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EQUITY RESEARCH REPORT
INDEX DETAIL
NSEX 18489
TY 5536
DUSTRY BIOTECH & PHARMA
HAREHOLDING HOLDING
(%)
ROMOTERS 56.89
OVT/BANKS/FII 0.82
F 6.62
NSURANCE COMPANIES 2.79
IS/NRI/OCBS/FOREIGN 24.24
ORPORATE BODIES 1.96
ENERAL PUBLIC` 6.68
SCRIP DETAIL
CAP ( CRORE) 5061
OK VALUE 65.80
WK H/L 1376/156
VIDEND YIELD 0.58
bt/Equity ratio 1.46Ratio 8.66
(RS) 1.0
E CODE 524804
E CODE AUROPHARMA
SHAREHOLDING PATTERN
BUY
CMP - 17
TARGET - 28
AUROBINDO IN BRIEF
AUROBINDO PHARMA was born of a vision. Founded in 1986 by
Mr. P.V.Ramaprasad Reddy, Mr. K.Nityananda Reddy and a
small, highly committed group of professionals, the company
became a public venture in 1992. It commenced operations in 1988-
89 with a single unit manufacturing semi synthetic penicillins
(SSPs) at Pondicherry.
Aurobindo Pharma Limited, headquartered at Hyderabad, India,
with a consolidated revenue of `36513 million, manufacture
generic pharmaceuticals and active pharmaceutical ingredients.
The Company's manufacturing facilities have been inspected and
approved by several leading regulatory agencies such as US FDA,
UK MHRA, WHO, Health Canada, MCC South Africa, ANVISA
Brazil. Approximately 53.6% of the gross consolidated turnover
comes from the formulations business. The Company's robustproduct portfolio is spread over 6 major therapeutic/product areas
encompassing Antibiotics, Anti-Retro virals, CVS, CNS,
Gastroenterological, and Anti-Allergics, supported by an
outstanding R&D set-up. The Company has marketing footprints in
over 125 countries and employs over 8,000professionals.
Aurobindo Pharma has identified international operations, catering
to over 100 countries, as a major engine of growth and expanding
global network of marketing and manufacturing operations across
countries like China, Brazil, Japan, Netherlands, South Africa,
Thailand, UK, USA, Russia, Netherlands and many more which
will further expand its international reach.
Vision - To become Asia's leading and one amongthe top 15generic pharma companies in the world by 2015.
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Aurobindo Pharma slumps as US
drug regulator bans imports from
Hyderabad unit
Aurobindo Pharma indicated that its Unit VI
Cephalosporin facility at Chitkul Village,
Hyderabad was audited by the US Food and
Drug Administration (USFDA) in December
2010. Subsequently, Aurobindo has sent the
compliance report to USFDA, which is under
review. But, subsequent to the audit findings,
USFDA has imposed an import alert on its
website for detention on Aurobindo's Unit VI
products.
Aurobindo is trying to establish contact withUSFDA to understand the correct
interpretation of such an alert i.e. whether it
relates only to sterile products and/or oral
products manufactured at Unit VI. Aurobindo
said it will ascertain the scope of this import
ban alert and request USFDA for a face to face
meeting at the earliest and present the facts
with a view to comply with all the USFDA
regulations and bring back the Unit VI to
active operations for US market at the earliest.
Until then, Aurobindo indicated that, the
development will impact any further shipment
from unit VI to US market.
Aurobindo Pharma receives USFDA
Tentative Approval
Aurobindo Pharma has announced that the
company has received tentative approval from
the US Food & Drug Administration to
manufacture and market Venlafaxine
Hydrochloride Extended-release Capsules
37.5mg, 75mg and 150mg.
The tentatively approved ANDA No. 200834
for Venlafaxine Hydrochloride Extended-
release Capsules 37.5mg, 75mg and 150mgwas filed with Paragraph IV certification and
is currently under litigation in the United
States District Court for the District of New
Jersey [Wyeth LLC v. Aurobindo Pharma
Limited, and Aurobindo Pharma USA Inc.,
Civil Action No. 10-CV-02084]. The product
will be launched after the litigation settlement.
Aurobindo now has a total of 132 ANDA
approvals (99 Final approvals and 33 Tentative
approvals) from USFDA.
RECENT ANNOUNCEMENT ON 24 FEB
POSITIVE FOR LONG TERM BUT MAY NEGATIVE IN SHORT TERM
On account of loss of revenue from Unit VI and cost of resolution. Though the stock has already
corrected more than 27% in the past days, the import alert will continue to weigh on valuations till
further clarity. We continue to remain positive on ARBPs long-term story; however, in the short
term, the stock may remain under pressure.
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2008 2009 2010
25569 31677 36513
2008 2009 2010
2385 1003 5634
27%
34%
39%
REVENUE(IN
MILLION)
2008
2009
2010
26%
11%63%
PAT( IN MILLION)
2008 2009 2010
2008 2009 2010
35.83 15.49 89.12
2009 2010
1635.1 676.9
25%
11%64%
EPS Basic ( RS.)
