Book partial profit in Ajanta Pharma: Nirmal Bang

“Ajanta Pharma reported slightly higher than expected results in Q1FY13. Sales grew by 36.7% YoY and declined by 1.2% QoQ at Rs 174.1 cr. EBITDA margin improved by 460 bps YoY and fell 130 bps QoQ at 21.3%. PAT margins rose 140 bps YoY at 11.2%.”

“Q1FY13 Sales grew by 36.7% YoY mainly on account of strong volume growth and aided by weakening rupee. Sales was down by 1.2% QoQ on account of seasonality. EBITDA margin rose sharply by 460 bps on a YoY basis to 21.3% on account of cost of materials falling to 25.5% of sales as compared to 32% in Q1FY12. Management has indicated that these margin levels are sustainable and expects margin to remain at FY12 level of 20.8% for the full year. Q1FY13 interest expense rose sharply to Rs 16 cr from Rs 2.8 cr YoY due to inclusion of forex loss on foreign currency borrowings. Other Income was much higher at Rs 9.8 cr on account of gains on foreign currency debtors. Tax rate for the quarter was at 15.3%. For full year we have assumed tax rate of 20% for FY13E and FY14E. The company is expected to start sales from two approved ANDAs in Q2FY13. During the quarter, the company launched 3-4 new products and is expected to maintain a run rate of 2 products each quarter plus line extensions.”
 
“We have revised our target price upwards to Rs 809 (from earlier Rs 630), based on a higher PE multiple of 10x on FY13E EPS on account of continued outperformance by the company. At the CMP, the stock offers an upside potential of 9.8%. We recommend investors to BOOK PARTIAL PROFITS at current levels and hold the balance shares,” says Nirmal Bang research report.         

Institutional holding more than 40% in Indian cos

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