Powered by: Motilal Oswal
4/05/2021 11:31:56 AM | Source: Yes Securities Ltd
Buy Ajanta Pharma Ltd For Target Rs. 2,130 - Yes Securities
News By Tags | #1465 #872 #642 #1302 #5124
Buy Ajanta Pharma Ltd For Target Rs. 2,130 - Yes Securities

Result Highlights

* Strong performance across the board; India, US clocked 20% growth while India revenue rise of 23% came in as a surprise  

* Africa institutional business remains volatile; company guided for Rs2.7bn in FY22 sales  

* Gross margin expanded by ~400bps yoy as Q4 last year included product recall cost (mostly Ranitidine); other expenses decreased by ~18%, partly due to lower R&D. Other expenses ex‐R&D declined due to ongoing second wave that started in March. Company expects gross margin to sustain around 75% with a range of +/‐ 100bps in FY22

* R&D expenses  stood at Rs390mn (5% of sales); to rise by 100bps in FY22 as FY21 was a suppressed year for research expenses  

* PAT grew by 21% yoy driven by better than expected topline and margin performance

 

Our view:

FY22 would see rebound in domestic growth on low base (+6%) of FY21 while US would sustain 18% growth; expect some slowdown in FY23 on back of lower filings in FY21. Branded generics to maintain growth in the range of 11‐12% over FY21‐ 23.

Margin to decline in FY22 as one‐offs in the form of lack of costs in FY21 would reverse, coupled with rise in R&D to 5.8% of sales; this would result in ~450bps margin correction on FY21 base, even after assuming ~13% topline growth. Albeit, this would be a temporary phase with margin likely to inch upwards next fiscal. We raise FY22/23 revenues offset by cut in EBIDTA margin on lower gross margin leaving EPS estimates largely unchanged. BUY stays based on 25x FY23 EPS.

 

To Read Complete Report & Disclaimer Click Here

 

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

 

Above views are of the author and not of the website kindly read disclaimer

Disclaimer: The content of this article is for informational purposes only and should not be considered financial or investment advice. Investments in financial markets are subject to market risks, and past performance is not indicative of future results. Readers are strongly advised to consult a licensed financial expert or advisor for tailored advice before making any investment decisions. The data and information presented in this article may not be accurate, comprehensive, or up-to-date. Readers should not rely solely on the content of this article for any current or future financial references. To Read Complete Disclaimer Click Here