Home » Stock » Aurobindo Pharma hits 31-month high as Citi bets on the stock

Aurobindo Pharma hits 31-month high as Citi bets on the stock

Aurobindo Pharma stock hit 31-month high on April 26, rising 5 percent intraday after global research house Citi reiterated stock as one of its two top picks in Indian pharma space.

The stock rallied nearly 43 percent in last nine months. It closed at Rs 830.10 on the BSE, up 4.34 percent after hitting an intraday high of Rs 836.95, the highest level since October 2016.

Novartis disclosed additional details on Sandoz’s US business that is to be divested to Aurobindo Pharma.

“These additional details on Sandoz business added comfort on proforma numbers,” Citi said, and hence it reiterated Aurobindo as one of the two top picks in Indian pharma.

In September 2018, Aurobindo had signed a definitive agreement to acquire certain assets from Sandoz Inc, USA, a Novartis division for a consideration of $900 million.

This proposed acquisition comprised dermatology business and a portfolio of oral solid products along with commercial and manufacturing infrastructure in the US.

The brokerage said Novartis indicated CY18 revenue and operating profit of divested business at $1,174 million and operating margin 25 percent. “Divested business has net assets of $796 million and includes inventory of $188 million.”

These numbers imply a meaningful buffer on 2018 EBITDA of $294 million, Citi said.

The deal is expected to close in CY19 subject to approvals.

[“source=moneycontrol”]

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