Aurobindo - punished without cause?

protrade

Well-Known Member
#1
Dr Reddy reported a surprise drop in Earnings, because of a court mandated payment to an earlier partner in Australia. This resulted in entire pharma sector being punished.

But soon after this, Sun Pharma reported stellar results, and stock shot up to almost ₹800 levels - over a 15% jump!

Aurobindo shares have been similarly punished, for no visible reason - and the stock is now available at 15 times current year earnings - which is quite attractive, to say the least!

There is likely to be some positive news flow - especially around UB-612 - with Aurobindo still the only supplier that has been signed up by Vaxxinity. Paraguay has an order for a million doses, which will invariably be serviced by Aurobindo!

Interestingly, while it appears that Aurobindo is late to COVID Vaccine game, UB-612 is indicated to be effective against Alzheimer’s and Parkinson’s as well - which could be long term large opportunities for Aurobindo.

The involvement of Erik Prince (of Blackwater fame) and Tony Robbins (the motivational coach) with Vaxxinity, make it an interesting partner for Aurobindo.

Whether one looks at news flow, Fundamentals, valuation, or even technical support levels, Aurobindo seems a worthwhile buy.
 

protrade

Well-Known Member
#2
It’s looking more and more like the stock/company is being punished - it’s trading at 13 times earnings, on a day when markets have made record highs!

Is the management being punished for not being transparent enough?

The diversion into Cronus and animal care without any explanation or logic seems like it has been voted down by market. And management stance that shareholder approval is not needed for this diversion seems somewhat brazen!

They are also not giving any clarity on Covid vaccine status - and Taiwan has already given EUA to the Medigen vaccine, while it has withheld it for UB-612. But even if UB-612 fails completely, it’s not like Aurobindo has much to lose! It’s not like stock ran up like crazy for this.

Any ideas on why stock is being punished?

Could it be that market senses that management is not trustworthy? With Corporate governance issues? With all the activity going on in Real Estate and Infrastructure and Coal, maybe fears that promoters may be dicey?

But no matter how you see it, current levels are quite ridiculous for the stock!
 

protrade

Well-Known Member
#3
Also, the management seems to have lot of juggling around of business in different subsidiaries. This is the sort of thing that disturbs the market - because it raises doubts about fairness of transaction to existing shareholders.

The entire injectable business was spun off to Eugia. Why is this juggling happening?

It is looking very much like the stock will benefit under a different management. Otherwise I can’t see much reason why this stock is trading so cheap - despite having very low debt!

Probably a good case for a hostile takeover by someone who can do justice to shareholders.
 

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