In this edition, we have reviewed Aurobindo Pharma and Kajaria Ceramics. We suggest our reader-investors to BOOK PROFIT in Aurobindo Pharma and Kajaria Ceramics.
We had recommended Aurobindo Pharma in issue no. 5 dated February 6February 19, 2017 in our cover story “The Half-dozen Must-haves” when the scrip was trading at ₹ 682. Our recommendation was on the back of its acquisition of Portugal-based company “Generis Farmaceutica” and its extensive product pipeline with about 159 ANDAS pending for final approval.
Aurobindo Pharma is a pharmaceutical manufacturing company headquartered in Hyderabad, India. It is the market leader in semi-synthetic penicillins with a presence in key therapeutic segments such as neurosciences, cardiovascular, anti-retrovirals, anti-diabetics, gastroenterology and cephalosporins, among others. Aurobindo exports to over 125 countries across the globe, with more than 70 per cent of its revenues derived out of international operations.
On the financial front, Aurobindo Pharma posted 8.41 per cent decrease in its revenue to ₹ 2,188.29 crore in Q1FY18 from ₹ 2,389.76 crore in Q1FY17. Moreover, the company’s PBDT declined by 14.55 per cent to ₹ 490.01 crore in the first quarter of FY18 on a yearly basis. The company’s net profit too declined by 21.48 per cent to ₹ 307.33 crore for the same period.
On the valuation front, the company’s PE stood at 18.98x, whereas its peers Cadila Healthcare and Sun Pharmaceutical Industries’ PE stood at 43.81x and 27.33x, respectively.
Although the profits of Aurobindo dropped in the first quarter of the current fiscal, the share price of Aurobindo Pharma has increased by about 12 per cent since our recommendation. Looking at the current market conditions, we recommend investors to BOOK PROFIT in the stock.