN, Mkt Cap USD6.2b, CMP INR761, TP INR940, 24% Upside, Buy)
- Healthy growth across segments: Aurobindo Pharma’s (ARBP) revenues grew ~22% YoY to INR52.7b (v/s our est. of INR47.6b), largely led by the US (~46% of sales) and API segment (~17% of sales). The US sales were up ~22% YoY, while API segment sales were up ~20% YoY. Other geographies also reported healthy growth.
- Gross margin (GM) contracted 340bp YoY to 55% (-200bp QoQ), partly due to one-time provision for penalty on supply failure of some products in the US market, and change in product mix. EBITDA margin also contracted ~300bp YoY (-100bp QoQ) to 20.6%. R&D spend was higher by ~120bp YoY to 4.8% (as % of sales), partially offset by lower other expense (down ~150bp YoY). Forex gain stood at INR51m v/s INR7.3m YoY. Adjusting for forex gain and acquisition related exceptional expense, PAT increased by ~5% YoY to INR6.9b (v/s our est. of INR6.4b).
- For 9MFY19, sales stood at INR142.7b (+15% YoY), EBITDA at INR28.9b (-3% YoY) and PAT at INR18.7b (-5% YoY).
Aurobindo Pharma is a vertically integrated pharmaceutical group based in India. Co. maintains a product portfolio spread over major product areas encompassing CVS, CNS, Anti-Retroviral, Antibiotics, Gastroenterologicals, Anti-Diabetics and Anti-Allergic with approved manufacturing facilities by USFDA, UKMHRA, WHO, MCC-SA, ANVISA-Brazil for both APIs & Formulations. In addition to Semi-Synthetic Penicillins, Co. has a presence in key therapeutic segments such as neurosciences, cardiovascular, anti-retrovirals, anti-diabetics, gastroenterology and cephalosporins, among others. Co. exports to over 125 countries across the globe.
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