Ajanta Pharma rallies 9%; hits record high on strong Q1 results

In past one week, the stock has surged 19 per cent and rallied nearly 40 per cent so far this calendar year.

Shares of Ajanta Pharma hit a record high of Rs 1,682, as they rallied 9 per cent on the BSE in Friday's intra-day trade after the company reported a strong operational performance with reported earnings before interest, taxes, depreciation, and amortization (Ebidta) up 22 per cent year-on-year (YoY) at Rs 271 crore in the June quarter (Q1FY24). Ebidta margin improved 321 bps at 26 per cent.

At 09:25 AM; Ajanta Pharma was quoting 7 per cent higher at Rs 1,654, as compared to 0.30 per cent decline in the S&P BSE Sensex. In past one week, the stock has surged 19 per cent. Thus far in the current calendar 2023, it has soared nearly 40 per cent, as against a 8 per cent rise in the benchmark index.

In Q1FY24, the company's revenue grew 7 per cent YoY to Rs 1,021 crore mainly driven by Branded generics as well as the US generics both of which grew 6 per cent YoY and 19 per cent YoY respectively. Profit after tax rose by 19 per cent at Rs 208 crore.

The board announced a total dividend of Rs 25 per share, which includes a regular dividend of Rs 10 per share, and an additional Rs 15 per share for every Rs 2 face value shares, distributed as a special dividend on the commemoration of 50 years of momentous journey of the company.

ICICI Securities said the key takeaways from the apparent strong numbers was that the softening of API prices combined with recovery in Euro to 89 from 82 in Q1FY24 has bolstered the growth of gross profit margins.

Further, reduction in international logistics cost by Rs 25 crore has benefitted company to post strong EBITDA numbers. After a turbulent FY23, impacted by transitory issues, we expect persistent branded generics focus and continuous spending on R&D to drive the growth going ahead, the brokerage firm said in a note.

Ajanta Pharma posted in-line sales with better-than-expected profitability in Q1FY24. The company benefited from lower raw material cost/freight cost in Q1FY24 and expects the same to sustain over the near-to-medium term, according to Motilal Oswal Financial Services (MOFSL).

The brokerage firm raised their earnings estimates for FY24/FY25 by 7.5 per cent each factoring in: a) the lower intensity of price erosion in the US generics segment, b) superior execution in branded generics segment and c) lower operational cost.

“We expect 23 per cent earnings CAGR over FY23-25, led by 15 per cent sales CAGR in Domestic Formulation (DF)/Asia and 13 per cent sales CAGR in the US segment, supported by 370bp margin expansion. Considering the earnings outlook and attractive valuation,” MOFSL said in the result update.