Ajanta Pharma Q1 Results Review - Robust Earnings Visibility Impart Confidence: Yes Securities

Yes Securities Report

Ajanta Pharma Ltd.'s management reiterated robust growth expectation across branded generic markets of Asia and Africa though it appears Q1 performance may not be completed replicated across quarters. Domestic business should see the impact of Met XL NLEM inclusion recede as volumes rebound (Q1 cardiac growth of 14% versus 5% on 12 month MAT basis in June).

U.S. business has been caught in a range due to lack of approvals which might could be change in H2 and next fiscal as company alluded to spate of approvals in H2. While branded exports would see benefit of higher MR count that can drive growth, management is not looking to add to MR count in any significant manner in domestic business.

Margin expectation for FY25/26 remains intact adjusted for onetime Rs 300 million gratuity provision taken in Q1. We believe margin can inch towards 30% next fiscal as healthy branded business growth and revival in U.S. would drive expansion with limited opex growth.

High degree of certainty associated with revenue and margin delivery supports our target multiple tweak to 32 times from 30 times and we reiterate Add with target price Rs 2,750 (earlier Rs 2,550).

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