Market at close The S&P BSE Sensex shed 107 points to settle at 36,134 while NSE's Nifty50 index dropped 14 points to end at 10,870.
Shares of Aurobindo Pharma hit a 52-week high of Rs 830, up 3% on the BSE in intra-day trade in an otherwise weak market on expectations that the second half (October-March) run-rate will be better than H1 (April-September), given full benefits of gValsartan supplies will be reflected, scale-up in injectable sales and likely new niche launches.
In the past six months, the stock has outperformed the market by surging 55%, as compared to 3% rise in the S&P BSE Sensex.
“The company reported strong H1FY19 US sales, aided by new launches & order wins and benefits of shortage of gValsartan supplies. Further, the company believes benefits of strategic decision of keeping higher inventory levels (three months vs two earlier) is paying off and witnessing improvement in the base business,” analysts at Elara Capital said in company update.
“Strong US business and an emerging EU (transitioning from negative OPM into double digits) show drivers are in place. Further, the Sandoz acquisition seems to be transacted at attractive valuations at 1x sales and 5x EBITDA, which will give Aurobindo higher scale ($2.3 billion of consolidated US sales) and diversification in the US (derma portfolio),” the brokerage firm said with a ‘buy’ rating on the stock and target price of Rs 925 per share.
“With guidance of robust pipeline and visibility from the waves of complex generics till FY20E, we expect Aurobindo Pharma’s US generics to grow at 10% CAGR in FY18E-20E as price erosion in its portfolio is gradual stabilizing at 6-8%,” analysts at Prabhudas Lilladher said in result update.
“Near term growth drivers are gWelchol, gErtapenem, gToprol XL, Vancomycin, OTC drugs (10-12 launches) in US and DTG in ARV business. Management has also guided for a key launches of an injectable and developed sizeable inventory estimating approval in January CY19. We believe the product could be partner’s product in peptide segment as Aurobindo Pharma has agreement for supplying API for partner in US,” the brokerage firm said with ‘buy’ rating on the stock and target price of Rs 909.