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Published on 26/11/2018 11:00:15 AM | Source: Reliance Securities Ltd

Buy Ajanta Pharma Ltd For Target Rs.1360.00 - Reliance Sec

Posted in Broking Firm Views - Short Term Report| #Pharma Sector #Ajanta Pharma Ltd #Trading Report #Reliance Securities Ltd

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*  Ajanta Pharma (AJP) surged 3% in yesterday’s trade on account of increased growth visibility of domestic business.

*  We envisage AJP’s domestic formulations business to clock 13% CAGR over FY18-20E led by improved sales force productivity and new launches (15-20/annum).

*  We see strong recovery in FY20E with sales and PAT growth of 13% YoY and 36% YoY, respectively led by healthy growth domestic/Asia business, lower other operating expenses and reduced taxes. Return ratios are also expected to remain healthy (RoCE & RoE seen at 23% & 18%) in FY20E while EBITDA margin is expected to expand by 400bps YoY to 30% in FY20E.

*  We believe that AJP’s long-term fundamentals continue to remain healthy driven by strong traction in India business and healthy growth in Asia and the US led by new launches. We maintain our BUY recommendation on the stock with a Target Price of Rs1,360, valuing at 24x FY20E EPS of Rs56.7.


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