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You are here : IndiaNotes >> Research & Analysis >> Companies >> Aurobindo Pharma Ltd. >> Research

Techno Funda Call: Buy Aurobindo Pharma from a short-term perspective

SMC | 16 Mar, 2017  | Follow Author | Add to my Favourites 
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The company is a beneficiary of faster approvals for its drugs in the US and all key plants of the company are compliant with the US Food and Drug Administration (USFDA) norms. During Q3FY17, it has recorded good overall growth on YoY basis. Despite pricing pressure in select products, it has registered a growth of 11.4% YoY due to diversified product basket and markets. The management of the company remains focused on developing a differentiated and speciality product basket which will drive future growth.


BUSINESS PROFILE


AURO PHARMA manufactures generic pharmaceuticals and active pharmaceutical ingredients. The company’s manufacturing facilities are approved by several leading regulatory agencies like US FDA, UK MHRA, Japan PMDA, WHO, Health Canada, MCC South Africa, ANVISA Brazil. The company’s robust product portfolio is spread over 7 major therapeutic/product areas encompassing Antibiotics, Anti-Retrovirals, CVS, CNS, Gastroenterological, Anti-Allergies and Anti-Diabetics, supported by an outstanding R&D set-up. The Company is marketing these products globally, in over 150 countries.


INVESTMENT RATIONALE


• Aurobindo Pharma's consolidated net profit rose 6.3% to Rs 578.59 crore on 11.7% growth in net sales to Rs 3844.47 crore in Q3 December 2016 over Q3 December 2015.


• It manufactures generic pharmaceuticals and active pharmaceutical ingredients. The company's manufacturing facilities are approved by several leading regulatory agencies like US FDA, UK MHRA, Japan PMDA, WHO, Health Canada, MCC South Africa, ANVISA Brazil.


• In Q3 FY16-17, the company filed 9 ANDAs with USFDA including 5 in the Oral Category and 4 in the Injectable category. On 9 M FY16-17 bases, the company filed 23 ANDAs with USFDA including 14 inOral and 9 in Injectable segments. During the quarter, the company received 22 ANDA approvals from USFDA including 19 Final approvals (3 tentative approvals received final approvals) and 3 tentative approvals. On a cumulative basis, the company received 303 approvals from USFDA including 41Tentative* approvals


• Formulations business witnessed a growth of 11.4% during the quarter and accounted for 80% to the total revenues. The growth was on the back of healthy growth in US and RoW markets.


• The Active Pharmaceuticals Ingredients business contributed 20% to the total revenue and registered a growth of 11.6% YoY in Q3 FY17. The strong growth in Betalactum APIs led to overall API growth. The company sells API to domestic as well as the global market.


TECHNICAL TRENDS




We recommend a buy in the stock of AURO PHARMA from a short-term perspective. The stock is trading at its good support level with good fundamental records and is expected to move up from this level. It made a 52 week low Rs.622 and 52 week high of Rs 895.00. Buy around at 691 with a closing below stop loss of Rs.645 levels for the target of Rs.774.


Note: Follow Strict Stop Loss.



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About SMC
SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.



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