ICICI Direct is bullish on Ajanta Pharmaceuticals has recommended buy rating on the stock with a target price of Rs 1730 in its research report dated May 22, 2020.
ICICI Direct's research report on Ajanta Pharmaceuticals
Q4FY20 results were a mixed bag. Revenues grew 32.4% YoY to Rs 682 crore mainly due to 88% growth in US business to Rs 143 crore and 46.2% growth in Asia revenues to Rs 209 crore. Domestic revenues grew 11.3% YoY to Rs 177.0 crore. EBITDA margins declined 248 bps to 22.2% mainly due to sales write-off impact due to Ranitidine issue in the US. EBITDA grew 19.1% YoY to Rs 151.3 crore. Adjusted net profit grew 48.1% YoY to Rs 131.7 crore. Delta vis-à-vis EBITDA was mainly due to higher other income, partially offset by a higher tax rate (26.6% vs. 18.6% Q4FY19).
Outlook
Overall, calculated focus, healthy margins and return profile and lighter balance sheet are some key differentiators for Ajanta. The company remains a play on global branded generics space. We arrive at our target price of Rs 1730 based on 24x FY22E EPS of ~Rs 72.0.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
