Shares of Aurobindo Pharma, the Hyderabad-based pharma company, surged as much as 5.88 per cent to Rs 858.80 apiece on the BSE on Thursday, a day after the company reported a 26 per cent increase in consolidated net profit at Rs 805.65 crore for the second quarter ended September 30 (Q2FY21). The company had posted a consolidated net profit of Rs 639.53 crore in the same quarter last fiscal.
At 10:20 AM, the stock was trading over 5 per cent higher at Rs 853 as against 0.45 per cent decine in the benchmark S&P BSE Sensex at 43,399.24 levels. Aurobindo Pharma shares had hit an all-time high of Rs 968 on the BSE on August 10, 2020.
For the September quarter, the company's consolidated total revenue from operations stood at Rs 6,483.44 crore as against Rs 5,600.47 crore in the corresponding quarter of the previous fiscal. CLICK HERE TO READ FULL REPORT
The company's board has also approved a second interim dividend of 125 per cent at Rs 1.25 per equity share of Re 1 for the financial year 2020-21.
Last month, Aurobindo Pharma reached a definitive agreement to sell its US subsidiary Natrol LLC to private equity firm New Mountain Capital and its affiliate Jarrow Formulas in an all-cash transaction valued at $550 mn (about Rs 4,048 crore). This, would make Aurobindo a zero-debt company and also help it repay loans, analysts had said.
"We believe a significant portion of the company’s current debt (Rs 4,777 crore as of Q1FY21) is working capital based. Therefore, a major portion of cash generated through this deal is likely to be utilised for strategic investments. The sale of this non-core segment is likely to improve focus on new and complex ventures such as biosimilars, vaccines and complex injectables where capital requirements are higher and precise," analysts at ICICI Securities had said in a note dated October 26.
Adding, "structurally, we remain positive on the company as it possesses one of the best, enduring generics ecosystems among peers (vertically integrated model, lower product concentration) to withstand volatility in the US and other generics space. We maintain the BUY recommendation and ascribe a target price of Rs 1,025 valuing it 14x FY23E EPS of Rs 73.3."