Aurobindo Pharma Q2 Results Review - Margin Outlook Optimistic Led By Better Product Mix: KRChoksey

KRChoksey Report

Result Highlights of Q2 FY24:

• For Q2 FY24, Aurobindo Pharma Ltd.'s revenue grew 25.8% YoY and 5.4% QoQ to Rs 72,194 million driven by healthy performance across all the key geographical segments, while for H1 FY24 revenue grew 17.5% YoY to Rs 1,40,699 million.

• Adjusted Ebitda for the quarter increased 67.7% YoY and 21.9% QoQ to Rs 14,032 million while for H1 FY24, Adj Ebitda increased 41.8% YoY to Rs 25,546 million, primarily led by robust sales, and Adj Ebitda margin expanded 486 basis points YoY and 293 bps QoQ to 19.4% while for H1 FY24 Adj Ebitda margin expanded 311 bps YoY to 18.2%, this is led by low material cost and favorable product mix.

• Adjusted profit after tax increased by 72.8% YoY and 30.6% QoQ to Rs 7,870 million while for H1 FY24 Adj PAT increased 38.4% YoY to Rs 13,898 million. Adj PAT margin expanded 296 bps YoY and 210 bps QoQ to 10.9% while for H1 FY24 PAT margin expanded 149 bps YoY to 9.9%. This is led by strong operating performance.

• During the quarter, Aurobindo Pharma free zone limited liability company; Saudi Arabia, step down subsidiary of the company, has entered into an agreement to acquire certain marketing and manufacturing related authorizations for an amount of Rs 3,983 million.

The stock is currently trading at 20.6 times/17.0 times of our estimated FY24E/FY25E earning per share.

We assign a price/earning multiple of 18.0 times on FY25E EPS of Rs 60.7to arrive at a target price of Rs 1,090 (earlier TP Rs 907) and maintain the recommendation of ‘Accumulate’ on Aurobindo Pharma Ltd, implying an upside of 6.0% from its current market price of Rs 1,030.

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