Aurobindo Pharma Disappointment continues – Downgrade to Accumulate ::Emkay

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Aurobindo Pharma

Disappointment continues – Downgrade to Accumulate

ACCUMULATE

CMP: Rs123                                        Target Price: Rs136

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n     Q2FY12 results were disappointing. Net sales down 3% to Rs10.7bn, EBITDA down 55% to Rs1.1bn and APAT (adj. for forex loss of Rs1.85bn) down 70% to Rs291mn

n     Revenue growth was mainly driven by 9% growth in API business on account of 100% growth in ARV business.  Formulations de-grew by 4% to Rs5.9bn

n     Base EBITDA margins declined 835bps YoY & 439bps QoQ due to volume driven sales of ARV in API

n     With increasing pressure on margins and low visibility in revenues – we downgrade the stock to Accumulate with a revised target price of Rs136 (10xFY13E Core EPS of Rs13.6)