Buy Ajanta Pharma; target of Rs 2515: Motilal Oswal

Motilal Oswal's research report on Ajanta Pharma

Ajanta Pharma (AJP) delivered better-than-expected 3QFY24 performance, led by strong growth in the Asia and Africa region. Domestic formulation (DF) exhibited muted growth, due to addition of a brand under National list of Essential medicine (NLEM). AJP would end FY24 on a strong recovery in profitability compared to that in FY23.

Outlook

We raise our earnings estimate by 9%/6%/3% for FY24/FY25/FY26, factoring a) better-than-industry growth in the branded generics market, b) improved traction in institutional anti-malaria business and c) controlled opex. We value AJP at 26x 12M forward earnings to arrive at a price target of INR2,515.