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March 3, 2011 WWW.3MTEAM.IN

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EQUITY RESEARCH REPORT

INDEX DETAIL

NSEX 18489

TY 5536

DUSTRY BIOTECH & PHARMA

HAREHOLDING HOLDING

(%)

ROMOTERS 56.89

OVT/BANKS/FII 0.82

F 6.62

NSURANCE COMPANIES 2.79

IS/NRI/OCBS/FOREIGN 24.24

ORPORATE BODIES 1.96

ENERAL PUBLIC` 6.68

SCRIP DETAIL

CAP ( CRORE) 5061

OK VALUE 65.80

WK H/L 1376/156

VIDEND YIELD 0.58

bt/Equity ratio 1.46Ratio 8.66

(RS) 1.0

E CODE 524804

E CODE AUROPHARMA

SHAREHOLDING PATTERN

BUY

CMP - 17

TARGET - 28

AUROBINDO IN BRIEF

AUROBINDO PHARMA was born of a vision. Founded in 1986 by

Mr. P.V.Ramaprasad Reddy, Mr. K.Nityananda Reddy and a

small, highly committed group of professionals, the company

became a public venture in 1992. It commenced operations in 1988-

89 with a single unit manufacturing semi synthetic penicillins

(SSPs) at Pondicherry.

Aurobindo Pharma Limited, headquartered at Hyderabad, India,

with a consolidated revenue of `36513 million, manufacture

generic pharmaceuticals and active pharmaceutical ingredients.

The Company's manufacturing facilities have been inspected and

approved by several leading regulatory agencies such as US FDA,

UK MHRA, WHO, Health Canada, MCC South Africa, ANVISA

Brazil. Approximately 53.6% of the gross consolidated turnover

comes from the formulations business. The Company's robustproduct portfolio is spread over 6 major therapeutic/product areas

encompassing Antibiotics, Anti-Retro virals, CVS, CNS,

Gastroenterological, and Anti-Allergics, supported by an

outstanding R&D set-up. The Company has marketing footprints in

over 125 countries and employs over 8,000professionals.

Aurobindo Pharma has identified international operations, catering

to over 100 countries, as a major engine of growth and expanding

global network of marketing and manufacturing operations across

countries like China, Brazil, Japan, Netherlands, South Africa,

Thailand, UK, USA, Russia, Netherlands and many more which

will further expand its international reach.

Vision - To become Asia's leading and one amongthe top 15generic pharma companies in the world by 2015.


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Aurobindo Pharma slumps as US

drug regulator bans imports from

Hyderabad unit

Aurobindo Pharma indicated that its Unit VI

Cephalosporin facility at Chitkul Village,

Hyderabad was audited by the US Food and

Drug Administration (USFDA) in December

2010. Subsequently, Aurobindo has sent the

compliance report to USFDA, which is under

review. But, subsequent to the audit findings,

USFDA has imposed an import alert on its

website for detention on Aurobindo's Unit VI

products.

Aurobindo is trying to establish contact withUSFDA to understand the correct

interpretation of such an alert i.e. whether it

relates only to sterile products and/or oral

products manufactured at Unit VI. Aurobindo

said it will ascertain the scope of this import

ban alert and request USFDA for a face to face

meeting at the earliest and present the facts

with a view to comply with all the USFDA

regulations and bring back the Unit VI to

active operations for US market at the earliest.

Until then, Aurobindo indicated that, the

development will impact any further shipment

from unit VI to US market.

Aurobindo Pharma receives USFDA

Tentative Approval

Aurobindo Pharma has announced that the

company has received tentative approval from

the US Food & Drug Administration to

manufacture and market Venlafaxine

Hydrochloride Extended-release Capsules

37.5mg, 75mg and 150mg.

The tentatively approved ANDA No. 200834

for Venlafaxine Hydrochloride Extended-

release Capsules 37.5mg, 75mg and 150mgwas filed with Paragraph IV certification and

is currently under litigation in the United

States District Court for the District of New

Jersey [Wyeth LLC v. Aurobindo Pharma

Limited, and Aurobindo Pharma USA Inc.,

Civil Action No. 10-CV-02084]. The product

will be launched after the litigation settlement.

Aurobindo now has a total of 132 ANDA

approvals (99 Final approvals and 33 Tentative

approvals) from USFDA.

RECENT ANNOUNCEMENT ON 24 FEB

POSITIVE FOR LONG TERM BUT MAY NEGATIVE IN SHORT TERM

On account of loss of revenue from Unit VI and cost of resolution. Though the stock has already

corrected more than 27% in the past days, the import alert will continue to weigh on valuations till

further clarity. We continue to remain positive on ARBPs long-term story; however, in the short

term, the stock may remain under pressure.


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2008 2009 2010

25569 31677 36513

2008 2009 2010

2385 1003 5634

27%

34%

39%

REVENUE(IN

MILLION)

2008

2009

2010

26%

11%63%

PAT( IN MILLION)

2008 2009 2010

2008 2009 2010

35.83 15.49 89.12

2009 2010

1635.1 676.9

25%

11%64%

EPS Basic ( RS.)

