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Aurobindo Pharma Ltd impressed the Street with a good recovery in sales in the US during the September quarter. The US revenue in the quarter increased by 6.9% YoY to ₹2,967.6 crore, accounting for 50% of consolidated revenue.
The stock saw gains of more than 6% in morning trade on Tuesday.
US sales had remained soft in Q1 keeping Street concerns elevated on increasing pricing pressure. Analysts at Yes Securities said US revenues growth was aided by the acquisition of brands and abbreviated new drug applications (ANDAs) in Q1.
Aurobindo Pharma also did well with filings for new products. It filed 27 ANDAs, including five injectables with the US FDA in Q2FY22, the highest ever ANDA filings in a quarter by the company. The company has a strong pipeline of products and is growing its niche product range as injectables. There are about 54 products in the injectable space awaiting final approval for launch in the US. The company’s pipeline for other products too remains strong with 171 products pending approvals in the non-injectables space.
Europe remains the second most important region for Aurobindo to drive its sales growth. On the positive side, Europe revenue in Q2FY22 increased by 10% YoY to ₹1,662 crore, accounting for 28% of consolidated revenue. The revenue growth was well supported by performance in the growth markets too. Analysts said that Europe and growth markets also grew 5% and 17% respectively QoQ with a gradual pickup in demand.
ARV business, however, was down 51% sequentially affected by higher inventory stocking on advance procurement in last year. Even Active Pharma Ingredients or API business performance was slightly soft with revenues at ₹781 Crore slightly lower than ₹812 Crore in the previous quarter.
The rising input costs also remained a dampener with margins at 20.0% coming lower than 22.1% in the year-ago quarter and 21.2% in the previous quarter.
In this backdrop net profits at ₹696.7 crore also missed expectations. For instance, analysts at Motilal Oswal Financial Services expected net profit of ₹802 crore.
Nevertheless, the company’s reported revenues at ₹5941.9 crore remained marginally higher than ₹5922.7 crore expected by MOFSL
With the decent US and Europe performance, the street confidence in Aurobindo also was lifted up. Analysts expect the cost pressure also to subside by Q4 and US recovery was noticeable.
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