Aurobindo Pharma revenue, profit slide in Q2; shares extend losses

Hyderabad-headquartered Aurobindo Pharma came up with its financials for the quarter ended September 30 with both revenues and net profit shrinking year-on-year even after factoring out the impact of a key business disposal.

The company’s consolidated net profit declined 13.7% to Rs 697 crore compared with the year-ago period. On a sequential basis, net profit slid 9.5%.

This was partly due to the disposal of its Natrol unit. However, even after factoring out the impact of the asset that had contributed to the financials last year, Aurobindo recorded lower business activity. Consolidated net profit after discounting Natrol declined 2.1% year-on-year.

Consolidated revenue declined 8.3% to Rs 5,941.9 crore compared with the same period last year but rose 4.2% sequentially compared to the first quarter. Factoring out the impact of Natrol disposal, revenue declined 2.1%.

The company’s share price has corrected sharply by a third since May. It declined 2.55% to close at Rs 672.4 apiece on the BSE in a strong Mumbai market on Monday.

Aurobindo Pharma Q2: Other Highlights

1) EBIDTA before forex and other income stood at Rs 1,186.7 crore.

2) EBITDA margin was 20%, compared with 21.2% in the first quarter and 21.3% a year earlier.

3) R&D spend was Rs 399 crore, 6.7% of revenue. This is up from 6.3% for April-June.

4) Received final approval for seven ANDAs including two injectables from the US FDA.

5) US formulations revenue grew 6.9% YoY to Rs 2,967.6 crore.

6) Europe formulation revenue stood at Rs 1,662 crore, an increase of 9.7%.

7) Revenue from growth markets declined 13.5% YoY and grew by 17.3% QoQ to Rs 386.3 crore.

8) API revenue for the quarter was at Rs 780.6 crore versus Rs 829 crore in the corresponding period last year.

9) The board declared an interim dividend of Rs 1.50 per share.

Aurobindo Pharma management commentary

N. Govindarajan, managing director of the company, said business performance across most of the segments was robust, aided by a gradual pick-up in demand and gradual market share gains.

“However, profitability was impacted by cost pressure on some of the key raw materials as well as higher logistic costs,” he said.

Govindarajan said Aurobindo is leveraging the opportunity to streamline its working capital to improve cashflows and will continue to see the benefits of these measures over the next few quarters.

“We are pleased with the steady progress in our complex generic product development and look forward to executing the same to enhance our business growth and profitability.”