Auro in concal spoke about price erosion in key products in US market citin hyper competition. This remains a key overhang on all US centric pharma majors. Key is how quickly they foray into differentiated products as stated in its AR 2016.
Aurobindo Pharma may face the brunt of suspension call -
How much will be the impact of this? Is it available anywhere which are these 100 drugs.
Aurobindo Pharma dips on USFDA procedural observations on Hyderabad unit
The stock dipped 4.7% to Rs 633 on BSE in late noon deal.
Management has clarified that this is not data integrity but procedural issues. However being a novice and not understanding the Pharma space completely for the time being seeing the risk of my capital invested have exited the counter with avg loss of 4% and moved my bet to Ajanta in the Pharma space.
@Nabendu you should not jump from one company to other. What was the reason why you owned a part of aurobindo? This is a wonderful platform to learn. Upload your portfolio and let the stalwarts here give you advice. Hitesh sir Donald sir and everybody here is very helpful. I also started like this 3 years back.
Disc. Not invested in ajanta or aurobindo
started investing in stocks just 4 months ago . Im still a really novice to understand businesses and finding moats like many other and the current market doent give me enough opportunity to find picks dirt cheap. Ill share my portfolio in one of the respective threads and let you know . For the specific stock I picked up Aurobindo around a month or two ago when the price was around 660 . The reason for investment was while the market was at almost all time highs the pharma sector wasnt performing well . Why Aurobindo ? Cause of the stake RJ holds and being a market leader as well as the lucrative price it was trading at. Why i exited ? I said im a novice and pharma is a complicated space to understand. While the company gave clarifications I do not want my money to erode completely after seeing the Divis fiasco . While this could be the best opportunity to buy I can be proven wrong by the market if they take the 6 procedural observations as a red flag
Why Ajanta ?
Firstly VP taught me to invest in proven businesses and surely their management is one of the best. Bdw I live very close to the AP Head Office which itself is in a small Industrial Estate area surrounded by resedential area in Western Suburbs of Mumbai. The way the company has grown from I remember in 2006-07 when price was around 50 to 60 to the current levels ( maybe i miss a bonus/stock split during the years ) speaks volumes about the company. Their US exposure is still very limited compared to other biggies and well their entry into the US could be the next stage of growth for the company . Considering the positive future developments + Motilal Oswals recent report on AP invested. Was also interested in NATCO but the current sky rocketed share price does not give me comfort level. Ill link my portfolio here in sometime
@hitesh2710 sir, How bad is procedural improvements observation?
I was of the impression that since there is no data integrity issues , these usfda observations will be minor.
I am not a pro but my opinion is as follows. At CMP Auro is available at a very reasonable valuation of 13.6x TTM consolidated earnings. The stock is being hit by general Pharma sector slowdown. All Pharma cos are at lows. Sectorally Auro is best poised for growth in the long term. Short term pain may continue but given that Hyderabad plant observations are procedural and given the pipeline of generic products growth in EPS is for sure.
Discl not invested, but tracking for prices to trim
valuation indeed looks cheap . But there are few negatives which keeps stock at low
- increased competition for generic products leading to price erosion in us market (sun pharmas us subsidiaryTaro reported very bad earnings this quarter)
- FDA observations on two plants which may delay approvals for drugs
Positives outweigh risks – time to accumulate
Q4 2017 Result Update.
Aurobindo Pharma looks to sell cancer drugs in the US by year end
Met someone senior who used to work there till 2 months back. Did not get any positive vibes on company culture. May be his own personal experience but this person, after several years at Aurobindo, just wanted to get out. Indirectly he has been cautioning me when I was buying at higher levels.
Discl:: No current holding.
Cost of Interest: 2.16 %
Red Flag or Salute to the CFO?
How can some company have such low costs interest rates. Either they’re gonna give away chunk of company or wht?
is it possible that the debt is taken from US banks by Aurobindo’s USA subsidies Hence the rate of interest is low
Aurobindo has foreign currency loan