Drug maker Aurobindo Pharma appears to have convinced analysts with its higher growth guidance and better margin outlook.
Brokerages Edelweiss Securities and Angel Broking have recommended their clients to buy the shares of the pharmaceutical company as they expect the firm's revenue to expand in coming quarters following US Food and Drug Administration's (USFDA) approvals for its products.
"We met Aurobindo management. The company sees higher growth visibility from incremental approvals in US, which along with potential FDA resolution would aid higher margins. The company has received eight approvals that would aid growth in the US. There is a good visibility of four to five product launches in injectibles space," Manoj Garg, analyst with Edelweiss Securities, wrote in his note to clients on Wednesday.
The brokerage has revised upwards its earnings estimate for Aurobindo Pharma and upgraded its rating to 'buy' from 'hold'.
While Angel Broking has maintained its earnings estimate it has recommended its clients to 'accumulate' Aurobindo Pharma shares with a target price of Rs 156 per share.
"We see scope for margins improvement for Aurobindo from higher capacity utilisation led by incremental launches in US and resolution of import alert in Unit-VI that has impacted operating margins of the company. This along with incremental launches in injectibles will enable the company to go back to 16-18% margins by 2013-14 from 13.5-14.0% in 2012-13," Garg said.
At 10:03am, Aurobindo Pharma shares were at Rs 142.75 on the National Stock Exchange (NSE), up 3% from previous close.
