Aurobindo hits 2-year low; dips 11% in a week on USFDA's 6 observations

Analysts at ICICI Securities expect Aurobindo Pharma's adjusted PAT to de-grow 30.4 per cent year-on-year (YoY) to Rs 557.90 crore in the March 2022 quarter.

Shares of Aurobindo Pharma were under pressure as it hit new 52-week low of Rs 536.40, down 2.6 per cent on the BSE in Tuesday’s intra-day trade in an otherwise upbeat market. In comparison, the S&P BSE Sensex was up 1.8 per cent or 930 points at 53,904 at 12:23 pm.

The stock of pharmaceutical company slipped 11 per cent in the past one week after the company received six observations from the United States Food and Drug Administration (USFDA) for its Unit VII.

The stock price of Aurobindo Pharma quoted its lowest level since May 2020. Besides that, the stock nearly halved or down 49 per cent from its 52-week high level of Rs 1,043 that it had touched on May 26, 2021.

“The USFDA inspected company’s Unit VII, an oral manufacturing facility situated at Jedcherla, Hyderabad, from 2nd to 10th May 2022. At the end of the inspection, we have been issued a ‘Form 483’ with six observations,” Aurobindo Pharma said on May 10, 2022.

Given this, the company has assured that it will respond to the USFDA within a stipulated timeline as well as work closely with the drug regulator to close the observations.

Meanwhile, analysts at ICICI Securities expect Aurobindo Pharma’s adjusted profit after tax (PAT) to de-grow 30.4 per cent year-on-year (YoY) to Rs 557.90 crore in March 2022 quarter (Q4FY22). "Earnings before interest, taxes, depreciation, and amortization (EBITDA) margins are expected to decline by 450 bps YoY to 16.8 per cent. Subsequently, EBITDA is likely to decline 21.5 per cent YoY to Rs 1,001 crore. That apart, revenues are expected to remain flat YoY to Rs 5,974 crore," the brokerage firm added.