Aurobindo pharma jumps 3% as its china facility gears up for Europe supply

Shares of the leading pharmaceutical stock rose 3 percent after the company announced the commencement of product supplies to Europe from its newly established China facility. This marks a significant step in the company’s global expansion strategy, following regulatory approvals and the ramping up of production at the plant.

Price Variation

On Monday, shares of Aurobindo Pharma Ltd climbed to an intra-day high of Rs.1,172.00 apiece, marking a 3.5 percent increase from its previous close of Rs.1,131.35 each. The stock later trimmed some of its gains, before closing at Rs.1,168.00 per share.

Global Expansion 

Aurobindo Pharma is set to begin supplying pharmaceutical products to Europe from its newly established China facility in April 2025. This follows the successful launch of operations at the plant in November 2024 and the acquisition of necessary regulatory approvals from European authorities.

Key Developments

Operational Timeline: The China facility is gradually increasing production, with billing expected to begin in April 2025, primarily focusing on European markets. CFO Santhanam Subramanian highlighted that this is a crucial step in Aurobindo’s global expansion.

Regulatory Approvals: The company has obtained the required European regulatory approvals, enabling it to begin supplying products. It is also preparing for potential inspections related to the U.S. market, signaling further expansion plans beyond Europe.

Growth Expectations: Aurobindo Pharma anticipates significant growth from the China facility in the next two to three years. While specific revenue projections for the first year were not disclosed, Subramanian expressed confidence that the facility will contribute substantially to the company’s revenue as operations stabilize.

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Biologics Segment

Alongside its generic pharmaceuticals, Aurobindo Pharma is placing a strong emphasis on its biologics business, which is projected to reach a significant milestone between 2028 and 2030. The company currently has three approved products and plans to commercialize at least seven biosimilars by 2027-28. Key products in this segment, such as Denosumab and Omalizumab, are expected to greatly strengthen the company’s position in the market.

Financial Performance

Turning towards the financials of the company, Aurobindo Pharma Ltd reported Q3 FY25 revenue of Rs.7,979 crore, rising 8 percent remarkably from Rs.7,352 crore in the same quarter last year. However, Profit After Tax (PAT) decreased by 10 percent to Rs.846 crore, from Rs.940 crore in the same period. 

Ratio Analysis

The Return on Capital Employed (ROCE) of the company stands at 13.75 percent, while the Return on Equity (ROE) is 11.6 percent. 

The company’s Price-to-Earnings (P/E) ratio is 18.61, which is higher than the industry average of 39. Additionally, the company maintains a solid current ratio of 3.24 and a low debt-to-equity ratio of 0.27. 

Written by – Siddesh S Raskar

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