2008
2009
2010
71%
29%
TERM LOAN (IN
MILLION)
2009 2010
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2009 2010
230.9 328.2
2009 2010
90% 100%
2009
2010
230.9328.2
BOOK VALUE
20092010
90%
100%
DIVIDEND(%)
DIVIDEND(%)
2009 2010
4.6 21.2
2009 2010
8.0 34.7
18%
82%
ROCE(%)
2009 2010
19%
81%
ROE
2009 2010
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Key financials
Rs. In millions
PARTICULARS 2009 2010 2011E 2012E
Sales 28852 33196 38175 43901
Profit 6904 11750 17625 26437
EPS 19.86 83.16 21.6 24.0
PE Ratio 16.1 10.7 13.4 12.04
Key Ratio
`Mar 2010 Mar 2009 Mar 2008 Mar 2007 Mar 2006
Debt-Equity Ratio (x) 1.46 1.79 1.98 2.02 1.61
Current Ratio (x) 1.28 1.44 1.70 1.62 1.32
Fixed Assets (x) 1.64 1.72 1.63 1.57 1.38
Inventory (x) 3.64 3.74 3.51 3.93 3.95
Debtors (x) 3.90 4.02 3.94 3.67 3.23
Operating Profit Margin (%) 27.14 9.30 18.17 17.72 12.31
Gross Profit Margin (%) 25.11 6.32 15.43 13.82 8.18
Cash Profit Margin (%) 19.79 6.01 13.32 13.62 7.13
Return On Capital Employed (%) 21.88 4.94 12.03 11.36 6.83
Return On Net Worth (%) 36.59 5.10 23.62 23.68 6.25
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Balance Sheet
Rs.In millions
Particulars 2010 2009
Sources of funds
Shareholders fund 19143 13208
Loan fund 19447 21146
Deferred tax liability 950 784
Total 39542 35139
Application of funds
Fixed asset 15448 11588
Investment 3709 2694
Current asset 26783 26060
Current liability 6398 5203
Total 39542 35139
PROFIT & LOSS STATEMENT
Rs. In. millions
PARTICULARS 2010 2009 % change
NET SALES 32522 27948 16.36%
PBT 7101 1570 352%
PAT 5257 1285 309%
DIVIDEND(Proposed)(Rs.)
3 1.5 100%
DIVIDEND (Interim) (Rs.) 3 3 -
EPS ( Diluted) (Rs.) 83.16 19.86 318%
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CASH FLOW STATEMENT
Rs. In millions
PARTICULARS 2010 2009
NET CASH FLOW FROM
OPERATING ACTIVITIES 3446 48.8
INVESTING ACTIVITIES (4062) (3017)
FINANCING ACTIVITIES (141.5) 1609
CASH AND CASH
EQUIVALENTS-
OPENING BALANCE 790 2093
CLOSING BALANCE 40.9 733.4
Purchase of investments include investments made in subsidiaries (692.7)
RECENT NEWS
APPROVAL FROM USFDA
Received USFDA approval to manufacture vancomycin injections at its new facility in Bangalore.
The company plans to manufacture all its approved sterile injectables from this facility and subsequently
launch them in the US.
The drugmaker expects shipments of vancomycin injections, which fall under its speciality business unit
Agila Specialties, to begin this month, it said. Vancomycin is used to treat bacterial infections inside the
intestine.
With unconstrained capacity, AUROBINDO are now well positioned to take advantage of the significant
opportunity for injectable products in the US market
The company expects its speciality business to grow 45% in 2011 to Rs 1,000 crore, it said last week
adding the consolidated revenue would grow 25% to Rs 2,200 crore.
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RESULT ANALYSIS
Earnings will continue to be robust through increasing contribution
from Pfizer deal and commencement of operations at Hyderabad SEZ
Aurobindo Pharmas 22.7 per cent returns in the current financial year have outperformed the 1.3 p er cent rise
in the Sensex during the same period. The surge comes on the back of inking a supply and licensing agreement
with Pfizer in March 2010, resulting in an improved earnings outlook for Aurobindo.
In the US markets Aurobindo filed 15 ANDAs and 3 DMFs during the quarter and received FDA approvals for
Anti hypertensive drug Losartan Pottasium and its combinations too.
Going ahead, analysts at 3MTEAM believe that the traction to earnings will continue through
increasing contributions from Pfizer deal and commencement of operations at Hyderabad SEZs unit
III. The increased product ramp up from Pfizer deal will further increase utilization levels at the SEZ
and savings on taxes will further lead to incremental earnings.
http://www.smartinvestor.in/company/comp_4666-Aurobindo_Pharma_Ltd.htmhttp://www.smartinvestor.in/company/comp_4666-Aurobindo_Pharma_Ltd.htmhttp://www.smartinvestor.in/company/comp_4666-Aurobindo_Pharma_Ltd.htm8/2/2019 Download Research
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BASED ON TECHNICAL ANALYSIS
BUY
BUY
3M TEAM
BUY
ABOVE
185
SL
178TARGET
220
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ANALYST NAME Deepak Ostwal
3M TEAM Research TEAM
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FUNDAMENTAL ANALYSIS only.
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