Saurabh Mukherjea says that the revenue and net worth is fraudulent. Its best not to be holding such companies.
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Alembic Pharma is another such company.
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Alembic isnt south indian. He also said company based in South India.
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So have we come to a conclusion about which fraudulent company Saurabh Mukherjea was talking about? Is it Auro or is it not?
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Very likely to be Aurobindo. If someone can check its cash conversion ratio it can be confirmed.
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Aurobindo cash conversion ratio is above 100%. This could be Caplin too which is based in Chennai. Marcellus PMS exited from Caplin Point in last year. But then Caplin ratios aren’t that drastically worse than Aurobindo and is at 85%.
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I exited Auro Pharma after watching Saurabh’s video. I was already not happy with their Realty business and after having lost capital in companies like Satyam, Gitanjali, Yes Bank, JP infra, PC Jewellers i did not want to wait and watch in this case.
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Even if revenues are flat for a couple of quarters, Aurobindo valuations seems cheap for the size of the company it is
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Lack of growth, US FDA observations and ED arrest are the cause of this valuation. Some contrarians are seeing opportunity in this. Risk averse investors should avoid this counter. If you really want to take risk then take small position only and don’t average down.
Contrarian takes, anyone? Perhaps one of the cheapest pharma stocks out there, certainly the cheapest large cap pharma stock. Whereas other large pharma stocks market cap is around 3x revenue, Aurobindo is ‘only’ about 1x.
Negatives are too many to count, so the question is not whether it’s a good company. The question is whether all the negatives are priced in or not? If they are, this can be a short term bounceback trade or a value trade.
If not, when does this reach ‘cigar butt’ category? Thoughts welcome.
Disc: A very small position initiated, will average down to a certain extent.
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One of the directors got involved in a shady deal at a personal level in an unrelated business(alcohol). How does this impact the day to day business of the company? Chronology nahi baith rahi
I would love for members to correct my understanding
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Director getting busted was the last nail in the coffin even before that quality wise things were kinda downhill.
United States Food and Drug Administration (USFDA) has issued Form 483 with 10 observations after the inspection of its unit IX, Gundlamachnoor facility
Aurobindo received Form 483 following an inspection of the company’s oral manufacturing facility in Jadcherla, India, outside of the city of Hyderabad. The report showed several quality control observations, but the company had promised to work with the FDA to get the issues resolved.(Unit 7)
Aurobindo’s active pharmaceutical ingredient (API) manufacturing facility in Hathnoora, India, with a total of 10 observations by the US regulator.
Aurobindo’s Unit XI was inspected by US FDA between July 25 and August 2, 2022. Network 18 accessed form 483 issued to Aurobindo Pharma’s Unit 11, Srikakulam
Discl: Exited around 520 range. Bought again as it fell below 450
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I am guessing the promoters need to pay off their debts somewhere else
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Will be interesting to track in upcoming days since the injectibles division is niche and demands higher valuation multiples as compared to the other business of Aurobindo.
Aurobindo Pharma share reacted negatively to FDA inspection report of its subsidiary Eugia and is down more than 10% of its recent high. However it is surprising to see no reaction to the news of sale of Eugia. Also the terms are not clear as there is a payment related to 20 years lease.
Anyone tracking it may share the development. Also VP veterans and people of pharmaceutical background are requested to elaborate for general boarders.
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Today I heard this about news on CNBC news channel. One of the analyst was mentioning that this could be a big trigger for Aurobindo , he mentioned that its a 15000 tonne capacity plant and India’s total yearly import is also 15000 tonnes. Is anyone in forum tracking this and confirm how much impact it can put on PNL and margins. Can it be a big trigger (I dont trust TV analysts much). Currently stock is trading at 21-22 PE and looks fairly valued.
Disclosure: Invested since 2015.