Aurobindo Pharma - The Smart Investor

Exhibit 1: Net Sales, OPM and Recurring PAT (ex other OI) trend
(` cr)
5,000
4,000
3,000
2,000
1,000
0
1,600
271
2,122
694
1,330 1,429 1,431 1,538 1,518 1,523 1,506
Source: Company, Angel Research
2,430
999
2,935
1,397
1,852
Aurobindo Pharma | Initiating Coverage
Initiate Coverage with a Buy and Target Price of `1,330
Recurring earnings (ex other OI) to post CAGR of 29.1%
Net sales are estimated to log a CAGR of 15.6% to `4,506cr over FY2010-12 on
back of supply agreements, the US (ex-Pfizer) and ARV formulation contracts. We
expect APL’s recurring earnings (excluding other operating income) to post a
CAGR of 29.1% over FY2010-12 to `506cr on the back of sales growth and OPM
expansion. We estimate OPM to increase by 206bp to 20.4% during the
mentioned period.
2,273
3,000
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
API Formulations
3,370
3,796
4,506
APL aims to clock US $2bn in FY2014
APL expects to clock strong CAGR of 29.4% in top-line to US $2bn by FY2014
from US $713mn in FY2010. The company expects contribution from the
formulations segment to ramp up to 75% by FY2014 from current levels of 55%.
Exhibit 2: APL’s revenue target
(US $mn)
2400
2000
1600
1200
800
400
0
Source: Company, Angel Research
Our estimates are lower than company’s long term guidance as we expect growth
to be more back-ended for the company driven by US (injectables and controlled
substances) and supply agreements.
October 18, 2010 2
(` cr)
600
500
400
300
200
100
0
67
189
230
169
304
355
506
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
Recurring PAT OPM
713
48 15
328
322
CAGR 29.4%
69.9
79.7
27.8
11.6
2,000
125
500
875
500
FY2010 FY2014
API Formulations Supply Agreements Injectable business
25.0
20.0
15.0
10.0
5.0
0.0
(%)