Company Update : Aurobindo Pharma Ltd By Motilal Oswal Financial Services Ltd
Earnings miss due to lower operating leverage
* Aurobindo’s (ARBP) 1QFY26 sales grew 4% YoY to INR78.7b (our estimate: INR79.3b).
* Overall Formulation sales grew 7.4% YoY to INR69.5b.
* US Formulation revenue declined 1.9% YoY to INR34.9b (CC: -4.2% YoY to USD408m; 44% of sales).
* Europe Formulation sales grew 18% YoY to INR23.4b (29% of sales).
* Growth Markets sales rose ~9% YoY to INR7.7b (10% of sales).
* ARV revenue increased 55% YoY to INR3.6b (5% of sales).
* API sales declined 16.1% YoY to INR9.2b (11.6% of sales).
* Gross margin (GM) contracted 60bp YoY to 58.8% due to a change in product mix.
* EBITDA margin contracted 200bp YoY to 20.4% (our estimate: 21.7%), led by lower GM and increased employee costs (+145bp YoY as a % of sales).
* EBITDA was down 5% YoY at INR16b (our estimate: INR17.2b).
* PAT declined 8.5% YoY to INR8.3b (our est.: INR9b), led by higher depreciation/tax.
Other key highlights:
* Received final approval for 14 ANDAs (including 1 ANDA previously tentatively approved, now receiving the final approval) from the USFDA.
* CC growth in Europe was 9%.
* API sales were impacted by pricing pressure and geo-political tensions.
* ARBP is on track to supply biosimilars to EU markets from 3Q/4QFY26 onward.
* The company would be filing its first biosimilar in FY26.
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