Aurobindo Pharma (NS:) beat expectations in the fourth quarter of FY24, with both sales and EBITDA showing strong year-over-year growth. Sales rose 17% and EBITDA rose an impressive 68%, beating Goldman Sachs (NYSE:) and broader market forecasts.
This strong performance was driven by strong growth in key geographic markets, both developed and emerging. EBITDA margin also beat forecasts, reaching 22.3%, 101 basis points above Goldman Sachs’ estimate. This improvement was primarily due to higher gross margins.
Offer: Now is the perfect time to take advantage of this opportunity! For a limited time, InvestingPro is available at an incredible 69% discount at just INR 216 per month. Click here and don’t miss out on this exclusive offer to unlock the full potential of your portfolio with InvestingPro+.
While Aurobindo did not provide specific consolidated revenue growth guidance, the company remains optimistic about achieving sustainable growth in FY25. This optimism is supported by several factors, including strong momentum in the US market, strong growth of Eugia (with sales target of US$150 million per quarter) and gRevlimid’s expected sales growth in the coming quarters.
The company’s Production Linked Incentive (PLI) project is underway and aims to reach peak occupancy by September. Additionally, Aurobindo plans to commission its China plant this year and expects to maintain EBITDA margins of 21-22% in FY25.
Goldman Sachs adjusted its FY25-FY27 earnings per share estimates to a range of -3% to +4%, reflecting the latest quarterly results and updated business outlook. Consequently, Aurobindo’s 12-month sum-of-the-parts (SOTP) share price target has been raised to INR 1,325 from INR 1,275, indicating an upside of 11%. The firm maintains a Buy rating on Aurobindo shares, noting that the current valuation, which trades at a 30-40% discount to average coverage, alleviates most concerns about pricing pressure and plant health.
In Europe, Aurobindo’s revenues grew 8% year-on-year and 5% quarter-on-quarter to €203 million. This growth was in line with the company’s forecasts and was supported by lower tax refund impacts. The company aims to maintain this revenue level in FY25 and is focused on improving margins from mid-range to around 20% over the medium term.
Image source: InvestingPro+
In addition to Goldman Sachs analysis, InvestingPro offers valuable information on Aurobindo Pharma stock. According to InvestingPro’s fair value calculations, the fair value of the stock is INR 1,270. This valuation is derived from sophisticated financial models that provide comprehensive analysis of a stock’s potential. InvestingPro’s ProTips feature further highlights a stock’s attractiveness by highlighting its consistent 24-year dividend payment history, low price-to-earnings (P/E) ratio and trailing 12-month profitability.
Image source: InvestingPro+
For investors looking for deeper insight and actionable insights, InvestingPro is a powerful tool. TO Click here and by subscribing to InvestingPro, investors can access a wealth of information and tools to help them make informed decisions while maximizing their potential returns in the stock market, now available at 69% off for a limited time.
Also read: Improve your investment strategy with Altman’s Z-Score
X (formerly Twitter) – Aayush Khanna