JM Financial puts buy on Aurobindo Pharma

JM Financial has upgraded Aurobindo Pharma to ‘buy’ with a target price of Rs207 mainly due to attractive valuation post the recent stock correction. The US FDA has lifted the February ’11 imposed ban on non-sterile products from its Unit VI in Hyderabad. It said the company expects to re-launch nine oral ceph products. Prior to the ban, it used to generate sales of c.$33 million from these products.

It intends to recover 60-70% of its original market share over the next 12 months. It sees reasonable opportunities in at least some of these products which have seen better pricing. Of the six oral ceph molecules (cefadroxyl, cefdinir, cefpodoxime, cefuroxime, cefprozil, cephalexin), it expects cefdinir to be the most interesting and important opportunity for Aurobindo.