Aurobindo Pharma company (NS:) performed better than expected in Q4FY24, with both sales and EBITDA showing significant year-on-year growth. Sales increased by 17% and EBITDA by an impressive 68%, surpassing both Goldman Sachs (NYSE:) and broader market forecasts.
This forceful performance was supported by forceful growth in key geographic markets, both developed and emerging. EBITDA margin also exceeded forecasts at 22.3%, 101 basis points higher than Goldman Sachs’ estimate. This improvement was primarily due to higher gross margins.
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While Aurobindo has not provided specific consolidated guidance on revenue growth, the company remains bullish about achieving solid growth in FY25. This optimism is driven by several factors, including continued momentum in the US market, forceful growth in Eugia (with a quarterly rate target of USD 150 million) and the expected raise in gRevlimid sales in the coming quarters.
The company’s Production Linked Incentive (PLI) project is on track and will be fully utilized in September. Additionally, Aurobindo plans to commission its factory in China this year and expects to maintain an EBITDA margin of 21-22% in fiscal 2025.
Goldman Sachs revised its FY25-27 EPS estimates to a range of -3% to +4%, reflecting the latest quarterly results and updated business outlook. As a result, Aurobindo’s 12-month sum-of-the-parts (SOTP) target price has been raised to INR 1,325 from INR 1,275, indicating an upside potential of 11%. The company maintains a Buy rating on Aurobindo, noting that the current valuation, which is trading at a 30-40% discount to average coverage, allays most concerns about pricing pressure and the condition of the plant.
In Europe, Aurobindo’s revenues increased by 8% year-on-year and 5% quarter-on-quarter, reaching €203 million. This raise was in line with the company’s guidelines and was contributed to by limiting the effects of tax refunds. The company aims to maintain current revenue levels in FY25 and focus on improving margins from mid-range to around 20% in the medium term.
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In addition to Goldman Sachs analyses, InvestingPro offers valuable information on Aurobindo Pharma shares. According to InvestingPro’s fair value valuation, the actual value of the stock is INR 1,270. This valuation is based on elaborate financial models that provide a comprehensive analysis of the stock’s potential. InvestingPro’s ProTips feature further highlights the stock’s attractiveness by highlighting its consistent 24-year dividend history, low price-to-earnings (P/E) ratio, and profitability over the last 12 months.
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