Aurobindo Pharma’s (APL) Q1FY14 results were much higher than market expectations with total income increasing 41.3 per cent YoY to Rs17.2 billion, with US formulations sales doubling YoY, according to an analysis by Fortune Equity Brokers (India) (Fortune).
EBITDA margin at 17.9 per cent was the highest in the last nine quarters while margins improved 643bps YoY and 265bps QoQ. Adjusted PAT increased over 4x YoY and a sharp 57 per cent QoQ to Rs1.73 billion aided by lower than expected interest cost. Adjustments pertain to post tax (tax rate of 20 per cent) and a non-recurring forex loss of Rs17.24 billion.
US formulations sales growth touched 90.3 per cent YoY helped by series of ANDA launches, low base and favourable exchange rate. The company’s US business had witnessed a slowdown in Q1FY13 due to lower offtake by partners and no meaningful ANDA launch. Sales from Auromedics (injectable subsidiary) and Cephalosporins was $ 7 million and $ 3 million respectively.
The Fortune analysis predicts that APL’s US business seems poised for a long term growth surge as it has been able to resolve all compliance issues in FY13 and made core structural improvements. The company has invested close to Rs 3.0 billion in its injectable Unit IV and has 24 injectable ANDAs pending approval. APL has been able to resolve USFDA issues surrounding Unit III and VI in FY13 allowing the company relaunch its cephalosporins from Unit VI. Company has also decided to hive off its injectable division into separate subsidiary since it requires different marketing capabilities to that of the oral business in US.
In other geographies, sales in the EU and RoW grew by 52.6 per cent YoY as the company has been able to consolidate well in Europe and key emerging markets. The company is increasing its field force in EU and RoW markets to maintain its ongoing strong growth momentum in the region.
ARV sales growth improved significantly at 36.8 per cent YoY. There is usually lumpiness associated with the ARV business and therefore the current growth might not repeat. Company is currently focusing more on profitability in the ARV space.
In contrast, the API segment posted muted 10.2 per cent YoY growth that was affected by decline in Ceph APIs. SSP growth was robust at 24.1 per cent YoY whereas Ceph APIs declined by 3 per cent YoY. The Fortune analysts expect the SSP and Ceph sterile API segment to show a much improved performance going ahead as Unit VI has received USFDA approval. Non Betalactam API sales growth was low at 12.6 per cent YoY. Being a focused segment of the API space, it is expected to do much better ahead.
EP News Bureau – Mumbai
