Growth across geographies keeps analysts positive on Aurobindo Pharma

In a quarter which saw its peers struggle, Aurobindo Pharma put out a strong March quarter performance. The company saw a 30.7 per cent growth in revenues, led by a strong 42.7 per cent growth in US sales.The geography is its single largest, accounting for 47 per cent of overall revenues. This was largely driven by the higher margin injectables business growth, with a ramp-up in antibacterial Ertapenem injection and new launches. The company launched 15 products, including four injectables in the fourth quarter of 2018-19 (FY19). Aurobindo also completed acquisition of seven branded oncology injectable products from Spectrum Pharmaceuticals, Inc.In addition to the March quarter results, easing of regulatory worries and attractive valuations, too, have led to an improving sentiment for the stock. Analysts expect the company to maintain a strong growth momentum in the US and Europe, led by acquisitions as well as base business.Among the key triggers for the stock is the company’s limited-competition niche injectable portfolio. The portfolio achieved the targeted 30 per cent growth in FY19 and is expected to continue growing at a similar pace for another three years, led by new approvals (12-15 products in 2019-20, or FY20). Reliance Securities expects this capacity expansion to boost Aurobindo’s overall profitabilityThe company is also expected to complete the acquisition of Sandoz’s derma and oral solid business by the second quarter (Q2) of FY20, which analysts feel will scale up Aurobindo’s US operations significantly. Elara Capital expects the incorporation of Sandoz business to increase the company’s 2020-21 earnings by 10 per cent.For FY20, analysts expect the sterile portfolio to drive bulk of the growth, along with the consolidation of Sandoz as well as the Spectrum portfolios.