This Midcap Pharma stock which is engaged in the manufacturing and marketing of APIs, generic pharmaceuticals, and other related services is up by 2.6 percent after the company collaborated with a global pharma major for the development and commercialization of products.
Price Action
With a market capitalization of Rs. 71,914.86 Crores, the shares of Aurobindo Pharma Limited were up by 2.6 percent in the day’s trade and touched a day’s high of Rs. 1,255.90 per equity share, from its previous day’s close price of Rs. 1,223.65. The stock has delivered a return of 22 percent in the past year which has outperformed the nifty index in the same period. The stock has reiterated from the day’s high and currently trading at Rs. 1,243.9 apiece which is 1.65 percent higher.
What Happened
The company announced a collaboration and license agreement with a global pharma major for product development and commercialization for an upfront agreement of $25 million on the agreement’s effective date.
The terms and conditions with rationale behind the collaboration
Aurobindo Pharma USA Inc., the wholly owned subsidiary of Aurobindo Pharma has entered into a collaboration and licensing agreement with a global pharmaceutical company for the development of specific products in the respiratory therapeutic area.
This partnership is expected to last between three to five years, during which both parties will co-exclusively commercialize the products. Once developed, the products will be manufactured at the partner’s facility and will be marketed jointly. Aurobindo retains the option for technology transfer in the future. The financial terms of the agreement are confidential, but both companies will share development costs equally which is capped at $90 million for Aurobindo.
The collaboration aims to share the product development risks and costs, shorten the development timeline, and strengthen and diversify the existing product portfolio.
About the Company
Aurobindo Pharma Limited, founded in 1986, is a major Indian pharmaceutical company engaged in the manufacturing and marketing of generic pharmaceuticals and active pharmaceutical ingredients.
They operate across various therapeutic segments which include antibiotics, cardiovascular, anti-retrovirals, and central nervous system products. Aurobindo’s business model focuses on vertical integration, with extensive R&D capabilities and a robust global presence in over 150 countries. They focus on cost-effective drug development, using India’s competitive advantages to provide affordable healthcare solutions.
Financials & Ratios
Its Revenue from operations rose by 8 percent year on year from Rs. 7,219 Crores in Q2FY24 to Rs. 7,796 Crores in Q2FY25, accompanied by profits of Rs. 752 Crores to Rs. 817 Crores.
In terms of Return ratios, it has reported a return on equity (ROE) of 11.18 percent and a return on capital employed (ROCE) of 13.51 percent. It has reported a debt-to-equity ratio of 0.21.
Shareholding Pattern
As of September 2024, the shareholding pattern with promoters stake holding a major share of 51.82 percent in Aurobindo Pharma, Foreign Institutional Investors (FII) holding around 16.59 percent, Domestic Institutional investors (DII) standing at 25.14 percent, and public holdings standing at 6.45 percent.
Written by Santhosh S
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