Fundamental

Ajanta Pharma Initiating Coverage



Ajanta Pharma (AJP) delivered a better-than-expected 3QFY18 financial performance, with sales growing 10% YoY to Rs 587 crore. EBITDA margin showed a marginal improvement YoY to 33.6% .Lower other income and a higher tax outgo led to lower PAT growth of 3.4% YoY (v/s EBITDA growth of 11% YoY) to Rs 147 crore.

Outlook & Valuation: We believe that AJP’s long-term fundamentals continue to remain healthy driven by strong traction in the US business (post US FDA clearance to its Dahej unit) and above industry growth in domestic business. Its Sales, EBITDA and PAT witnessed 24%, 37% and 44% CAGR, respectively through FY12-17 owing to strong growth in domestic formulation business (22% CAGR) and healthy growth in exports (21% CAGR). We have HOLD rating on the stock with a Target Price of Rs1500, valuing the stock at 25x FY19E EPS of Rs 60.


Tags: FundamentalAjanta Pharma


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