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COMPANY UPDATE: AUROBINDO PHARMA LTD
Date CMP Ratings Target Target Period % Expected Returns Key Financials(Cons) Total Income (cr) PAT (cr) EPS (Rs) Equity Capital (cr) Face Value

December 28,2009
For Private Circulation Only

Founded in 1986 by Mr. P.V.Ramaprasad Reddy, Mr. K.Nityananda Reddy. It commenced operations in 1988-89 with a single unit manufacturing semi synthetic 908.70 penicillins (SSPs) at Pondicherry. The company is the market leader in semi-synthetic POSITIVE penicillin drugs. It has a presence in key therapeutic segments like cardiovascular, 1070.00 Antivirals, Osteoporosis, gastroenterology, Diabetology etc. Over the years, the 6-8 months Aurobindo Pharma has evolved into a knowledge driven company. It is R&D focused, 17.8 has a multi-product portfolio with multi-country manufacturing facilities, and is becoming a marketing conglomerate across the world. The business model of Aurobindo Pharma is built around creating a significant FY07 FY08 FY09 FY10 E presence in the generics market. The company has found strong acceptance for its 2261.3 2435.9 3077.3 3900.0 products in key premium markets such as USA, Europe and growth markets such as 201.0 238.5 354.0 485.0 Brazil and South Africa.
37.4 44.3 65.8 90.1 26.9 26.9 26.9 26.9

Revenue Visibility Aurobindo Pharma Ltd aims to cross $2 billion in revenue over the next four years by March 2014, primarily driven by the strategic alliance with global pharmaceutical firm **FY09 EPS is excluding Fx Pfizer Inc. and improved formulations sales supported by additional capacities. The company expects to increase the contribution of formulations to total sales from 57% Valuation Summary FY06 FY07 FY08 FY09 now to 80%-85% over the period with increased focus on high-margin products in EPS (Rs) 13.08 37.4 44.3 65.8 regulated markets. We expect that the company would grow at a fast pace, on account Book value/Share (Rs) 152.96 166.08 209.06 230.87 of huge existing capacity, strong pipeline of regulatory filings and approvals and ROA % 2.59 5.73 6.56 2.37 continous product launches and improving capacity utilization.
5.0 5.0 5.0 5.0 ROE % 8.55 22.68 21.21 8.07 RoCE (%) Total Debt/Equty % Stock Data Market Cap (Rs cr) Dividend Yield TTM EPS TTM PE 52 week H/L Equity Capital (Rs cr) Book Value Face Value 4888.81 0.5 71.39 12.72 908.70/127.65 26.9 245.69 5 4.78 1.69 6.38 2.35 7.14 1.64 10.87 1.88

Alliance with Pfizer Aurobindo Pharma has entered into an in-licensing and supply agreement with Pfizer Inc for the supply of finished dosage products. Under the terms of the agreements, Pfizer has acquired rights to 39 generic solid oral dose products in the US and 20 in Europe, plus an additional 11 in France. These medicines, which cover a broad range of therapeutic areas including cardiovascular disease and CNS disorders, will be commercialised in the US through Pfizers Greenstone subsidiary. The deal will help Aurobindo Pharma to see steadier growth in its topline. The in-licensing income, besides the upfront payment and royalties, may also help improve cash inflows for the company. Besides this, the steady order inflows will also help it better utilise its manufacturing facilities. Under the agreement, Aurobindo would receive an upfront payment of $110 million (Rs509 crore) and also would enjoy revenue sharing over the next 15 years. Revenues from the Pfizer arrangement will start accruing from 2011-12 and the management expects it to peak at about $500 million (Rs2,314 crore) a year by March 2014. The company, has already received an upfront payment of $43 million, expects to receive the balance in instalments over the next 8-10 quarters. Formulation Facility in Hyderabad commissioned The company has a strong regulatory pipeline of filings and is expected to continue the momentum of filings. (Refer chart 1 below). The Company has commissioned its formulations manufacturing facility (Unit VII) in Hyderabad and commercially operations are likely to begin by April 2010. The company has invested around Rs 150 crore for setting up this large manufacturing plant with a secure area of 30 hectares of land. This facility will support support the growing demand for generic pharmaceutical products from supply contracts and exports globally.

