Q3FY21 Result Update - Ajanta Pharmaceuticals - ICICI Direct

Q3FY21 revenues grew 15.0% YoY to Rs. 749 crore. Domestic sales grew 12.8% to Rs. 220 crore whereas Emerging markets (branded) grew 19.2% YoY to Rs. 286 crore. US sales remained muted (up 1.3% YoY) at Rs. 161 crore. Africa tender business grew 57.1% YoY to Rs. 77 crore. EBITDA margins improved 372 bps YoY to 32.3% amid better gross margins. Hence, EBITDA grew 30.0% YoY to Rs. 242 crore. PAT grew 63.7% YoY to Rs. 177 crore. Delta vis-à-vis EBITDA was mainly due to lower tax rate (18.0% vs. 38.6% in Q3FY20).

Valuation & Outlook

Q3 results were a beat on all fronts on the back of strong growth in branded generic sales in Emerging markets and India along with better gross margin performance. While the management expects subdued domestic growth in FY21 due to Covid-19, it expects high single digit growth for branded business in Asia, Africa (India, Asia, Africa- ~70% of sales) along with ~20% growth for US. On margins front, change in product mix (higher US revenues) notwithstanding, the management expects ~200-250 bps improvement in FY21, 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 maintain BUY and arrive at our target price of Rs. 2250 (earlier Rs. 1960) based on 24x FY23E EPS of ~Rs. 93.7.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AjantaPharma_Q3FY21.pdf

Shares of AJANTA PHARMA LTD. was last trading in BSE at Rs.1799.05 as compared to the previous close of Rs. 1746.15. The total number of shares traded during the day was 32166 in over 2268 trades.

The stock hit an intraday high of Rs. 1879.45 and intraday low of 1760. The net turnover during the day was Rs. 59008750.

Source : Equity Bulls

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