Reduce Ajanta Pharma: target of Rs 2,450: Choice

Choice's research report on Ajanta Pharma

Revenue grew 14.1% YoY / 3.9% QoQ to INR 13.5 Bn (vs. CIE estimate: INR 13.5 Bn). EBITDA grew 5.4% YoY but declined by 6.7% QoQ to INR 3.3 Bn (vs. CIE estimate: INR 3.6 Bn); margin contracted 201 bps YoY / 276 bps QoQ to 24.2% (vs. CIE estimate: 27.0%). Excluding the one-off forex loss, the adjusted EBITDA margin stood at 27%. PAT increased 20.2% YoY / 1.9% QoQ to INR 2.6 Bn (vs. CIE estimate: INR 2.7 Bn).

Outlook

AJP’s investment-led phase continues, with management maintaining focus on field force expansion, brand building, and strengthening market presence. While revenue growth is expected to sustain in high single to low double-digits, EBITDA margin are likely to remain stable at 27% through FY26–27E, as reinvestments offset operating leverage benefits. We have revised our EPS estimate by +4.5%/-2.7% for FY26E/FY27E and reduced our target multiple, from 30x to 25x, factoring in the absence of margin expansion (flat since FY24). Our stance also reflects the lack of high-value pipeline assets relative to peers with exposure to GLP-1s and complex generics. Accordingly, we arrive at a revised target price of INR 2,450 (vs. INR 2,995 earlier) and downgrade the stock to REDUCE.