Aurobindo Pharma, Margin pressure overshadows solid sales growth :: ICICI Securities, report

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Aurobindo Pharma - Margin Skids, But Business Trends Steady; Result Update Q3FY15 ::Edelweiss, report

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Aurobindo Pharma and Lupin receives final approval for Valsartan (g-Diovan) tablets :: IndiaNivesh

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Aurobindo Pharma, Margin expansion a positive surprise… :: ICICI Securities, report link

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Aurobindo Pharma Ltd.|Q2FY15 Result Update | The good show continues… :: IndiaNivesh

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Aurobindo Pharma and Cipla :: IndiaNivesh PDF link

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Aurobindo Pharma and Cipla
Newsflash: MPP announced six new sub-licences with Aurobindo Pharma, Cipla,
Desano, Emcure, Hetero Labs and Laurus Labs to allow generic manufacturing of
TAF for 112 developing countries. The generic companies will begin development
plans for new HIV product simultaneous with USFDA’s review to expedite access to
low and middle-income countries once the medicine is approved. In studies, TAF
has demonstrated comparable antiviral efficacy to that of 300 milligram tenofovir
disoproxil fumarate (TDF) – a World Health Organization-preferred HIV therapy –
but at a dose that is 10 times lower. The smaller milligram dose may also allow
lower production costs, as well as greater ease in developing new fixed-dose
combinations and single tablet regimens.
Our view: TAF, once approved, would be one more product under tender business
for HIV drugs. Participation of Aurobindo Pharma and Cipla in this drug would depend
on the profitability from this drug, given the past history of both the companies of
prioritising profitability over revenues. The potential consumption of this product
remains promising given the small amount of dosage required. Gilead, the innovator,
has just released the positive results on two of its TAF Phase III studies. Post results
and development by generic players, we expect meaningful revenue and profitability
to accrue 12-18 months from now.
The global sales of branded TDF – Viread has been US$958mn for CY13, as per
annual report of Gilead.
Impact on Stock:
Since the product is in development stage, we expect it to have no financial impact
as of now, however, it would be sentiment positive on Aurobindo Pharma and Cipla.


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Annual Report Analysis - Aurobindo Pharma :: Edelweiss PDF link

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Aurobindo Pharma’s (APL) FY14 annual report analysis highlights robust profitability and return ratios with PBT increased to INR15.3bn from INR3.7bn in FY13. However, growth in operating cash flow (after interest) was subdued at INR5.8bn in FY14 from INR1.1bn in FY13 due to heavy investment in working capital despite robust profitability. Higher working capital investments coupled with acquisition advance paid led to APL’s debt increased by INR3.3bn despite robust profitability; however, the company’s D/E improved from 1.3x to 1.0x. During FY14, purchases and sales from/to related parties increased 41% and 228%, respectively. Profitability of subsidiaries (excluding US) deteriorated as losses widened from INR663mn in FY13 to INR1,039mn in FY14. The company made additional investment of INR1.9bn in existing subsidiaries, of which INR1.6bn was infused in Helix Healthcare (Helix).  Total exposure to Helix stood at INR6.3bn, of which INR1.8bn has been impaired.

What’s on track?

APL’s FY14 revenue and profitability catapulted 38% and 300%, respectively, coupled with expansion in RoCE and RoE, which stood at 27.2% and 36.9%, respectively  (FY13: RoCE-11.2%, RoE-11.9%).

Profitability of US subsidiaries improved from INR293mn (1.9%) in FY13 to INR1,345mn (5%) in FY14.

The company’s D/E ratio declined from 1.3x in FY13 to 1.0x in FY14 led by increase in net worth.

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J.P. Morgan - Aurobindo Pharma

Aurobindo Pharma Key takeaways from conference call

Aurobindo Pharma (ARBP IN, Not Covered, Rs638.55) reported 4QFY14 results ahead of consensus estimates, driven by limited supply of gCymbalta sales during the exclusivity period in the US. Revenue in the quarter was Rs23.3bn (+48% YoY; +9% QoQ) vs Bloomberg consensus estimates at Rs21.7bn. EBITDA of Rs7.4bn was 20% higher than consensus. While the company did not give specific guidance, it indicated that ARBP would maintain growth momentum seen in the past 2-3 years, with continued growth in the base business in the US, strong trends in injectable, AuroLife, and additions to the European business (EUR330-340mn). On margins, the company highlighted that it would maintain or better EBITDA margins from base quarter (pre-Cymbalta quarter of 2QFY14) levels of 23%, excluding Cymbalta and any impact from the European acquisition.

