Choice Equity Broking's report on Ajanta Pharma
AJP is currently in an investment phase, expanding its presence across geographies and therapeutic areas. As a result, the company expects higher promotional and employee expenses, which will likely cap EBITDA margin improvements until post-FY27E. Reflecting this outlook, we have revised our FY26E/FY27E earnings estimates downward by 6.2%/6.1%, respectively.
Outlook
However, we maintain our BUY rating on the stock and revise our target price to INR 3,180 (revised down from INR 3,667 in Q3FY25) by averaging our PE-based and DCF-based valuations. For the PE method, we apply a multiple of 30x on FY27E EPS, (in line with comparable generics peers in terms of growth, returns, and margins).
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