Aurobindo Pharma Limited Q1 FY23 Earnings Conference Call Insights

Key highlights from Aurobindo Pharma Limited (AUROPHARMA) Q1 FY23 Earnings Concall

Q&A Highlights:

• [00:08:34] Prakash Agarwal of Axis Capital asked about the price erosion trends. Ram Prasad Chairman replied that the company is seeing some kind of tapering and believes the price erosion in 1Q23 vs 4Q22 is 2% and with shelf stock adjustment it’s closer to around 3%.

• [00:09:12] Prakash Agarwal of Axis Capital enquired about growth not picking up in injectibles. Yugandhar Puvvala CEO of Eugia Pharma answered that in US the growth was 16%. The overall growth is in single digit at the global level. The company added, it’s confident of hitting double digit growth for FY23.

• [00:09:53] Prakash Agarwal of Axis Capital also asked about the update on company’s outlook of doubling the business in next two years. Ram Prasad Chairman clarified that the company is still on track to hit the guidance for FY24 of $650-700 million.

• [00:10:41] Prakash Agarwal of Axis Capital asked about gross margin and its outlook going forward. S. Subramanian CFO answered that it will be the same 3%. AUROPHARMA believe going forward it must be in this range in the coming quarter and probably there must be softening coming in 3Q.

• [00:11:59] Prakash Agarwal of Axis Capital also asked about EBITDA margin outlook. S. Subramanian CFO said that even though it look like low in 1Q23, the company had additional expenditure of around INR60 crores. Going forward that additional expense won’t be there.

• [00:17:00] Shyam Srinivasan with Goldman Sachs asked about the Europe business update. S. Subramanian CFO answered that Europe business is stable and growing. In 1Q23 there was 6% growth and 4Q22 was 7% growth. The markets are about 0-3% growth. AUROPHARMA is expecting 5-8% growth YonY.

• [00:21:46] Praveen Kale asked about the stock price as it’s not appreciating much as expected and what it means to retail investors. S. Subramanian CFO said the company cannot comment about share price, but in terms of performance, AUROPHARMA has given a clear roadmap of where it is heading.

• [00:34:31] Surya Patra of PhillipCapital asked about the status of the PLI Project. S. Subramanian CFO replied that the project has already started and the company expects to install the entire thing by about 2Q23 and then do the pilot batches etc. The completion is expected by 4Q24 and commissioning by April 1, 2024.

• [00:36:35] Nitin Agarwal from IDFC asked about the update on the China business. Ram Prasad Chairman answered that the plant was completed and the company has taken 11 exhibit batches and the filings will start from Oct. onwards. In 2024, AUROPHARMA expects commercials to start in China.