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Aurobindo Pharma surges 20% on receiving EIR from USFDA

Prabhudas Lilladher has a ‘hold’ rating on the stock with a target at Rs 525.

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Last Updated: Feb 19, 2020, 03.49 PM IST
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Brokerage Prabhudas Lilladher said prima facie the categorization is a relief versus the expectation of OAI (Official Action Initiated), which is virtually a warning letter.
Shares of Aurobindo Pharma surged 20 per cent in Wednesday's session after the company said it has received the Establishment Inspection Report (EIR) with Voluntary Action Initiated (VAl) status from the US drug regulator for Unit IV, which is a general injectable formulation manufacturing facility.

Shares of the company closed 20.40 per cent higher to Rs 602.25 on BSE.

Brokerage Prabhudas Lilladher said prima facie the categorization is a relief versus the expectation of OAI (Official Action Initiated), which is virtually a warning letter. However, it is very unlikely that there would be approval of pending ANDAs from an injectable plant without resolution in the near term, it added.

The broker has a ‘hold’ rating on the stock with a target at Rs 525. Emkay also has a ‘hold’ rating on the scrip.

The company in Q3 reported net profit at Rs 705.3 crore against Rs 712.2 crore during the corresponding period last fiscal.

ICICI Securities in its post-Q3 earnings report said it was positive on Aurobindo’s long-term outlook considering its strong US pipeline with potential to launch more than 30 products every year, significant benefit of scale in the US with Sandoz acquisition in Q4FY20, and increasing contribution from complex generics (injectables, ophthalmics, penems, etc.).

The broker maintained ‘buy’ on the stock with a target at Rs 547.

Aurobindo Pharma has been one of the standout performers this year. It is up 29 per cent year-to-date, against a 0.21 per cent slide in Sensex.

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