· Outlook on Actavis’ European assets acquired. Management indicated that operations were in line with expectations and maintained guidance of turning around the loss-making operations to achieve breakeven by the second year-end (PAT neutral or positive). The key driver for this would be: 1) switching ARBP products with Actavis and vice versa depending on profitability; 2) operational optimization without impacting revenue and 3) over the next 18-24 months bringing some products in-house to take advantage of ARBP’s low cost API. Overall for its European business, revenue growth (ARBP + acquired assets) is expected at 10% in FY15, as per management. On potential restructuring, ARBP indicated that it would take at least two quarters to get a complete picture on this.

Aurobindo Pharma : Poised for strong growth: Centrum

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%.

GMDC - RU4QFY2013 Aurobindo Pharma - RU4QFY2013 Sadbhav Engineering - RU4QFY2013 Steel Authority of India - RU4QFY2013 Mahindra and Mahindra - RU4QFY2013 Madras Cements - RU4QFY2013 ONGC - RU4QFY2013 Unity Infraprojects - RU4QFY2013 Jyoti Structures - RU4QFY2013 :: Angel Broking PDF links

Forwarding you the Multiple Scrip’s Result Updates. Kindly click on the links to view the report.

 

GMDC - RU4QFY2013

 

Aurobindo Pharma - RU4QFY2013

 

Sadbhav Engineering - RU4QFY2013

 

Steel Authority of India - RU4QFY2013

 

Mahindra and Mahindra - RU4QFY2013

 

Madras Cements - RU4QFY2013

 

ONGC - RU4QFY2013

 

Unity Infraprojects - RU4QFY2013

 

Jyoti Structures - RU4QFY2013

 

Aurobindo Pharma - Company Update - Centrum

Aurobindo Pharma

Buy

Target Price: Rs245

CMP: Rs140

Upside: 75%

US performance to excel

We recently interacted with company officials of Aurobindo Pharma (APL) to get the latest update on the company. The key highlights are:

m  Unit VI cleared by US FDA: APL has received Establishment Inspection Report (EIR) for its Unit VI manufacturing cephalosporin oral and sterile products. The unit was under Import Alert from February’11 and was re-inspected by US FDA in September’12. The current potential from this unit is $25-30mn (Rs1.35-1.60bn) annually. The company will commence exports from this unit from April’13.
m  Other two units cleared: APL’s other two manufacturing units, Unit IV manufacturing general liquid injectables and Unit XII manufacturing SSP-oral and sterile have also been cleared by US FDA after re-inspection in Q3FY13. The company’s US subsidiary Auromatics is likely to market the products from these two units. The company expects revenues of ~$30mn (Rs1.60bn) annually from these two units.
m  Strong performance in the US:  APL’s formulation exports to US grew by 58%YoY from Rs3.25bn to Rs5.13bn. The company received approval for 7 ANDAs during Q3FY13 for Rizatriptan Benzoate tablets, Felodipine ER tablets, Oxacillin injection, Levofloxacin injection, Pioglitazone tablets, Pioglitazone+Metformin tablets, Valsartan+Hydrochlorithiazide tablets. The combined market size for these 7 products at the innovator level is $4.86bn (Rs262bn). All these products are likely to contribute to the full year from FY14 onwards.
m  Strong product pipeline in the US: APL has filed 262 ANDAs with US FDA of which 171 were approved by the end of Dec’12. The company has filed 1337 dossiers in Europe.
m  Penicillin, cephalosporin business growing well: APL’s SSP and cephalosporin API businesses have grown by 36% and 30% respectively due to favourable demand and lower competition. The company intends to maintain good growth in these segments in the domestic and emerging markets.
m  New geographies added: APL has entered into new geographies of Canada, Japan and Australia. It has received 37 ANDA approvals in Australia and 26 in Canada. The company expects revenues from Canada and Japan from FY14. The revenues from Australia are expected from FY15 onwards.
m  Dossier income: APL received Rs386mn ($7mn) from the sale of dossiers in Q3FY13. Dossier income keeps on varying based on the filings of the generic company. The company expects revenues of $2-3mn (Rs108-162mn) per quarter. This is a high margin business as the costs are already accounted for in the previous quarters.
m  API reports 21% growth: The company’s API business (40% of revenues) grew by 22% during Q3FY13. Major growth drivers were SSP and cephalosporin which grew by 36% and 30% respectively.
m  Debt repayment: The company has debt of Rs33.0bn (including working capital) currently. It is likely to repay $50mn (Rs2.7bn) from internal accruals in FY14. The repayment of ECB of ~$40mn (Rs2.16bn) annualy will fall during FY15-FY19 and most likely will be met from internal accruals.

