Aurobindo Pharma’s profit rises on steady domestic demand 

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(Reuters) -Indian drugmaker Aurobindo Pharma reported a 3.8% rise in profit on Wednesday, helped by steady domestic demand, especially for its anti-retroviral drugs for HIV infections.

Consolidated net profit in the second quarter rose to 8.48 billion rupees ($96.48 million) from 8.17 billion rupees a year ago.

Revenue rose 8.37% to 82.86 billion rupees.

For further highlights on earnings, click here 

KEY CONTEXT

India’s generic drugmakers get a significant portion of their revenue from North America, where fierce competition has led to lower prices, weighing on their margins. The U.S. contributed 43.9% to Aurobindo’s quarterly consolidated revenue, according to the company’s presentation.

U.S. President Donald Trump had levied tariffs on import of branded and patented drugs from October, unless the companies were building a plant in the country. However, the policy had then excluded generic drug imports, offering a reprieve to the sector.

Aurobindo Pharma has also gained from strong demand for its anti-retroviral drugs to treat HIV patients.

Still, intense competition in the North American generics market continues to pressure drugmakers’ margins.

Larger rivals Cipla and Dr Reddy’s posted weak sales in the region this quarter.

PEER COMPARISON TABLE: 

    Valuation (next 12 months) Estimates (next 12 Analysts’ sentiment

months) 

  RIC PE EV/EBIT Price/Sal Revenue Profit Mean rating # of Stock to Div yield

DA es growth (%) growth (%) analysts price (%)

target

Aurobindo <ARBN.NS 16.21 9.02 1.83 8.30 11.68 BUY 26 0.87 0.35

Pharma Ltd

Cipla Ltd 24.38 15.59 3.79 7.48 0.18 BUY 37 0.90 0.86

Zydus 22.87 14.78 3.94 6.01 -6.98 HOLD 26 0.95 1.12

Lifesciences

Ltd

Alembic 23.11 14.26 NULL 9.99 22.00 BUY 12 0.90 1.19

Pharmaceutic

als Ltd

STOCK PERFORMANCE CHART:

($1 = 87.8950 Indian rupees)

(Reporting by Mridula Kumar in Benagluru; Editing by Leroy Leo)