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Aurobindo_ The Goddess of Beauty

Posted 26 Apr 10 | 06:46 PM by :
Related to : Companies & Industry (Aurobindo Pharma Ltd)
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                  “We expect annual revenue of $400-500 million from our partnership with Pfizer after a couple of years,” P V Ramaprasad Reddy, Aurobindo chairman & MD, said in an interview with “Business Standard” dated 9.6.2009. The drug maker expects sales from the Pfizer alliance to contribute some 25% to its total sales in four years. Aurobindo Pharma Ltd aims to cross $2 billion in revenue, three times what it is now, over the next four years by March 2014, primarily driven by the strategic alliance with global pharmaceutical firm Pfizer Inc. and improved formulations sales supported by additional capacities. The company expects to increase the contribution of formulations to total sales from 57% now to 80%-85% over the period with increased focus on high-margin products in regulated markets, said chairman and managing director P.V. Ramaprasad Reddy. “We expect sales from the strategic alliance with Pfizer to contribute to some 25% of our total sales, or some $500 million, by March 2014, as we expect to grow at 30%-35% a year over the next four years,” Mr. Reddy told Mint

Aurobindo agreed as per this to license and supply Pfizer some 80 post-LOE products across multiple markets. Aurobindo has a large manufacturing base -- 15 manufacturing facilities that include five formulations plants approved by several regulatory authorities across the globe -- and is marketing its products in over 100 countries.

Pfizer, with a global commercial presence in 150 countries, plans to exploit the sales potential of these post-LOE products of Aurobindo through the newly formed Established Products Business Unit. Aurobindo’s product range covers therapeutic segments such as anti-infective, cardiovascular and central nervous system (CNS) disorder drugs.

Under the agreement, Aurobindo gets an upfront payment of $110 million (Rs. 509 crore) and also enjoys revenue sharing over the next 15 years, Reddy said. Revenues from the Pfizer arrangement will start accruing from 2011-12 and were expected to peak at about $500 million (Rs. 2,314 crore) a year by March 2014, he said. The company, which has already received an upfront payment of $43 million, expects to receive the balance in installments over the next 8-10 quarters.

Now, listen very carefully what Mr. Ramaprasad Reddy is talking because he seldom comes in front of media to discuss the future business plans. Now, 2 billion US dollars revenue by March, 2014 means minimum Rs. 8000.00 crore sales revenue after considering fair   exchange rate of One US dollar = Rs. 40.00. If net profit margin expansions happen commensurate with higher turnover & higher share of value-added products @ conservative estimate of 20%, then it translates into NP of whooping Rs. 1600.00 crores on an expanded equity capital (after considering entire dilution of FCCB’s into equity) of, say, Rs. 32.00 crores. This translates into an EPS of Rs. 250.00 & market price of Rs. 3,750.00 per share after considering a fair PE ratio of 15 & believes me; this will happen much before March, 2014.


30 Apr 10 at 12:54 PM
By: Natdev

Excellent & straightforward analysis after taking into account FCCB concerns which have been hovering around this stock for the last 2 years. I too am optimistic about this stock and accumulating since jan-2008.I strongly feel that this stock will reach to Rs.2000/- in 15-18 months period or earlier thah this.

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