Ajanta Pharma's June-quarter earnings reinforced the strength of its India and US businesses, prompting Jefferies to raise its target price after the company delivered a better-than-expected performance.
While the brokerage expects competition to weigh on US growth over time, it believes the company's domestic business continues to outperform, with Asia likely to rebound after temporary disruptions linked to the Middle East conflict.
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Jefferies
- Maintained Buy and raised the target price to Rs 4,050 from Rs 3,550.
- Said the June-quarter earnings beat was led by the India and US businesses.
- Believes the company's outperformance in the domestic market continues.
- Expects the Asia business to rebound after the June quarter was impacted by the Middle East conflict.
- Cautioned that growth in the US business could moderate as competition increases.
Ajanta Pharma Q1 Show
Ajanta Pharma reported a 30.9% year-on-year (YoY) rise in consolidated net profit to Rs 334 crore, while revenue from operations increased 24.8% to Rs 1,626 crore.
Operating performance remained healthy, with EBITDA rising 20.5% to Rs 423 crore. However, EBITDA margin eased to 26% from 26.9% a year earlier.
Among business segments, the US Generics business was the biggest growth driver, with revenue jumping 57% year-on-year to Rs 487 crore, while the India business grew 24% to Rs 509 crore.
The Africa business posted 30% growth to Rs 295 crore, whereas revenue from the Asia business declined 16% to Rs 255 crore during the quarter.
Separately, the company's board approved an interim dividend of Rs 32 per equity share, translating into a total dividend payout of Rs 400 crore.
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