Aurobindo Pharma hits 52-week high despite 12% decline in PAT in Q4; here's why

Shares of pharmaceutical major Aurobindo Pharma surged as much as 7.15% to hit an intraday high of ₹654.95 apiece on the BSE on Tuesday as the company managed to meet analysts' estimates despite a decline in its consolidated profit after tax (PAT) by 12% year-on-year (YoY) to ₹505.9 crore in the March quarter of FY23 against ₹576.1 crore in the same period last year.

During the session on Tuesday, the shares of Aurobindo Pharma opened at ₹611.25 as against the closing price of the previous session at ₹611.20. At 1:20 pm, the company’s share price was trading 5.42% higher at ₹644.50. At present, Aurobindo Pharma’s shares are trading 64.8% higher than the 52-week low of ₹397.30, which the company touched on February 3 this year. During the session on Tuesday, the company’s market capitalisation stood at ₹37,699.29 crore, with over 2.18 lakh shares exchanging hands on the BSE against the two-week average of 0.62 lakh shares.

In the January to March quarter this year, the company's revenues stood at ₹6,472.9 crore, up 11.4% as against ₹5,809.3 crore in the same period last year. Of this, the company’s net sales stood at ₹6,378.6 crore as against ₹5,795.3 crore in the December quarter.

The company's EBITDA (earnings before income, tax, depreciation and amortisation) before forex and other income stood at ₹1,002 crore, up 2.9% as against ₹974.4 crore in the same period last year. The EBITDA margin for the quarter was 15.5%. EBITDA before R&D stood at ₹1,413 Cr and EBITDA margin at 21.8%.

On a sequential basis, the company’s PAT surged marginally by 3% quarter-on-quarter (QoQ) as against ₹491 crore in the December quarter. The company’s revenue saw a marginal growth of 1% sequentially during the quarter under review against ₹6,407.1 crore in the December quarter. In FY22, the company’s PAT stood at ₹1,927.6 crore as against ₹2,647.1 crore in FY22. The company’s revenue stood at ₹24,855.4 crore, up 6%, as against ₹23,455.5 crore in the same period last year.

What brokerages say

Analysts at ICICI Direct have maintained a 'HOLD' rating, with a revised target price of ₹615 at 11x P/E on n FY25E EPS of ₹55.8. "We maintain HOLD as the US base business outlook, especially on the OSD front, is yet to stabilise to the comfort level, besides an elongated margin recovery due to pressure on GPM and higher R&D. Legacy cGMP and
governance issues are expected to abate slowly," the brokerage firm said.

Analysts at Kotak Institutional Equities have retained an ‘ADD’ rating with a revised target price of ₹625. According to the brokerage firm, Aurobindo Pharma has delivered a healthy Q4FY23. The brokerage firm expects a strong 310 bps (basis points) EBITDA margin expansion in FY24 and ARBP to deliver an EBITDA CAGR of 15% over FY23-26E.

Analysts at Nuvama have maintained a ‘BUY’ rating with a revised target price of ₹720. Nuvama has raised FY24/25E EPS by 4%/8% and the target valuation to 15x owing to better industry prospects.

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