For 3QFY2019, Aurobindo Pharma (APL), the company posted sales of `5,175cr
v/s. `4,269cr in 3QFY2018, a yoy growth of 21.2%. On the operating front, the
EBITDA margin came in at 19.2% v/s. 22.5% in 3QFY2018. YoY decline is on the
back of sales of certain high margin products in 3QFY18. Sequentially EBDITA
margins expanded by ~40bp. Consequently, the Adj. PAT came in at `732cr v/s.
`595cr in 3QFY2018, a yoy growth of 23.0%. We recommend our buy rating on
the stock.

Outlook and valuation: We expect Aurobindo to report net revenue CAGR of
~22% & net profit to grow at ~19% CAGR during FY2018-21E, due to inorganic
growth. Valuations of the company at 12.9xFY2020E are cheap V/s its peers and
own fair multiples of 17-18x.We recommend a Buy rating on the stock.

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