Stock Pick: Arobindo Pharma
Industry: Pharmaceutical – Bulk Drugs and Formulation
Current Price: Rs 276.15 as on 16th July, 2008
Target Price: Rs 408
52 Week High/Low: 753/233
Call: Strong BUY
Aurobindo Pharma is one of the major players in the country in semi-synthetic penicillin bulk drugs. It has been consistently posting strong numbers over the last couple of years. Its PAT has gone up by 230% YoY and Sales have grown by over 36% as compared to 2006. The turnover rate from creditors is also more or less constant YoY.
The company recently got an approval from the US Food and Drug Administration to manufacture and market Zaleplon capsules and Benazepril hydrochloride capsules. The stock trades at an attractive P/E of 5.5 and currently offers an EPS of 54.1 (vs. an industry average of 19.14 – as on 11th July, 2008). For year ended March 2008, it had a topline worth 2234.73 Cr. and a Net Profit of 290.78 Cr. The stock is not expected to perform exceptionally well for the next 4 months due to a likely forex loss on account of appreciating rupee. But it remains a strong BUY for a period of 6-12 months. The stock has already significantly corrected over the past 6 months. It is the best value buy in the Pharma sector after the recent fall in the markets.
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