2008

2009

2010

71%

29%

TERM LOAN (IN

MILLION)

2009 2010


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2009 2010

230.9 328.2

2009 2010

90% 100%

2009

2010

230.9328.2

BOOK VALUE

20092010

90%

100%

DIVIDEND(%)

DIVIDEND(%)

2009 2010

4.6 21.2

2009 2010

8.0 34.7

18%

82%

ROCE(%)

2009 2010

19%

81%

ROE

2009 2010


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Key financials

Rs. In millions

PARTICULARS 2009 2010 2011E 2012E

Sales 28852 33196 38175 43901

Profit 6904 11750 17625 26437

EPS 19.86 83.16 21.6 24.0

PE Ratio 16.1 10.7 13.4 12.04

Key Ratio

`Mar 2010 Mar 2009 Mar 2008 Mar 2007 Mar 2006

Debt-Equity Ratio (x) 1.46 1.79 1.98 2.02 1.61

Current Ratio (x) 1.28 1.44 1.70 1.62 1.32

Fixed Assets (x) 1.64 1.72 1.63 1.57 1.38

Inventory (x) 3.64 3.74 3.51 3.93 3.95

Debtors (x) 3.90 4.02 3.94 3.67 3.23

Operating Profit Margin (%) 27.14 9.30 18.17 17.72 12.31

Gross Profit Margin (%) 25.11 6.32 15.43 13.82 8.18

Cash Profit Margin (%) 19.79 6.01 13.32 13.62 7.13

Return On Capital Employed (%) 21.88 4.94 12.03 11.36 6.83

Return On Net Worth (%) 36.59 5.10 23.62 23.68 6.25


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Balance Sheet

Rs.In millions

Particulars 2010 2009

Sources of funds

Shareholders fund 19143 13208

Loan fund 19447 21146

Deferred tax liability 950 784

Total 39542 35139

Application of funds

Fixed asset 15448 11588

Investment 3709 2694

Current asset 26783 26060

Current liability 6398 5203

Total 39542 35139

PROFIT & LOSS STATEMENT

Rs. In. millions

PARTICULARS 2010 2009 % change

NET SALES 32522 27948 16.36%

PBT 7101 1570 352%

PAT 5257 1285 309%

DIVIDEND(Proposed)(Rs.)

3 1.5 100%

DIVIDEND (Interim) (Rs.) 3 3 -

EPS ( Diluted) (Rs.) 83.16 19.86 318%


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CASH FLOW STATEMENT

Rs. In millions

PARTICULARS 2010 2009

NET CASH FLOW FROM

OPERATING ACTIVITIES 3446 48.8

INVESTING ACTIVITIES (4062) (3017)

FINANCING ACTIVITIES (141.5) 1609

CASH AND CASH

EQUIVALENTS-

OPENING BALANCE 790 2093

CLOSING BALANCE 40.9 733.4

Purchase of investments include investments made in subsidiaries (692.7)

RECENT NEWS

APPROVAL FROM USFDA

Received USFDA approval to manufacture vancomycin injections at its new facility in Bangalore.

The company plans to manufacture all its approved sterile injectables from this facility and subsequently

launch them in the US.

The drugmaker expects shipments of vancomycin injections, which fall under its speciality business unit

Agila Specialties, to begin this month, it said. Vancomycin is used to treat bacterial infections inside the

intestine.

With unconstrained capacity, AUROBINDO are now well positioned to take advantage of the significant

opportunity for injectable products in the US market

The company expects its speciality business to grow 45% in 2011 to Rs 1,000 crore, it said last week

adding the consolidated revenue would grow 25% to Rs 2,200 crore.


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RESULT ANALYSIS

Earnings will continue to be robust through increasing contribution

from Pfizer deal and commencement of operations at Hyderabad SEZ

Aurobindo Pharmas 22.7 per cent returns in the current financial year have outperformed the 1.3 p er cent rise

in the Sensex during the same period. The surge comes on the back of inking a supply and licensing agreement

with Pfizer in March 2010, resulting in an improved earnings outlook for Aurobindo.

In the US markets Aurobindo filed 15 ANDAs and 3 DMFs during the quarter and received FDA approvals for

Anti hypertensive drug Losartan Pottasium and its combinations too.

Going ahead, analysts at 3MTEAM believe that the traction to earnings will continue through

increasing contributions from Pfizer deal and commencement of operations at Hyderabad SEZs unit

III. The increased product ramp up from Pfizer deal will further increase utilization levels at the SEZ

and savings on taxes will further lead to incremental earnings.
http://www.smartinvestor.in/company/comp_4666-Aurobindo_Pharma_Ltd.htmhttp://www.smartinvestor.in/company/comp_4666-Aurobindo_Pharma_Ltd.htmhttp://www.smartinvestor.in/company/comp_4666-Aurobindo_Pharma_Ltd.htm


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BASED ON TECHNICAL ANALYSIS

BUY

BUY

3M TEAM

BUY

ABOVE

185

SL

178TARGET

220


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ANALYST NAME Deepak Ostwal

3M TEAM Research TEAM

For any suggestions or query, please write us &

You can also contact us at +91-9301302732-98260 26106

Invest Smartly with 3M TEAM

Or Visit us at www.3mteam.in

Our Corporate Office:

3M TEAM

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Opp Central Mall

Indore, MP452001

______________________________________________________________________

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DISCLAIMER: Stock trading involves high risk and one can lose Substantial amount of money. The

recommendations made herein do not constitute an offer to sell or solicitation to buy any of the

Securities mentioned. No representations can be made that recommendations contained herein will

be profitable or they will not result in losses. Readers using the information contained herein are

solely responsible for their actions. The information is obtained from sources deemed to be reliable

but is not guaranteed as to accuracy and completeness. The above recommendations are based on

FUNDAMENTAL ANALYSIS only.
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