Aurobindo Pharma - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Aurobindo Pharmaceuticals (APL) posted results in-line with expectations, on top line, while on the net profit came below expectations. The main disappointment came in on the operating front, wherein the OPM's came in at 10.2%. We maintain our Buy view on the stock.

In-line expectations: Net sales grew by 3.8% yoy to Rs.1,171cr. API was the key growth driver for the quarter, registering a growth of 17.8% yoy, whereas the formulation segment de-grew by 3.2% yoy The US formulation segment de-grew by 14.0% to Rs.301cr (Rs.350cr). The ARV formulation segment de-grew by 2.3% yoy to Rs.176cr (Rs.180cr). Gross margin came in at 45.2% (46.4%), impacted by higher raw-material costs, thus impacting the OPM's which came in at 10.2% V/s 16.7% in 4QFY2011. For the quarter, APL reported profits on account of Adjusted net profit came in at Rs.109cr (Rs.125cr) for the quarter.

Outlook and valuation: Commencement of operations at the Hyderabad SEZ and incremental contribution from the Pfizer deal would boost APL's earnings with better growth visibility going forward. We estimate net sales to log a 12.7% CAGR to Rs.5,767cr over FY2012-14E on the back of supply agreements and the US and ARV formulation contracts. Even after factoring in lower profitability going forward, the stock trades at attractive valuations. Hence, we maintain a Buy with a revised price target of Rs.156.

Source : Equity Bulls

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