Buy Ajanta Pharmaceuticals; target of Rs 1730: ICICI Direct
ICICI Direct is bullish on Ajanta Pharmaceuticals has recommended buy rating on the stock with a target price of Rs 1730 in its research report dated May 22, 2020.
May 25, 2020 / 09:46 PM IST
ICICI Direct's research report on Ajanta Pharmaceuticals
Q4FY20 results were a mixed bag. Revenues grew 32.4% YoY to Rs 682 crore mainly due to 88% growth in US business to Rs 143 crore and 46.2% growth in Asia revenues to Rs 209 crore. Domestic revenues grew 11.3% YoY to Rs 177.0 crore. EBITDA margins declined 248 bps to 22.2% mainly due to sales write-off impact due to Ranitidine issue in the US. EBITDA grew 19.1% YoY to Rs 151.3 crore. Adjusted net profit grew 48.1% YoY to Rs 131.7 crore. Delta vis-à-vis EBITDA was mainly due to higher other income, partially offset by a higher tax rate (26.6% vs. 18.6% Q4FY19).
Overall, calculated focus, healthy margins and return profile and lighter balance sheet are some key differentiators for Ajanta. The company remains a play on global branded generics space. We arrive at our target price of Rs 1730 based on 24x FY22E EPS of ~Rs 72.0.
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