Buy Ajanta Pharma; target of Rs 409: Nirmal Bang

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Buy Ajanta Pharma; target of Rs 409: Nirmal Bang

Nirmal Bang is bullish on Ajanta Pharma and has recommended buy rating on the stock with a target of Rs 409 in its January 24, 2012 research report.

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Nirmal Bang is bullish on Ajanta Pharma and has recommended buy rating on the stock with a target of Rs 409 in its January 24, 2012 research report.

"Ajanta Pharma reported better than expected results for Q3FY12. Sales grew by 21.3% qoq and 36% yoy at Rs 163.9 cr. EBITDA margin has improved by 340 bps qoq and 170 bps yoy at 20.6%. PAT margins have also improved by 250 bps qoq and 140 bps yoy at 11.3%."

"Q3FY12 result includes Rs 6 cr forex loss because of MTM adjustment. This has been included in other expenses. The company got the benefit of exchange fluctuation to the tune of Rs 4.5 cr in sales. EBITDA margin has improved to 20.6% during the quarter, which is purely on operational efficiency. Management has indicated that these levels are sustainable and expects margin to inch up further in Q4FY12. Tax rate has increased during the quarter to 17.7%. It is expected to go further up in Q4FY12 due to full utilization of past carry forward losses. For full year we have assumed tax rate of 14% and 22% for FY13. The company is expected to start sales from two approved ANDAs by Q1FY13. During the quarter, the company has filed two more ANDAs and expects to file another three in Q4FY12 taking the total number of filings to 10. The company is steadily building its ANDAs portfolio in US, which would ensure sustained growth in the coming years."

"With base business growing at decent 20% CAGR and new businesses like US are adding, we remain positive on the future prospects of the company. We are rolling our target price to FY13E. We recommend "BUY" on Ajanta Pharma Limited with a target price of Rs. 409 (earlier was Rs 385) indicating a potential upside of 18% from current levels. We also recommend investors to accumulate the stock on declines," says Nirmal Bang research report.

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To read the full report click on the attachment