Aurobindo Pharma Ltd Q1 FY23 Result Updates. Strong revenue growth led by robust growth in ARV segment.

Aurobindo Pharma Ltd Q1 FY23 Result Updates.
Strong revenue growth led by robust growth in ARV segment.

Aurobindo Pharma reported a net profit of Rs. 520.5 crores, down by 32.4% YoY from Rs. 770 crores in June 2021.
Aurobindo reported revenue growth of 9.4% YoY and 7.3% QoQ to Rs. 62.36 bn in Q1FY23 after a continuous decline in growth, on a YoY basis, over the last few quarters. This improvement was the result of a return of growth in the US, strong growth in Growth markets, and robust growth posted in Anti-Retroviral (ARV) segment.
Gross Profit Margin declined 479 bps YoY and 284 bps QoQ to 53.7% in Q1FY23 due to increased raw materials costs, YoY and QoQ, in Q1FY23. EBITDA Margins for the quarter declined 574 bps YoY (-130 bps QoQ) to 15.5% and EBITDA declined 20.2% YoY (-1.0% QoQ) to Rs. 9.65 bn in Q1FY23.
R&D expenses stood at Rs. 3.10 bn or 5.0% of the revenue in Q1FY23. Net organic Capex was USD 61.0 mn and an average forex rate was Rs. 76.98 in Q1FY23. Net cash from investments was USD 337.0 mn as of Q1FY23 while the average finance cost was 1.8% due to running multiple currency loans. FCF was USD 121.0 mn, out of which nearly USD 53.0 mn was spent on Capex, another USD 8.0 mn on the PLI project, USD 34.0 mn on dividends, and USD 22.0 mn for the acquisition of the business in Q1FY23. Due to robust FCF, the company was able to reduce gross debt to USD 277.0 mn as of Q1FY23 from USD 313.0 mn as of Q4FY22.

Growth in the US was driven by forex gains strong growth in injectable revenue.

Aurobindo Pharma USA’s revenue increased 5.0% YoY to USD 214.0 mn in Q1FY23. The revenue for Auromedics, Injectable business in the US, increased at a higher pace of 16.0% YoY to USD 71.7 mn in Q1FY23.
Growth markets include INR 456.0 mn of domestic formulations revenue in Q1FY23. The US segment (47.6% of total revenue) revenue increased at 10.8% YoY (+8.9% QoQ), Growth Markets (6.9%) revenue rose by 30.8% YoY (+10.0% QoQ), and ARV segment revenue (6.1%) increased at a strong pace of 28.1% YoY (+60.9% QoQ) in Q1FY23. At the same time, API revenue (14.5%) increased at 11.7% YoY (-0.7% QoQ) while Europe formulation revenue (24.8%) declined at 2.2% YoY (+0.5% QoQ) in Q1FY23. The growth in the US was partially driven by forex gains and partly due to strong growth seen in injectable revenue, YoY, in Q1FY23. Injectables revenue now forms 26.3% of the US revenue vs. 24.6% it was in Q1FY22 and 26.8% it was in Q4FY22. Europe revenue was affected by unfavorable currency movement, as on a constant currency basis it grew at 5.9% YoY to EUR 189.0 mn in Q1FY23. Growth markets performance was driven by strong growth in Canada.

The shares of Aurobindo Pharma Ltd are trading at Rs. 555.75, down by 2.38%.

Valuations:

The return on equity (ROE) is 11.7% for the quarter ended June 2022. The price-to-earning (P/E) ratio stood at 12.9. The return on capital employed (ROCE) for the company is 12.9%. The price to book value of Aurobindo Pharma Ltd is 1.31. The EV/EBITDA is 7.18. EPS for the quarter is Rs. 40.9.