Buy Ajanta Pharma; target of Rs 1410: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Ajanta Pharma

Ajanta Pharma (AJP) delivered in-line earnings in 3QFY23, adjusted for a translational forex loss. The superior execution in the US generics and branded generics markets of India (DF) and Asia was offset to some extent by a moderation in Africa (branded as well as institutional). We trim our earnings estimate by 2%/2%/1.3% for FY23/FY24/FY25 to factor in 1) field force expansion in Asia/Africa, 2) a prolonged period of higher raw material and freight costs, and 3) delays in ANDA approvals. We continue to value AJP at 22x 12M forward earnings to arrive at a TP of INR1,410. While AJP may end FY23 with an earnings decline, it continues to build the ANDA pipeline for the US market, launch products aggressively in the branded generics market and expand MR strength to support growth. The cost pressure is likely to moderate in the medium term. Accordingly, we expect a 15% earnings CAGR over FY23-25. We maintain BUY on the stock.

Outlook

We continue to value AJP at 22x 12M forward earnings to arrive at a TP of INR1,410. While AJP may end FY23 with an earnings decline, it continues to build the ANDA pipeline for the US market, launch products aggressively in the branded generics market and expand MR strength to support growth. The cost pressure is expected to moderate in the medium term. Accordingly, we expect a 15% earnings CAGR over FY23-25. We maintain BUY on the stock.

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Ajanta Pharma - 01 -01-2023 - moti