Aurobindo Pharma - The Smart Investor

Overall contribution of the formulation
segment increased from 17.0% in 2006
to 55.0% in FY2010
Financials
Aurobindo Pharma | Initiating Coverage
Top-line to register 15.6% CAGR over FY2010-12E
APL recorded 20.5% CAGR in net sales during FY2006-10 to `3,370cr driven by
the formulation segments. Overall contribution of the formulation segment
increased from 17.0% in 2006 to 55.0% in FY2010 primarily led by the US and
ARV contracts. During FY2006-10, while sales in the US posted a CAGR of 99.2%
to `912cr driven by product launches and commencement of supplies to Pfizer,
ARV formulation sales logged 54.9% CAGR over on the back of the contract wins
under the PEPFAR project. The API segment however, recorded sluggish CAGR of
3.0% as the increase in volumes was offset by lower price realisations during the
period.
Exhibit 18: Increasing contribution from formulations
100%
80%
60%
40%
20%
0%
17
83
Source: Company, Angel Research
For FY2011, we expect net sales to grow at a slower pace of 12.7% to `3,796cr
due to capacity constraints (NPNC) - the new facilities at the Unit VII (SEZ) and NJ
are expected to scale up gradually. We expect the formulation segment to clock
22.7% yoy growth to `2,273cr, while the API segment is expected to decline by
1.3% to `1,581cr.
In the US region, the formulation segment is expected to clock 35.3% yoy growth
to `1,234cr driven by the off-take under the Pfizer contract primarily in 2HFY2011
and launch of new products (SSP and Ceph injectable products). In Europe, we
expect net sales to come in at `265cr, up 11.5%, while the RoW is expected to
register 8.7% yoy growth to `225cr on the back of product launches. The ARV
segment is expected to clock 10.8% yoy growth to `549cr as contribution from
PEPFAR contract increases.
For FY2012, we expect net sales to clock strong growth of 18.7% to `4,506cr on
the back of increase in capacity utilisation at its new facilities. Formulation sales
are expected to register 32.0% yoy growth to `3,000cr while the API segment is
expected to remain flat at `1,575cr.
October 18, 2010 12
33
67
41
59
48
52
55 60
45 40
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
API Formulations
67
33