Anand Rathi has given a hold rating to Ajanta Pharmaceuticals with a target price of Rs 1,268.
The pharma company’s revenue is likely to have grown 16% to Rs 5.5 billion due to strong traction in its domestic and US businesses. The EBITDA margin is likely to have expanded 202bps y/y to 27%. The fourth quarter FY20 profits are, however, expected to have declined 5% y/y to Rs 849 million due to IND-AS-related adjustments and other overheads of new plants.
Operations at its Dahej plant have been temporarily halted as one of the employees at the plant is suspected to be infected with Covid-19.
The share price moved up by 7.24% from its previous close of Rs 1327.95. The last traded price is Rs 1424.05. Incorporated in 1979, Ajanta Pharma has a market cap of Rs 11589.17 crore.
Investment Rationale
Domestic growth is likely to come at 8%, slightly below the industry growth rate. Exports are likely to have been driven by strong traction in US generics (65% growth) and brand-name business in Africa (10%). Africa institutional business, however, might have declined due to fewer tenders issued.
Financials
For the quarter ended December 31, 2019, the company reported consolidated sales of Rs 651.21 crore, up 1.31 % from last quarter sales of Rs 642.76 Crore and up 34.24 % from last year's same quarter sales of Rs 485.11 crore. The company reported net profit after tax of Rs 107.55 Crore in the latest quarter.
Promoter/FII Holdings
Promoters held 70.51 per cent stake in the company as of March 2020, while FIIs held 8.91 per cent, DIIs 11.36 per cent and public and others 9.21 per cent.