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Aurobindo Pharma Ltd. | Q2FY14 Result Update




IndiaNivesh Securities Pvt Ltd


10 Nov 2013





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Aurobindo Pharma Ltd. | Q2FY14 Result Update Positive surprise on margins front, sustainability likely, maintain BUY &revisetarget price upward from Rs 252 to Rs 343 | Valuations: During the quarter positive surprise was from the margins front but we believe that company’s investment in its subsidiaries to expand front ended teams has started paying dividends and likely to be sustainable. Its most of subsidiaries are turning break even or higher EBITDA positive. Additionally, favorable product mix is likely to be positive for gross margins also. In our view, considering robust performance of the company in the last few quarters & promising outlook, re-rating of the stock seems on the cards. We continue to maintain strong BUY on the stock & increase target price from Rs 252 to Rs 343, valuing at 10x of FY15E. (Earlier valued at 9x of FY15E). At CMP of Rs 260, the stock is trading at P/E multiple of 10.4x of FY14E &7.6x of FY15E earnings estimates.

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