Motilal Oswal's report on Ajanta Pharma
USFDA inspected AJP’s Dahej facility over April 3-7, 2017. This was the first USFDA inspection of this facility. AJP has filed one ANDA from this facility, which triggered the inspection. USFDA issued 0 (zero) Form 483 observations at the end of the inspection. This implies minimal regulatory compliance risk for AJP over the medium term.
Outlook
We remain positive on AJP due to healthy pipeline and aggressive filing pace for next 2-3 years in the US market, sustained outperformance in the domestic formulations (DF) market and stable base in the Africa market. We expect 19% CAGR in earnings over FY17-20, led by a 46% CAGR in US sales and a 20.4% CAGR in DF sales. We value AJP at 25x FY19E EPS to arrive at a price target of INR 2,028. Buy.
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