Hold Aurobindo Pharma Ltd For Target Rs.1,600 by Prabhudas Liladhar Capital Ltd
Multiple levers
Aurobindo Pharma’s (ARBP) Q1FY27 adjusted EBITDA stood at INR 19.2bn (up 20% YoY); 4% above our estimates; partly aided by currency tailwinds. The company has maintained its 21% OPM guidance for FY27E. In near term ramp up in PenG facility, Vizag pant commercialization will be key. We believe ARBP has multiple growth drivers in place with investments in vaccines, injectables, biosimilars and PLI which are expected to be reflected from FY27E/FY28E. Our FY27E and FY28E EPS stands increased by 4-7% as we factor in Lannet acquisition. The stock is currently trading at 9.5x EV/EBITDA and 18x P/E on FY28E. We retain our “Hold” rating with revised TP of INR 1,600/share; valuing at 18x FY28E EPS.
* Revenues supported by EU & RoW markets:
Overall Revenue came in at INR 91.5bn, up 16.3% YoY, (we est INR 89bn). The YoY growth was aided by currency tailwind and low base. US revenues stood at USD 399mn, up 3% QoQ (we est USD 395mn). EU sales up 25.6% YoY to INR 29bn, beat our est. ARV formulations down 7% YoY to INR 3.3bn whereas RoW sales were up 38% YoY. API sales improved by 14.8% YoY
* EBITDA beat est, Adj OPM 21%:
Gross margins remain healthy at 60% (up 153 YoY but down 91bps QoQ). There was one off to the tune of INR 430mn related to derecognition of lease receivables. Other expenses adj for that was up 7% QoQ. Resultant EBITDA margins came in at 21%, up 65bps YoY. Adj for one off EBITDA stood at INR 19.2bn (up 20% YoY); we estimate INR 18.5bn. Tax rate stood 31%. There was forex gain of INR 526mn. Adj for forex PAT at INR 10.6bn. Reported adj EPS of INR 17/share
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