Aurobindo flares up on bulk deal

Shares of Aurobindo Pharma shot up by another 12.3 per cent on Tuesday after another bulk deal, this time amounting to Rs 14.68 crore, was announced on the NSE by a leading foreign institutional investor. Goldman Sachs Investment (Mauritius) reportedly bought 2.8 lakh shares of Aurobindo for Rs 524.30.

The stock of the Hyderabad-based drug maker ended up at Rs 552, up by around Rs 110 or 25 per cent in the last two trading sessions. On Friday, the counter had seen a large bulk deal with Templeton on the selling side and Fidelity on the buying side.

"It started after reports of a take-over bid by the Israel-based drug manufacturer Teva yesterday," said one broker, "but after news came of the bulk deal on Tuesday, it just kept going up."

Aurobindo issued a clarification to the BSE yesterday pointing out that it had not been negotiating any such equity-transfer with the Israeli company. Market sources also pointed out that the current rally in the company's stock has come at an opportune time for the Indian drug-maker.

According to the company's annual report, it had a debt of Rs 829 crores at the end of March 2005 and had shelled out around Rs 14. 13 crores or nearly four-times its net profits, as interest payments in the September quarter.

The company is also reported to be scouting an appropriate investor to pump in some capital for retiring some of its debts, but has reportedly been finding it difficult to find suitors at Rs 500 per share, the price allegedly demanded by the promoters.

"The current escalation in prices makes a Rs 500-per-share deal more palatable for anyone who wants to invest in the company," a broker pointed out.

The company however denied it was looking at debt-restructuring. In an emailed response, a senior company executive said that the debt had been caused by investments in research and development.