Reduce Ajanta Pharma: target of Rs 2500: ICICI Securities

ICICI Securities's research report on Ajanta Pharma

Ajanta Pharma’s Q4FY25 result was in line with our expectations. Revenue growth of 11% YoY was primarily driven by India and US businesses while Africa institutional biz continues to be a drag (-54.1% YoY). Sequential dip in gross margin was on lower revenue share of branded generics (70% of sales vs 74% in Q3FY25) while higher R&D expense (5.4% vs 4.7% of sales) and surge in employee cost due to MR addition dragged EBITDA margin by 102bps YoY to 25.4%.

Outlook

Management anticipates 13-14% YoY growth in branded generics while US may grow faster at 15-19% led by new launches in FY26. Inferior product mix, employee and promotional cost for India may result in flattish gross and EBITDA margins in FY26. We cut FY26/27E EPS by 2%/3% to factor in higher opex. Maintain REDUCE with TP of INR 2,500 on 25x FY27E earnings.