Poised for strong growth
Aurobindo Pharma’s (APL) revenues for Q4FY13 were in line with our
expectation. However, EBIDTA margin and net profit were below our
expectations. The company reported a growth of 32%YoY in
revenues, 350bps in EBIDTA margin and 2%YoY in net profit. Sales
growth in US formulation business was 62%YoY and in EU & RoW it
was 45%YoY. API-SSP reported 14%YoY growth whereas APIcephalosporin
reported 26%YoY growth. APL has a strong pipeline
of products for the US market. The management has given a
guidance of above 20% sales growth for FY14. We have a Buy rating
for the scrip and revised target price of Rs254 from Rs245 (based on
10x Sept’14 EPS of Rs25.4).
Excellent sales growth: APL reported 32%YoY growth in revenues from Rs11.91bn to
Rs15.70bn in Q4FY13. US formulation revenues (30% of total) grew by 62%YoY from
Rs3.01bn to Rs4.86bn. Its EU & RoW formulation business (16% of total) grew by
45%YoY from Rs1.72bn to Rs2.49bn. The API-SSP business (12% of revenues) grew by
14%YoY from Rs1.65bn to Rs1.89bn. APL’s API-cephalosporin business (15% of total)
grew by 26%YoY from Rs1.93bn to Rs2.44bn. API-ARV & others (15% of total) grew by
11%YoY from Rs2.12bn to Rs2.35bn.
Margin improves: APL’s margin for Q4FY13 improved by 350bps from 11.8% to 15.3%
due to overall decline in costs. The company’s material cost declined by 270bps from
53.9% to 51.2% of net sales due to higher sales of formulations in the US market.
Personnel cost dropped by 50bps from 11.7% to 11.2% due to strong sales growth.
Other expenses declined by 30bps from 22.6% to 22.3%.
Aurobindo Pharma’s (APL) revenues for Q4FY13 were in line with our
expectation. However, EBIDTA margin and net profit were below our
expectations. The company reported a growth of 32%YoY in
revenues, 350bps in EBIDTA margin and 2%YoY in net profit. Sales
growth in US formulation business was 62%YoY and in EU & RoW it
was 45%YoY. API-SSP reported 14%YoY growth whereas APIcephalosporin
reported 26%YoY growth. APL has a strong pipeline
of products for the US market. The management has given a
guidance of above 20% sales growth for FY14. We have a Buy rating
for the scrip and revised target price of Rs254 from Rs245 (based on
10x Sept’14 EPS of Rs25.4).
Excellent sales growth: APL reported 32%YoY growth in revenues from Rs11.91bn to
Rs15.70bn in Q4FY13. US formulation revenues (30% of total) grew by 62%YoY from
Rs3.01bn to Rs4.86bn. Its EU & RoW formulation business (16% of total) grew by
45%YoY from Rs1.72bn to Rs2.49bn. The API-SSP business (12% of revenues) grew by
14%YoY from Rs1.65bn to Rs1.89bn. APL’s API-cephalosporin business (15% of total)
grew by 26%YoY from Rs1.93bn to Rs2.44bn. API-ARV & others (15% of total) grew by
11%YoY from Rs2.12bn to Rs2.35bn.
Margin improves: APL’s margin for Q4FY13 improved by 350bps from 11.8% to 15.3%
due to overall decline in costs. The company’s material cost declined by 270bps from
53.9% to 51.2% of net sales due to higher sales of formulations in the US market.
Personnel cost dropped by 50bps from 11.7% to 11.2% due to strong sales growth.
Other expenses declined by 30bps from 22.6% to 22.3%.