Aurobindo Pharma Initiating Coverage Report By Motilal Oswal

Discussion in 'Latest Brokerage Stock Buy-Sell Reports' started by Meenakshi Razdan, Apr 2, 2015.

  1. Meenakshi Razdan

    Meenakshi Razdan Administrator Staff Member Moderator

    Mar 19, 2015
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    Growth levers firmly in place; initiate with Buy

    Focus on niches in US to drive improving profitability and return ratios

    We initiate coverage on Aurobindo Pharma (ARBP) with a Buy rating and target
    price of INR1,645 (45% upside). We expect ARBP’s valuation gap with peers
    (~25% now) to narrow on strong earnings outlook (26.4% CAGR over FY15-17E)
    and improving capital efficiency (RoE/RoCE to expand). This would be achieved
    through (a) scale-up of differentiated US pipeline (injectables, penems, and
    controlled substances), (b) turnaround of EU acquisition (Actavis), and (c)
    sustained deleveraging efforts (D/E at 0.3x from 0.7x now).

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