The shares of full-integrated pharmaceuticals player Aurbindo Pharma Ltd. were trading near their new 52-week low in the early hours of trading on Tuesday. As of 10:45 IST, the stock was being exchanged for ₹ 529.50 on the bourses, down more than 27.5% year to date. 

One-year performance has been dismal as well as the stock has declined 44.5% in the past year. This contrasts sharply with the benchmark  NIFTY Pharma index which has declined 14.75% since the start of the year and 14.30% in the last year.

The stock presently trades only 26.25% above its book value of ₹ 419 per share. It reached its 52-week high of ₹ 1,013 on 5 July 2021 and hit its 52-week low of ₹ 503 yesterday. Its current trailing 12 months price to earnings ratio is 11.70 against the sector PE of 28.15.

For the quarter ended March 2022, it reported a 28% decline in its consolidated net profit of ₹ 567 crore against ₹ 801 crores in the same period of the last fiscal year on account of decreased operational revenue with a marginal increase in expenses. 

Its formulations revenue for the US recorded a 4.7% year-on-year decline and Europe formulations revenue remained almost unchanged at ₹ 1,540 crores. The company’s consolidated net profit for the financial year 2021-22 plummeted 50% to ₹ 2,647 crores compare to ₹ 5,333 a year ago.  

Analysts at HSBC Securities expect input cost pressures and US pricing issues to persist for the next few quarters. The launch of new products will remain critical in handling US pricing woes. The brokerage is of the view that any meaningful contribution from the company’s initiatives such as R&D for biosimilars, depot injections, capital expenditure for PLI project for penicillin G, and India formulations business is a minimum of 2 years away.

Analysts at HSBC Securities have given a buy rating for a target price of ₹ 655 per share signalling an upside of 24%. 

The target price for ARBP from ICICI Securities is almost along the same lines at ₹ 649 per share. However, BOB Capital Markets is comparatively bullish on the drug maker and has provided a buy call with a 61% upside for a target price of ₹ 850 per share.

Written By – Vikalp Mishra


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