-- 

Aurobindo Pharma Ltd.:: IndiaNivesh

Aurobindo Pharma Ltd (APL) is an integrated pharmaceuticals company with major
focus on exports. Predominantly being the API supplier, company has increased
its revenue contribution from formulation business by more than 60% in the last
5-6 years. Apart from majorly focused in USA formulation & API business, company
has healthy presence in Europe & African markets also. In Africa, APL is focused in
ARV formulations.
Investment Rationale
Expect healthy revenue growth from US market given ramp up in
existing products & new launches:
We expect Aurobindo’s US business to report healthy revenue growth of ~28%CAGR
over FY12-15E given strong pipeline of the company i.e ~171 ANDAs are awaiting
approvals out of cumulative 262 filings. Key positives going forward would be
company’s filings & approvals in complex products including injectables from
AuroMedicis, where company has launched ~5 products including Ampicillin,
Ampicillin + Sulbactam & Piperacillin + Tazobactom. Company expect this business
to ramp up post USFDA approval of unit IV, where company has filed 21 ANDAs &
has received 2 ANDAs approvals. Management expects injectable business to
contribute ~ $10-12 million in FY13E & ~$30 million in FY14E. Another 25-30 ANDA
filings from unit IV & Myriad facility’s ANDAs approvals in 2015-16 would propel
the growth going forwards.
Additionally, AuroLife (US based Subsidiary) has launched schedule III controlled
Substance i.e Hydrocodone Bitartrate+ Acetaminophen in US market in Q2FY13.
The company expects to launch 3-4 more controlled release launches in near term.
Aurolife has filed 18 ANDAs with USFDA & likely to file another 4-5 products. Annual
approval of 20-25 ANDAs & recent launches like Pioglitazone, Escitalopram,
Modafinil, Clopidogril, Seroquel & Montelukast would improve company’s base
business going forward.

Growth across segments Aurobindo Pharma :: Centrum

Growth across segments
Aurobindo Pharma’s (APL) results for Q2FY13 were better than our
expectations. The company reported 40%YoY growth in revenues, 600bps
improvement in EBIDTA margin and net profit of Rs2.23bn against net loss of
Rs803mn. The formulations business (59% of revenues) grew by 53%YoY
whereas the API business (40% revenues) grew by 27%YoY. The company’s
interest cost increased by 62%YoY due to the increase in working capital. APL
reported forex gain of Rs1,177mn against forex loss of Rs1,854mn. We have a
Buy rating for the scrip with a target price of Rs245 (based on 8x FY14E EPS).

Aurobindo Pharma - IndiaNivesh Sec

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.

Aurobindo Pharma - Better growth visibility; visit note; upgrade to Buy :: Edelweiss PDF link

Aurobindo Pharma (ARBP IN, INR 144, upgrade to Buy)

We met Aurobindo (ARBP) management. ARBP sees higher growth visibility from incremental approvals in US, which along with potential FDA resolution would aid higher margins. ARBP has received 8 approvals that would aid growth in the US. Moreover, post FDA approval of Unit-IV/VI, there is a good visibility of 4-5 product launches in injectibles space. We revise up FY13E-14E earnings by 12-13% and upgrade to ‘BUY’.

Aurobindo Pharma Buy Target Price: Rs137 :: Centrum

Sizzling Stocks - Aurobindo Pharma, Jamna Auto Industries :: Business Line

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Sizzling Stocks - Aurobindo Pharma (Rs 133.1)

Aurobindo Pharma conclusively broke out of a key resistance level at Rs 120 by surging 8 per cent on April 16, which it was testing from early February this year. This up move has also penetrated the stock's 50 and 200-day moving averages. The stock's bullish momentum prolongs and it gained 14 per cent for the week. It has been on a medium-term uptrend from its December 2011 low of Rs 83. The daily relative strength index is hovering in the bullish zone and the weekly RSI is on the brink of entering in to this zone from the neutral region, which implies bullish momentum.

The stock is likely to face resistance at Rs 136 in the near future. A decisive break through after testing this resistance will take the stock higher to Rs 150 and to Rs 165 in the medium-term. Immediate support is at Rs 120 and the subsequent one is placed at Rs 109. A fall below the second support will mar the stock's medium-term uptrend and pull it lower to Rs 97.

  

Jamna Auto Industries (Rs 171.5)

The stock skyrocketed 38 per cent, breaking through key resistances. But it is currently testing key long-term resistance at Rs 174. Its daily as well as weekly indicators are featuring in the overbought territory, signalling a potential near-term correction in the stock price. A downward reversal from the long-term resistance level will pull the stock down to Rs 156 and then to Rs 140.

The stock's medium-term uptrend that has been in place since last December's low of Rs 75 will stay in place as long as the stock trades above Rs 130. A fall below this level will mitigate the uptrend and pull the stock down to Rs 115 or Rs 100 in the medium-term. On the upside, an emphatic rally above Rs 174 will take the stock to Rs 181 and to new highs in the ensuing weeks.

