Buy Ajanta Pharma; target of Rs 3220: ICICIdirect

ICICIdirect.com's report on Ajanta Pharma

Revenues grew 21.8% YoY to Rs 362.6 crore, in line with I-direct estimate of Rs 356.5 crore on the back of 15% growth in exports and 35% growth in domestic sales

EBITDA margins improved 393 bps YoY to 36.2%, higher than I-direct estimate of 31.6%. EBITDA increased 35.2% YoY to Rs 131.4 crore against I-direct estimate of Rs 112.6 crore

Net profit increased 35.7% YoY to Rs 84.7 crore, higher than I-direct estimate of Rs 79.0 crore, driven by a strong operational performance "The Q3 numbers have once again demonstrated Ajanta’s consistency in delivering above average numbers both in India and abroad. In domestic formulations, APL continues to register robust growth. In the exports space both the Philippines and Franco-African markets continue to thrive on the back of consistent product launches and base business growth. On the margins front, the company has consistently been improving its margin on the back of an improved product mix. We expect revenues, EBITDA and net profit to grow at a CAGR of 22%, 23% and 25%, respectively. We have ascribed a target price of Rs 3220 based on 25x (1x of PEG) based on FY17E EPS of Rs 129. Buy the stock", says ICICIdirect.com research report.

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