Buy Ajanta Pharma; target of Rs 2400: Ajcon Global

Ajcon Global's report on Ajanta Pharma

Ajanta Pharma is a specialty pharmaceutical formulation company having branded generic business in India and emerging markets, generic business in US and institution business in Africa. The Company has a well‐diversified business model in terms of markets, therapies and products to fulfil unmet patient needs. This also helps it to de‐risk the business to a large extent from possible uncertainties in the business environment. The largest contribution of near 68 percent of business comes from a wide range of branded generic products in around 30 countries in Asia (including India) and Africa. Each geography has carefully chosen therapies and products to make its business valuable. Additional about 22 percent comes from generics business in the world’s largest market the USA and remaining comes from anti‐malaria institutional business in Africa. The Company’s strategy to invest in different markets and geographies in a sustained manner has made its business model quite resilient. The Company has also built competitive edge in each of the markets by identifying unmet needs and offering customized products. It is this edge that provides it continuous growth.

Outlook

At CMP of Rs. 1,720.70, the stock is valued at a P/E of 20x at 9MFY22 annualised EPS of Rs. 86.52, valued at a P/E of 23x at FY21 EPS. We recommend a "BUY" and assign a target price of Rs. 2,400 (P/E of 23x at estimated FY24 EPS of Rs. 104.34 ) due to the following factors.

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