ICICI Direct has given Buy recommendation for Ajanta Pharmaceuticals with a target price of Rs. 2250 in its research report issued on May 01, 2021

ICICI Direct’s research report on Ajanta Pharmaceuticals

Q4 revenues grew 11.0% YoY to Rs 757 crore. Domestic sales grew 23.2% to Rs 218 crore whereas emerging markets (branded) de-grew 10.5% YoY to Rs 273 crore amid logistical challenges in Asia and Africa. US sales grew 21% to Rs 173 crore. Africa tender business grew 86% YoY to Rs 80 crore. EBITDA margins improved significantly to 34.3% (vs. 22.2% in Q4FY20) amid better gross margins and lower other expenditure. EBITDA grew 71.4% YoY to Rs 259 crore. PAT grew 21% YoY to Rs 159 crore. Delta vis-à-vis EBITDA was mainly due to lower other income and higher tax rate.

Outlook

We maintain BUY rating and arrive at our target price of Rs 2250 (unchanged) based on 24x FY23E EPS of ~Rs 93.8.