| Experienced promoters and established track record of the company
Auro Laboratories Limited (ALL) has an operational track record of over three decades in the pharmaceutical and API manufacturing segment. The company is promoted by Mr. Sharat Deorah & Mr. Siddhartha Deorah with a long-standing experience in the sector, particularly in export-oriented API production which is ably supported by the second line of management. The company’s operations are supported by established relationships with suppliers—primarily overseas vendors for key raw materials and customers across Europe and Southeast Asia. ALL has a generic product base which is an essential medicine and is in demand across the world throughout the year. The strong customer base in European markets and Southeast Asian countries is an added advantage for the company. Going forward, ALL is expected to continue drawing operational support from the experience of its promoters and the capabilities of its managerial team along with established customer base.
Improving scale of operations on account of completion of capex
The company has witnessed a decline in revenue to Rs.19.40 crore in FY2025 compared with Rs.53.64 crore in FY2024, primarily due to a nine-month brownfield expansion undertaken for its major integration of capacity expansion. With the commissioning of the new block in August 2025, the manufacturing capacity has increased from 1,260 MT to 2,100 MT per year. Further, revenue has improved to Rs.22.25 crore in 9MFY2026, which is lower than expected on account of the geo-political situation in the middle east. Exports account for about 85 per cent of the company’s revenue, with European countries being the major market. Profitability moderated in FY2025, with EBITDA margin at 20.52 per cent compared to 22.56 per cent in FY2024, largely due to lower absorption of fixed costs during the expansion period. PAT margin also declined to 9.48 per cent in FY2025 from 14.53 per cent in the previous year FY2024. In 9MFY2026, company reported operating margins of approx ~31 per cent. Acuite believes, with advancement of facilities the profitability is expected to remain healthy while scaling up of operations substantially would remain challenging given the current global and economic challenges.
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| Moderate financial risk profile
The financial risk profile of the company is moderate, marked by a modest net worth position and leverage levels that have increased due to the ongoing debt-funded capex plan. The tangible net worth stood at Rs.42.97 crore March 31, 2025 as against Rs.41.96 Cr. as on March 31, 2024, while gearing rose to 1.05 times from 0.63 times in FY2024 on account of additional term loans availed for capacity expansion and forward-integration initiatives. Coverage indicators are comfortable with interest coverage ratio (ICR) at 3.75 times and debt service coverage ratio (DSCR) at 3.49 times in FY2025. The company completed its API expansion project, which increased installed capacity from 1,260 MT to 2,100 MT per month, addressing saturation at the existing facility. ALL is also undertaking another capex toward forward integration and manufacturing of formulation products, namely Tablets from their API’s. The unit is designed for an annual capacity of 750 million tablets, is supported by a proposed supply arrangement with a European customer. Notwithstanding the benefits of the capex, it is likely to increase debt levels, thereby leverage and coverage metrics may remain under pressure in the near to medium term.
Intensive working capital nature of operations
The working capital operations of the company are intensive in nature marked by high Gross Current Assets (GCA) of 405 days in FY2025 and 199 days in FY2024. The receivables stood at 179 days in FY2025 and 93 days in FY2024. The high GCAs in FY2025 were on account of disruption in operations due to capex. With new capacity now operational, efficiency gains are expected in the current fiscal. Collections are set to normalize as operations stabilize. Inventory days remained moderate at 87 days in FY2025 as against 72 days in FY2024. With capacity utilization improving, working capital intensity is expected to ease, supporting augmentation of cash flows in FY2026. Acuite believes that the operations of the company would remain working capital intensive in near to medium term on account of high inventory requirements and nature of business.
Susceptibility of profitability to volatility in raw material prices, forex risk in an intensely competitive Industry
Auro Laboratories Limited (ALL), an API manufacturer focused on the anti-diabetic segment, operates in a highly fragmented and intensely competitive API industry, which limits pricing flexibility and bargaining power, particularly against larger domestic and global players. Although its long presence since 1992, adherence to cGMP and EDQM standards, and ongoing product development provide some competitive support, overall susceptibility to price-based competition remains elevated. Further, the company imports certain key inputs, exposing its profitability to volatility in global commodity prices and foreign exchange fluctuations. While ALL mitigates forex risk through natural hedging and forward contracts, residual exposure to currency movements continues to constrain margins.
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