Financial Daily from THE HINDU group of publications
Friday, Jan 23, 2004
Financial Daily from THE HINDU group of publications Friday, Jan 23, 2004 |
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Markets
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Stock Markets Aurobindo Pharma shines on US hopes Deeptha Rajkumar
IN an otherwise volatile market, the stock of Aurobindo Pharma, a leading cephalosporins player, held firm amidst good volumes. The stock ended the day at Rs 387.85, up 5.47 per cent, with around 85,259 shares traded on the BSE. On the NSE, the stock closed at Rs 389.30, up 5.79 per cent, with around 3.18 lakh shares traded. According to market sources, the company's proposed regulated market foray and the recent preferential allotment of equity shares have fuelled interest in the counter. "The management expects regulatory filings to gather steam from January 2004 and US sales to commence towards the latter part of FY05," informed sources said. The company has tied up with the US-based Medapharmex for this purpose. Analysts maintain that Aurobindo has to date filed 20-22 DMFs in Europe and three DMFs in the US besides making one ANDA filing in the US. "The rate of filings in the US is expected to accelerate from January 2004 with two more ANDAs to be filed by this month end, following which the company has targeted one DMF and one ANDA filing every month," an analyst with a reputed domestic broking house said. Aurobindo expects USFDA inspection of its plant to be triggered around October 2004, following which sales to the US are expected to start. According to sources in the know, the management has indicated that its focus in the US would primarily be on formulation sales and bulk supply agreements would be entered only in rare cases. Another reason for the current optimistic view on the company is that the benefits from its Chinese operations are already beginning to reflect positively on its margins. "Aurobindo's 100 per cent Chinese subsidiary — Aurobindo Datong Pharma — began operations in October 2003 and achieved close to optimum capacity utilisation. The subsidiary will meet 50 per cent of the company's raw material requirements and also supply to its other arm — Aurobindo Tongling — in China. Sourcing from China is likely to lead to sizeable savings in raw material costs and boost earnings from FY04," an analyst said. Given the improvement expected in the company's financials, analysts expect the company to post a profit of Rs 250 crore for FYO5. "However, one will have to wait and watch how they tackle the US markets, only then will we see a re-rating in the stock," an analyst said.
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