Accumulate Ajanta Pharma; target of Rs 1676: Dolat Capital
Dolat Capital recommended accumulate rating on Ajanta Pharma with a target price of Rs 1676 in its research report dated August 01, 2020.
August 09, 2020 / 09:15 PM IST
Dolat Capital's research report on Ajanta Pharma
Ajanta Pharma reported stellar Q1 beating our estimates on the operating performance. While India reported a 10% de-growth, exports have surprised us positively (20% YoY growth) led by branded markets of Africa and Asia (EM-up 11% YoY). US, at US$20mn, reported an in-line growth at 37% YoY in constant currency. Higher contribution from branded exports helped in 50bps expansion of gross margins at 76.7%. Further, aided by slower field activities, lower expenses spiked EBITDA margin at 33% (up 640 bps QoQ and 1,170 bps YoY), way higher than our estimates. While the same is expected to taper as activities resume in subsequent quarters, management
We have upgraded our numbers by 8%/3% respectively for FY21/22E factoring in margin improvement largely in FY21. At the CMP, Ajanta is trading at 25x and 22x its FY21E and FY22E EPS, respectively. Maintain ACCUMULATE. Volatility in the emerging markets remains a key risk.
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