P N Vijay Financial Services Pvt Ltd Registered Office: 908, Kailash Building, Kasturba Gandhi Marg, New Delhi 110001. India Tel: +91-11-23350838-9, Fax: +91-11-23350840, website: www.askpnvijay.com

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PN Vijay Financial Services Pvt Ltd
COMPANY UPDATE: AUROBINDO PHARMA LTD

December 28,2009
For Private Circulation Only

Regulatory Approvals - Products Generics US FDA Europe South Africa APIs Total US FDA Europe new registrations Filed Registered

As on 12.11.09 160 77 217 454 143 70 409 44

Approved 109 30 48 187 Strong Product Pipeline Aurobindo has diversified product portfolio focusing on therapeutic areas. And the company is expected to experience majority of its growth from the US market mainly due to strong pipeline of its products, huge generic opportunity and increasing customer base.

Patent and designs

Recent Approvals received from US FDA The Company has received approval from the US Food and Drug Administration (US FDA) for its anti allergic drug Cetirizine Hydrochloride Syrup . Cetirizine Hydrochloride syrup is indicated for relief of symptoms associated with seasonal allergic rhinitis in adults and children above two years of age and falls under the anti-allergic segment. The Company has received final approval from US Food & Drug Administration (US FDA) for its abbreviated new drug application for Perindopril Erbumine tablets in multiple strengths. The drug is the generic version of Solvay Pharmaceuticals' Aceon tablets. The drug is used for treating hypertension. Aurobindo Pharma received approvals for two abbreviated new drug applications Cefotaxime for injection USP 500 miligram (mg), 1 gram (g), 2g and Cefotaxime for injection USP 10g pharmacy bulk pack. Cefotaxime is the generic version of Sanofi Aventis US' claforan. The drug falls under the anti-betallactum segment and is ready for launch. Company has received tentative approval from US FDA or Atomoxetine Hydrochloride capsules and is used for treating attention-deficit/ hyperactivity disorder (ADHD) and falls under the neurological segment. Strong Quarterly Figures The company has registered a total operating income of Rs 882.6 crores (Rs 709.4 crores) up by 24.4% YoY. The operating profit before forex stands Rs 207.0 crores (Rs 124.9 crores) up by 65.7%. PBT before forex has been at Rs 164.6 crores (Rs 84.2 crores) thus growing by 95.5%, PBT stands at Rs 161.0 crores (loss of Rs 20.9 crores). PAT before forex has been at Rs 106.8 crores (Rs 66.7 crores) thus growing by 60.1%. PAT stands at Rs 103.2 crores (Loss of Rs 38.4 crores). Company eyes 23% profit next fiscal The company's management is confident to achieve 23% profit margins next fiscal that currently has profit margins of around 18%, backed by the new formulations manufacturing facility. The company had recently joined hands with Pfizer to market its products.

P N Vijay Financial Services Pvt Ltd Registered Office: 908, Kailash Building, Kasturba Gandhi Marg, New Delhi 110001. India Tel: +91-11-23350838-9, Fax: +91-11-23350840, website: www.askpnvijay.com

