Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Aurobindo Pharma Outperforms Expectations with Strong Q4, Eyes Robust Growth Ahead

Published 2024/05/28, 05:04
© Reuters.

Aurobindo Pharma (NS:ARBN) has outperformed expectations in the fourth quarter of FY24, with both sales and EBITDA showing significant year-over-year growth. Sales increased by 17%, while EBITDA surged by an impressive 68%, surpassing both Goldman Sachs (NYSE:GS)' projections and those of the broader market.

This robust performance was driven by strong growth across key geographical markets, both developed and emerging. The EBITDA margin also exceeded forecasts, reaching 22.3%, which is 101 basis points higher than Goldman Sachs' estimate. This improvement was primarily attributed to higher gross margins.

Offer: Now's the perfect time to seize the opportunity! For a limited time, InvestingPro is available at an irresistible discount of 69%, priced at just INR 216/month. Click here and don't miss out on this exclusive offer to unlock the full potential of your portfolio with InvestingPro+.

Although Aurobindo did not provide a specific consolidated topline growth guidance, the company remains optimistic about achieving solid growth in FY25. This optimism is underpinned by several factors, including sustained momentum in the US market, substantial growth in Eugia (with a target of $150 million quarterly run-rate), and an anticipated ramp-up in gRevlimid sales in the coming quarters.

The company’s Production Linked Incentive (PLI) project is on track, aiming for peak utilization by September. Additionally, Aurobindo plans to commission its China plant this year and expects to maintain an EBITDA margin of 21-22% in FY25.

Goldman Sachs has adjusted its EPS estimates for FY25-27 by a range of -3% to +4%, reflecting the latest quarterly performance and updated business outlook. Consequently, the 12-month sum-of-the-parts (SOTP) target price for Aurobindo has been raised to INR 1,325 from INR 1,275, indicating an 11% upside potential. The firm maintains its Buy rating on Aurobindo, noting that the current valuation, which trades at a 30-40% discount to the coverage average, alleviates most concerns regarding pricing pressures and plant status.

In Europe, Aurobindo’s revenues grew by 8% year-over-year and 5% quarter-over-quarter, reaching EUR 203 million. This growth was in line with the company’s guidance and was helped by a reduction in tax clawback impacts. The company aims to maintain this revenue run-rate in FY25 and is focused on improving margins from the mid-teen levels to around 20% in the medium term.

Image Source: InvestingPro+

In addition to Goldman Sachs' analysis, InvestingPro offers valuable insights into Aurobindo Pharma's stock. According to InvestingPro’s fair value calculation, the true worth of the stock is INR 1,270. This valuation is derived from complex financial models that provide a comprehensive analysis of the stock's potential. InvestingPro's ProTips feature further underscores the stock's attractiveness by highlighting its consistent 24-year dividend payout history, its low price-to-earnings (P/E) ratio, and its profitability over the last 12 months.

Image Source: InvestingPro+

For investors seeking a deeper understanding and actionable insights, InvestingPro stands out as a powerful tool. By clicking here and subscribing to InvestingPro, investors can get access to a wealth of information and tools that can help them make informed decisions, maximizing their potential returns in the stock market, now available at a 69% limited-time discount.

Also Read: Boost Your Investment Strategy with the Altman Z-Score

X (formerly, Twitter) - Aayush Khanna

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.