Be a PRO & get up to 50% off on select brands. Explore Now

Buy Ajanta Pharma; target of Rs 1390: Motilal Oswal

Motilal Oswal is bullish on Ajanta Pharma has recommended buy rating on the stock with a target price of Rs 1390 in its research report dated January 30, 2019.

February 01, 2019 / 04:30 PM IST
  • bselive
  • nselive
Todays L/H

Motilal Oswal's research report on Ajanta Pharma

Ajanta Pharma (AJP) reported its 3QFY19 revenue down 17% YoY to INR4.8b (in-line), largely due to lower exports, down 27% YoY to INR3b (64% of sales). The decline was offset to some extent by 9% YoY growth in domestic formulation (36% of sales) to INR1.7b. Gross margin (GM) contracted 144bp YoY to 79.8%, mainly due to increased raw material prices and change in product mix. EBITDA margin contracted at higher rate of 990bp YoY on higher employee cost/other expenses, up 700bp/145bp YoY (as % of sales). The increased operational cost is associated with newer facilities at Dahej and Guwahati. Absolute EBITDA declined 42% YoY to INR1.1b (our estimate: INR1.2b). Reduced margins, higher depreciation and tax rate led to PAT decline of 51% YoY to INR727m (our estimate: INR837m). For 9MFY19, sales/EBITDA/PAT declined 4%/14%/19% YoY to INR15.4b/INR4.4b/INR3b.


We cut our FY19/20/21 EPS estimates by 4%/8%/8% to INR44/INR52/INR60 to factor in a muted 3Q and increased operational costs associated with newer facilities. We roll to 24x (unchanged) 12M forward earnings to arrive at a TP of INR1,390 (prior: INR1,482). We remain positive on AJP, given its healthy growth in Branded Generics and in the US. Buy.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Feb 1, 2019 04:30 pm

stay updated

Get Daily News on your Browser