Motilal Oswal's research report on Ajanta Pharma
Ajanta Pharma’s (AJP) revenue was slightly lower than our estimate (2.8% miss). However, EBIDTA/PAT was considerably lower than estimate (9%/19% miss). Lower sales in Africa-branded exports and reduced operating leverage led to inferior performance for the quarter. We reduce our earnings estimate for FY24/FY25 by 10%/4%, factoring in a) gradual recovery in Africa-branded generics, given disruption in supplies to the Franco-Africa market, b) reduced pace of launches in US generics and c) increased opex. We value AJP at 22x 12M forward earnings to arrive at a TP of INR1,490. The performance of AJP in FY23 was affected by multiple factors, including increased raw material costs, freight costs, currency headwinds, and intensified price erosion in US generics.
Outlook
However, as most of these factors are expected to ease, and with the support of niche approvals, the outlook for AJP is expected to improve over FY24/FY25. We reiterate our BUY rating on the stock.
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