Shares of drugmaker Ajanta Pharma shot up around 14 percent and hit its 52-week high of Rs 2,540 in opening trade on May 3 as investors rejoiced the company's stellar March quarter earnings along with its buyback plans.
At 09.21 am, shares of Ajanta Pharma were trading at Rs 2,477.95 on the NSE.
The company's board approved its fourth buyback plans in as many years along with its Q4 results. Through the buyback, the drugmaker will repurchase up to 10.28 lakh equity shares or 0.82 percent of the total outstanding shares of the company.
The buyback price is fixed at Rs 2,770, offering a 24.5-percent premium to the stock's previous close. The company will spend Rs 285 crore to carry out the share buyback.
Coming to its Q4 earnings, the drugmaker recorded a 66 percent on year spike in consolidated net profit to Rs 202.72 crore for the January-March period, up from last fiscal's Rs 122.25 crore.
Revenue also grew 20 percent year-on-year to Rs 1,054.08 crore, up 20 percent from Rs 881.84 crore, a year ago. The rise in the topline was led by growth across all key business.
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As for the company's various businesses, US generics, which makes up 25 percent of sales, delivered a 32-percent on year growth while Asia branded generics, which accounts for 18 percent of revenue, posted 18 percent on year rise.
The company's Africa branded generics and institutional sales, which comprise 17 percent of the total revenue, grew 17 percent and lastly, the domestic formulation segment, which holds 31 percent of total sales, registered 14 percent growth.
Other factors
In addition, a decline in raw material costs, lower employee costs and other expenses sharply improved the company's operating margins in Q4, helping it deliver a well rounded performance. EBITDA margin swelled up 1,000 basis points to to 26.4 percent from 16.9 percent in the year-ago quarter.
Nuvama Institutional Equities believes that Ajanta's branded generics business stands on a strong footing with mid-teens growth expected in FY25 due to sales force expansion and new launches.
As for US generics business, Nuvama pegged a likely mid-single digit growth due to benign erosion and six new launches. Moreover, the brokerage also feels that Ajanta's 28 percent EBITDA margin guidance is conservative considering improving geography mix and lower input costs, hence Nuvama sees more room for an expansion of 50–100 bps.
The brokerage has a 'buy' tag on Ajanta Pharma, along with a price target of Rs 2,560.
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