Ajanta Pharma Stock Jumps To Highest In Four Years Post Q3 Results

Shares of Ajanta Pharma Ltd. rose to their highest in four years as sales surged across key markets in the third quarter.

The drugmaker's revenue rose 15% year-on-year to Rs 748.7 crore, according to an exchange filing, led by double-digit growth in India, emerging markets and Africa businesses. That compares with the Rs 690-crore consensus estimate of analysts tracked by Bloomberg.

• Its India business grew 13% over the year earlier to Rs 220 crore
• Sales in Africa rose 58% to Rs 77 crore.
• Emerging market branded generic sales were up 19%
• The U.S. generic sales were flat compared with the year-ago period.

The company expects the emerging market branded segment sales to grow 9-10% year-on-year in FY21. It also sees Ebitda margin at 31-32%.

Ajanta Pharma's net profit rose 64% year-on-year to Rs 176.6 crore in the three months ended December. The bottom line was aided by higher other income, which doubled to Rs 38 crore from Rs 19 crore a year ago.

• Operating profit, or earnings before interest, tax, depreciation and amortisation, rose 30% to Rs 241.6 crore
• Margins expanded nearly 400 basis points to 32.3%.

“We remain positive on Ajanta Pharma on the back of better operating leverage in the U.S. generics, outperformance in branded generics segment and better capacity utilisation, given that it is done with major expansion programme for the next two-three years,” Motilal Oswal said in a post-earnings note. The research firm Ajanta Pharma's revenue from the U.S. and the branded generics business to grow at an annualised rate of 22% and 11%, respectively, over FY20-23.

Shares of Ajanta Pharma gained as much as 7.6% to Rs 1,879.45 — the highest since December 2016. The 7.6% gain is also the most in six months. The stock has snapped a two-day losing streak. All the 12 analysts tracking the company recommend a ‘buy'. The average of Bloomberg consensus 12-month price target implies an upside of 7.5%.