Buy Ajanta Pharma; target of Rs 1980: Anand Rathi
Anand Rathi is bullish on Ajanta Pharma has recommended buy rating on the stock with a target price of Rs 1980 in its research report dated November 05, 2020.
November 09, 2020 / 03:15 PM IST
Anand Rathi 's research report on Ajanta Pharma
Driven by its US/Africa branded business (up 38.7%/36.6% to Rs1.5bn/ Rs1.1bn) Ajanta’s Q2 FY21 revenue grew 11.4% y/y to Rs7.2bn. A better product mix in branded generics (70% of sales) pushed its gross margin up 420bps to 78%. Lower R&D/marketing overheads expanded the EBITDA margin 1,067bps to ~38%. Adj. PAT grew 45.3% to Rs1.7bn. Earnings are likely to be driven by its branded generics in India, the Rest of Asia and Africa, on improving prospects. Besides, it plans to file 10-12 products in the US in FY22. We believe the stock is available at attractive valuations of 19.3x/16.3x FY22e/23e earnings.
We upgrade it to a Buy, with a higher target of Rs1,980 (earlier Rs1,614).
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