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COMPANY UPDATE: AUROBINDO PHARMA LTD
Industry Perspective The pharmaceutical industry is one of the success stories of India ensuring that good quality essential drugs are made available at affordable prices to the vast population of the country as well as competing with some of the best names in the global markets. The industry is an intellectual industry and is in front rank of India's science-based industries with investment in research and development and wide ranging capabilities in the complex field of drug manufacture and technology. It has grown from a mere $0.3 billion turnover in 1980 to about $19 billion in 2008. The country now ranks 3rd in terms of volume of production and 14th largest by value. The accelerated growth has been fuelled by exports to more than 200 countries with a sizeable share in the advanced regulated markets of US and Western Europe. 40% of the World's bulk drug requirement is met by India. The Indian Pharmaceutical Industry has made significant progress in creation of required infrastructure, meeting global needs for supply of quality medicines and APIs and also entering into the highly opportune area of CRAMs and clinical trials. Domestic investment in the pharmaceuticals sector is estimated at Rs 314.30 billion. The pharmaceuticals sector has been able to attract FDI amounting to $1.40 billion in the sector during 2000-01 to 2008-09 of which, there has been an inflow of $334.09 million in 2007-08. While pharmaceutical products are exported primarily to USA, Germany, Russia, UK and Brazil amongst the large basket of countries, India's imports emanate mainly from China, Switzerland, USA and Italy. India currently exports drug intermediates, APIs, finished dosage formulations (FDFs), bio-pharmaceuticals, clinical services to various parts of the world. CRAMS (Contract Research and Manufacturing Services) has become a promising medium for the Indian pharma industry, with India increasingly being viewed as global hub for CRAMS. Over the last 5 years, the CRAMS industry has been contributing close to 8% of the total Indian pharmaceutical business. The Indian Pharma industry will continue to grow at an accelerated pace by seizing greater share of the fast growing global generics market. The industry is expected to significantly boost its share of the generics market on the back of its expertise in process engineering and its low cost advantage. The global generics market is growing significantly. US is the world's largest market for generics. Company Outlook Aurobindo Pharma straddles key strategies from fermentation to formulation and is one of the most cost effective producers in the world. The company has built up large manufacturing capacities for both APIs and formulations. The company has proven competence and expertise which reflects in its strong balance sheet that supports the business plan. Aurobindo, which started off as a supplier of drug raw materials to semi- regulated markets, has moved up the value chain and currently sells finished generic drugs in regulated markets. Improvement in Aurobindo Pharma's financials over the years has been the result of integration of operations both backward and forward, restructuring of the product mix and efficient working capital management. For an investment outlook, we have positive view on the company's financials mainly on account of attractive valuations and planned growth path by the company which seems executable and would justify the growth in medium to long term time frame. The strong pipeline of products clearly reflects the growth visibility. On the valuations side, at the current market price of Rs 908 the company is trading at a price earning multiple of 10.09x FY10E EPS of Rs 90. We maintain our POSITIVE recommendation with a target price of Rs 1070, implying an upside potential of 17.8%. At the target price, the scrip would be valued at 11.89x FY10E EPS of Rs 90.

December 28,2009
For Private Circulation Only

P N Vijay Financial Services Pvt Ltd Registered Office: 908, Kailash Building, Kasturba Gandhi Marg, New Delhi 110001. India Tel: +91-11-23350838-9, Fax: +91-11-23350840, website: www.askpnvijay.com

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PN Vijay Financial Services Pvt Ltd
COMPANY UPDATE: AUROBINDO PHARMA LTD
AUROBINDO PHARMA LTD (Consolidated) Quarterly and Yearly Results (Rs in crores) Particulars Net Sales Expenditure Profit from Operations Other Income PBIDT Interest Foreign Exch (Gain/Loss) Tax Net Profit Minority Interest NP after minority interest EPS Equity Capital Face Value Q2FY10 882.7 712.6 170.1 12.7 182.8 18.2 3.6 57.8 103.2 103.2 19.2 26.9 5.0 Q1FY10 852.7 690.3 162.4 2.2 164.6 22.7 -57.5 33.1 166.4 166.4 30.9 26.9 5.0 -37.98 QoQ% 3.52 4.74 11.04 Q2FY09 709.4 613.3 96.1 3.8 99.9 15.6 105.1 17.3 -38.1 -38.1 26.9 5.0 170.87 YoY% 24.43 77.00 82.98 FY09 3124.2 2673.2 451.0 15.9 466.9 81.1 254.7 31.3 99.8 99.8 18.6 26.9 5.0 53.6 238.2 238.2 44.3 26.9 5.0 -58.10 FY08 2435.9 2195.1 240.8 94.2 335.0 43.2 YoY % 28.26 87.29 39.37

December 28,2009
For Private Circulation Only

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P N Vijay Financial Services Pvt Ltd Registered Office: 908, Kailash Building, Kasturba Gandhi Marg, New Delhi 110001. India