Aurobindo Pharma: Gaining from lifting of import alert by US FDA

The lifting of the import alert by the US FDA at the manufacturing unit VI of Hyderabad-based Aurobindo Pharma led to the drug company's stock closing 11.7% higher today. This is a significant upside move for the stock, which has depreciated over 30% since the beginning of 2013.

Resolution of the FDA issue pertaining to the unit VI cephalosporin facility was one of the key positive factors watched out for the company. It has paved the way for resumption of exports of 9 products to the US market.

The import alert was imposed in February 2011 and prior to the alert, the unit was having annual US sales of $ 33 million for the said products. In the FY14, the company is expecting the unit to recover 70-80% of the revenues made by it before the import alert.

Today, more number of analysts are bullish on the stock compared to what they were at the start of the year. The stock now has 21 buy, one sell and two hold recommendations with a target price of Rs 232.7. Three months ago, it had 14 buy, four hold and six sell recommendations with a target price of Rs 200.6.