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Systematix Research Report
Ajanta Pharma Ltd. Q4 FY24 revenue and Ebitda were above expectations, led by strong growth in Africa Institutional sales, which reported 23% YoY growth and better than expected gross margins (due to softening of active pharma ingredient prices).
Growth in branded markets was strong and in-line with our expectations. Asia, Africa, and India sales grew by 18%, 13% and 14% respectively on a YoY basis. Branded market sales growth is expected to be on a similar trajectory in FY25E.
The U.S. revenue, which grew 16% on a YoY basis, should slow down in FY25 (mid-single digit growth expected). Price erosion is expected to be in the high single digit to low doubledigit range, while new approvals should offset the decline on account of price erosion.
In Asia, the company has built a strong portfolio with chronic segment, contributing 75% of sales. Ajanta will add sales force to strengthen their presence and fortify their brand in these markets.
We revise our forecasts on Ajanta Pharma to incorporate higher growth in branded markets. Based on our revised forecasts we expect Ajanta Pharma to deliver a revenue / Ebitda /profit after tax compound annual growth rate of 9.2% / 9.3% / 15.2% over FY24-FY26E.
We revise our target PE multiple to 26 times and recommend a hold on Ajanta at current market price with a revised target price of Rs 2,235.
The revised multiple is to account for the growing contribution of branded markets to the overall mix. Branded markets’ contribution is expected to reach 75% of sales in FY26E from 71% currently.
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