MOSL: AUROBINDO PHARMA (Buy)-In-line-Sandoz deal completion – key near-term trigger
Aurobindo Pharma: In-line; Sandoz deal completion – key near-term trigger
(ARBP IN, Mkt Cap USD4.5b, CMP INR547, TP INR645, 18% Upside, Buy)
On track to resolve regulatory issues; better traction in approved products
- Aurobindo Pharma (ARBP) remains focused on US generics, on the back of a strong ANDA pipeline with good mix of complex generics. ARBP is also in the process of integrating Apotex and hopes to derive further synergies from it for its Europe business.
- We raise our EPS estimates for FY20/FY21E by 3% to factor in better traction in existing products in the US/EU. We also raise our P/E multiple to 9x (from 8x earlier) to include the synergy benefits from Sandoz and the improving business prospects in Europe through the organic as well as the inorganic route. Maintain Buy.
In-line earnings led by US formulations/Europe biz
- 3QFY20 sales were up 12% YoY to INR59b (v/s est. INR57.9b), led by 22% YoY growth in US formulations (50.4% of sales) to INR29.7b and 14.2% YoY growth in the Europe business (25% of sales) to INR14.8b.
- ARV (5.3% of sales) grew 11.4% YoY for the quarter. Growth markets (5.9% of sales) posted muted INR3.5b sales, up 1.6% YoY.
- API (13.4% of sales) declined 14.3% to INR7.9b, dragging overall growth to some extent.
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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