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Ajanta Pharmaceuticals - Q1FY21 Result Update - ICICI Securities

Posted On: 2020-08-01 22:12:28

Q1FY21 revenues grew 9.2% YoY to Rs. 668 crore mainly due to 46.1% growth in the US business to Rs. 149 crore and 27.8% growth in Asia revenues to Rs. 161 crore. Domestic revenues de-grew 10.3% YoY to Rs. 174 crore. EBITDA margins improved 589 bps to 33.4% mainly due to lower other expenditure. Subsequently, EBITDA grew 32.6% YoY to Rs. 223 crore. Net profit grew 28.9% YoY to Rs. 148 crore. Delta vis--vis EBITDA was mainly due to higher tax rate and depreciation partially offset by higher other income.

Valuation & Outlook

Despite a dent in domestic sales in Q1FY21 due to Covid-19, overall revenue growth remained steady on the back of strong growth in US and branded export formulations. Additionally, Ajanta posted a strong margin performance in the quarter, led by lower travel & promotional spends along with change in product mix. While the management expects subdued domestic growth in FY21 due to Covid-19, it expects high single digit growth for branded business in Asia and Africa (India, Asia, Africa- ~70% of sales) along with ~10% growth for the US. On margins front, change in product mix (increase US revenues) notwithstanding, the management expects ~200-250 bps improvement over FY20, going ahead, with improving operating leverage and moderating capex. Overall, calculated focus, healthy margins, 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. 1810 based on 25x FY22E EPS of ~Rs. 72.5.

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Shares of AJANTA PHARMA LTD. was last trading in BSE at Rs.1633.4 as compared to the previous close of Rs. 1512.15. The total number of shares traded during the day was 47112 in over 3187 trades.

The stock hit an intraday high of Rs. 1645 and intraday low of 1492.4. The net turnover during the day was Rs. 74528633.

Source: Equity Bulls

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