AUROBINDO PHARMA Receives approval for generic Seroquel:Edelweiss

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News: Aurobindo Pharma (ARBP) has received approval for generic Seroquel in US from
Unit III facility
Impact: We estimate a revenue of USD8mn‐USD10mn from the product during FY11,
assuming 95% price erosion and 7% market share for Aurobindo. There are ten players
in the market including Lupin, DRRD and Sun Pharma.
Edelweiss view: USFDA had issued a warning in May 2011 relating to mislabeling issues
at Unit III facility, leading to delay in approvals. However, the facility has recently been
inspected by USFDA post the corrective actions by Aurobindo. The approval for generic
Seroquel from the facility gives an indication that the inspection has been successful,
leading to a resolution to issues at the facility which is a key positive. While the Unit VI
facility is still under the import alert, the management has hinted at an inspection latest
by Jun‐July 2012. There are 10‐11 products pending approval from the Unit III facility.
Outlook and Valuations: Maintain ‘HOLD’
We are positive on the outlook going forward, and have built in higher growth
prospects via a recovery in the US business though margin expansion will depend
largely upon a resolution of Unit VI facility. We have highlighted earlier that margins,
which bottomed out in Q2, have seen a recovery in Q3FY12. We maintain our estimates
and await incremental traction in business. Moreover, CBI/IT enquiries also remain an
overhang on valuations. Maintain ‘HOLD’

3QFY2012 Result Update -Aurobindo Pharma: reliance sec

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Performance boosts sequentially
Key highlights of the result
 Better than expected 3QFY2012: Aurobindo reported better than expected
top-line growth of 17.7% yoy (19% qoq) led by low margin ARV API (up 106%
yoy) and healthy formulations growth in EU and ROW markets (up 45.1% yoy),
partially aided by weak INR. The US formulations grew 14.9% qoq despite the
ban on non-betalactum plant, which is commendable. The licensing income
remained low at Rs22.8cr.
 Margins improved sequentially: Despite higher contribution from the low margin
ARV tender business, the gross margins improved 60bp qoq to 44.1%. Further,
favorable currency led the EBITDA expansion by 400bp at 13.3% qoq as
exports remain unhedged.
 APAT up 10.2% qoq: Aurobindo reported net loss of Rs28.5cr in 3QFY2012,
affected by USFDA issues and forex loss of Rs144.5cr on account of loan
restatement. Adjusting for the one-time expense, the APAT stood at Rs116cr,
above our estimate.
 Concall takeaways: (1) The Company expects USFDA inspection by March,
2012 for Unit III and by June, 2012 for Unit VI, (2) It has guided for 25 product
launches in US out of which 11 from Unit III and 14 through Unit VII post
USFDA resolution in FY2013E, (3) AstraZeneca contract is likely to start from
October, 2012 and it expects to launch ~80 products (worth US$30-50mn) by
December, 2013, (4) Pfizer contributed Rs67cr in 3QFY2012, expected to
double in 4QFY2012, (5) Company guided to improve margins by cost saving of
US$1.5mn per quarter on Unit VI, (6) Capex guided at Rs200cr for the next 2
years, while, tax rate at 20% for FY2013, (7) Gross debt stands at Rs3,360cr,
cash at Rs225cr.
Outlook and Valuation
Aurobindo’s 3QFY2012 performance reflected strong growth traction on a
sequential basis. New launches in EU and ROW markets, gradual improvement in
US through shift of products from affected units and favorable currency led to better
than expected quarter. Despite management’s encouraging picture of strong
visibility (US$2bn sales guidance by 2015) led by new launches in US, ramp up in
filings in niche OCs and OTC segments, pick up in Pfizer and AstraZeneca sales
and sustained growth in EU and ROW, we believe that the growth would remain
under pressure until the USFDA resolution is obtained. We factor in the sequential
improvement of the company and revise our EPS to Rs13.3 (Rs11.9 earlier) and
Rs14.5 (Rs13.9 earlier) for FY2012E and FY2013E respectively.
The stock has corrected 51% in the last 1 year due to slippages in growth affected
by import alert on manufacturing plants and high forex losses. Further, high fixed
costs relating to facility up-gradation and import alert on Unit VI impacted its
operating performance. CBI raids with regards to financial misdeeds by promoter
also added to its woes. We believe that stock correction is overdone (up by 25% in
the last 3 months) and a likely rebound in growth and margins would drive growth.
Hence we maintain Hold with a price target of Rs139.
Risks to the view
 Delay in USFDA resolution and slowdown in the ramp up of Pfizer sales could
impact future revenues

52-WEEK FLOP: AUROBINDO PHARMA ::Business Line

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