Ajanta Pharma offers growth potential amid US generic challenges: Nuvama

With larger generic companies facing growth challenges in the US in FY27E, Ajanta Pharma, analysts believe, offers a strong investment opportunity, driven by its branded market growth

Analysts at Nuvama Institutional Equities have maintained their positive outlook on Ajanta Pharma, following the company’s financial results for the second quarter of FY2025–26.

 

Shrikant Akolkar, Aashita Jain, Gaurav Lakhotia, and Tanay Parab — analysts at Nuvama — believe that, with larger generic companies expected to face growth challenges in the US in FY27E, Ajanta Pharma presents a strong investment opportunity, driven by its growth prospects in branded markets.

 

The brokerage has reiterated its 'Buy' rating on Ajanta Pharma’s stock, setting a target price of ₹3,250 per share, up from the previous target of ₹3,210. This represents an upside of 28.2 per cent from its last closing price of ₹2,535 on the NSE.

 

 

Earlier on November 3, the company reported a solid performance for Q2FY26, with its profit after tax (PAT) climbing 20 per cent year-on-year to ₹260 crore, compared to ₹216 crore in the same quarter of the previous fiscal. Revenue from operations also saw a healthy 14 per cent increase, reaching ₹1,354 crore, up from ₹1,187 crore in Q2FY25. The company’s earnings before interest, taxes, depreciation, and amortisation (Ebitda) rose 5 per cent Y-o-Y to ₹328 crore, compared with ₹311 crore in Q2FY25.

India growth satisfactory and US strong; Africa growth upgraded

The brokerage further emphasised that Ajanta Pharma’s India business grew 12 per cent Y-o-Y, reaching ₹430 crore, in line with Nuvama’s estimates. Although the cardiac therapy segment showed weak growth (up just 6 per cent Y-o-Y), other key therapies performed well, with some exceeding expectations.  The Nuvama analysts remain optimistic about Ajanta Pharma, highlighting its strong growth in India, driven by nearly 20 per cent expansion in its medical representative (MR) force and its entry into new therapeutic areas. "The company’s growth in EM branded markets is also noteworthy, underpinned by strong execution, new product launches, and continued MR expansion. The US business stands to benefit from a low base and these new launches, while the addition of a liquid manufacturing block at Pithampur further boosts its growth prospects," wrote the analysts in their research note.

 

Analysts forecast continued double-digit growth this year, with further improvement expected in FY27E, supported by productivity gains from an expanded sales force.

 

In the Emerging Markets (EM) branded business, Asia grew 5 per cent Y-o-Y but missed expectations due to order deferrals into H2FY26E. "However, the management is confident of low-teens growth in this segment for FY26E. The growth forecast for the Africa branded business has been upgraded to double digits for FY26E, driven by new product launches,"  said the analysts.

 

Meanwhile, US revenues surged by a robust 48 per cent Y-o-Y, surpassing expectations, with analysts predicting further high-teens growth in FY27E.  CATCH STOCK MARKET LIVE UPDATES TODAY

Promising organic growth story with better capital efficiency

Analysts at Nuvama are particularly bullish on Ajanta Pharma’s organic growth story, raising their FY27E EPS estimate by 4 per cent. They note that the company’s India performance was in line with expectations, while its Asia business slightly missed targets, falling short by 6 per cent due to deferred orders. However, management has projected double-digit growth in its Asia branded business for FY26E. The US business, meanwhile, is already on a solid footing for FY26E and FY27E, driven by new launches.

 

The analysts project a revenue/Ebitda/PAT CAGR of 14 per cent/17 per cent/18 per cent over FY25-FY27E, with a return on capital employed (RoCE) and return on invested capital (RoIC) both exceeding 30 per cent by FY27E.