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Research
Aurobindo Pharma - Moving in right direction... - ICICIdirect
Posted On : 2013-06-02 21:05:57( TIMEZONE : IST )
Aurobindo reported a mixed set of Q4FY13 numbers. Revenues grew 32% YoY to Rs. 1570 crore, much higher than I-direct estimate of Rs. 1450 crore, driven by ~41% YoY growth in formulations. Better-than-expected traction in US/EU-RoW formulations and Cephalosporin APIs resulted in overall robust growth. EBITDA margins improved ~350 bps YoY but declined ~120 bps QoQ to 15.3% (I-direct estimate: 16.4%). The sequential decline in margins was on account of 1) lower dossier income and 2) year end provisions at some of the European subsidiaries towards discounts/charge backs/rebates, etc. We maintain BUY as the company seems to be on the right track to address other lingering issues such as margins and leverage.
US/EU-RoW lead overall formulations growth
US formulations grew 61% YoY to Rs. 486 crore driven by 1) incremental product launches post approvals for various manufacturing sites and 2) growth in the legacy base business. During the quarter, the company filed seven ANDAs taking total filings to 269 and received approval for 12 products taking total approval count to 181. EU-RoW formulations grew ~45% YoY to Rs. 249 crore on the back of incremental product launches.
USFDA lifts import alert on Aurobindo's Unit VI
The USFDA has lifted the import alert for non-sterile products manufactured at Aurobindo's Unit–VI cephalosporin facility based in Hyderabad, paving the way for resumption of exports of nine products to the US market. Prior to the import alert, the unit had annual US sales of US$33 million for these products.
Regulatory ghosts more or less exorcised; maintain BUY
With clearances for unit III/VI/XII and approval for unit IV, the company is witnessing incremental approvals and is well poised to launch multiple products in the US. The Q4 performance has once again vindicated the overall recovery, which was visible in Q2 and Q3. The huge debt pile, however, will continue to remain a stumbling block. Since most of it is forex denominated, a falling rupee will only hit more, albeit notionally. Our new target price now stands at Rs. 200 based on 6x FY15E EV/EBITDA.
