Ajanta Pharma Q4 Results Review - Higher Opex Leads To Ebitda/Profit After Tax Miss: Motilal Oswal

Motilal Oswal Report

Ajanta Pharma Ltd.'s delivered in-line sales in Q4 FY24. However, Ebitda/profit after tax came in lower than our expectations, due to higher opex and higher tax outgo. Ajanta Pharma continued to outperform the industry in domestic formulation and Asia market. The performance is expected to improve in the Africa branded generics market going forward.

We cut our estimates by 6%/7% for FY25/FY26, factoring in

1. moderation in U.S. growth prospects,

2. higher logistics costs due to ongoing geopolitical tension, and

3. a higher tax rate.

We value Ajanta Pharma at 27 times 12 million forward earnings to arrive at a target price of Rs 2,565.

We expect a 17% earnings compound annual growth rate over FY24-26, backed by a 12%/15% sales CAGR in DF/Asia segment and a 150 basis point margin expansion.

With new launches, MR addition and increased market share in existing products, Ajanta Pharma remains in good stead to outperform in the branded generics market (70% of FY24 sales). Ajanta Pharma continues to build the abbreviated new drug application pipeline for the U.S. market and implement efforts toward consistent compliance. Maintain 'Buy'.

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