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Wednesday, May 05, 2004

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Value buying propels Aurobindo Pharma

Deeptha Rajkumar

Mumbai , May 4

REPORTS that its efforts to step up sales to the regulated markets are close to fructification saw the stock of Aurobindo Pharma gather strength on the bourses today.

The stock, which is close to its 52-week high on the bourses, has appreciated to its current levels from around Rs 375 a month ago.

Brokers maintain that apart from expectations of its efforts in the regulated market playing out, there is a belief that the company will report good numbers for the current fiscal. Analysts are looking at the company reporting around Rs120-130 crore profit on a consolidated basis. However, this is said to be a conservative estimate.

Aurobindo, which is largely known as a cephalosporins company, is all set to reap benefits of its backward integration initiatives. "As operating expenses, in preparation and maintenance of facilities in line with the US/EU markets standards, are already being absorbed in financials, commencement of sales would thus lead to a significant pick up in margins," an analyst tracking the company said.

While the company has reportedly filed 5 DMFs and 3 ANDAs in the US market to date, there is expectation that the company would have filed 12 ANDAs by December this year. "The US market initiatives should show some traction in FY-05," says Mr Prashant Nair of Edelweiss Capital.

According to him, with FDA approval for its facilities on the anvil and once the company's plans for the US markets fall into place, one could see a significant upside in exports to regulated markets. "This could change the financials of the company, completely," he added.

Yet, there are those who feel that with the company yet to find a firm footing in the formulations market, all these factors are a long-term driver. But even if sales do not commence by the second half of FY-05 as expected, analysts maintain that the company will definitely see a Rs 220-odd crore profit next year.

The stock ended the day at Rs 421.60 on the BSE, up 6.56 per cent with around 86,779 shares traded. On the NSE, the stock closed at Rs 423.45, up 7.15 per cent with around 2.44 lakh shares traded.

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