Aurobindo Pharma Hits 52-Week High, Shares Up 63% from February Lows on Improved Earnings

Aurobindo Pharma Ltd rose for a third straight session.

Shares of Aurobindo Pharma surged 5% in intraday trade on Tuesday, hitting a 52-week high of Rs 646.35 on the BSE on heavy volume. The average volume traded over the counter has more than doubled today. A total of 3.8 million shares changed hands on the NSE and BSE at the time of publication of this report, representing 1% of the drugmaker’s total share capital.

Shares of Aurobindo are up 63% from their 52-week low of Rs 397.30 hit on February 3, 2023. Shares have soared nearly 50% so far this year on improving earnings. In contrast, the S&P BSE Sensex gained 1.7%.

Aurobindo Pharma is a leading pharmaceutical company vertically integrated with business units engaged in formulation, custom synthesis, peptides, R&D and active pharmaceutical ingredients (API).

The company’s revenue for the October-December quarter (Q3FY23) rose 6.7% year-on-year to Rs 6,407 crore, mainly driven by revenue from the US.

The US business grew 9.3% year-on-year to Rs 3,001 crore and accounted for 46.8% of consolidated revenue, driven by higher volumes and higher demand.

The company’s profit after tax fell by 13.8% YoY (+20.0% QoQ to Rs 491 crore). EBITDA margin declined 200 bps YoY to 14.9% (up 30 bps QoQ), mainly due to higher R&D expenses and higher other overhead.

As far as the US business is concerned, the company is expected to generate double-digit growth going forward. Aurobindo aims to commercialise 40 ANDAs within the next 12 months. The company expects to generate strong cash flow in FY25, supported by the Penicillin-G programme and biosimilar business.

The US is expected to follow this trend in the next quarter and fiscal year. Therefore, brokers are still optimistic about the stock and maintain a “buy” rating. The stock is trading above its target price of Rs 554 per share.

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