Aurobindo Pharma Ltd. | Aurobindo Pharma achieved target price of Rs 150..….revise target price upward to Rs 188 & maintain BUY............|
On 9th April 2012, post management meet, we came out with detailed report on Aurobindo and then prevailing market price of Rs 113 and recommended Buy on the stock with the target price of Rs 150. Yesterday, (as on 9th October 2012), stock achieved our target, yielding 33% returns. We now upgrade our target price to Rs 188 & maintain BUY on the stock. Our Take & Valuations: We are of the view that company’s operational efficiencies are likely to improve going forward from Q3FY13E mainly on the back of sincere measures taken by management in the past, incremental revenue from US, increase in asset turnover linked with higher capacity utilization which would lead to improvement in ROCE. At CMP of Rs 150, the stock trades at PE multiple of 12.9x of FY13E & 8x of FY14E earnings estimates. Earlier at market price of Rs 113 (for details refer “Management Meet Update” released on 9th April 2012) we had recommend buy on the stock with target price of Rs 150, which was achieved yesterday. We revise target price upward to Rs 188 (Valuing at 10x of FY14E EPS estimates) & maintain BUY on the stock.
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