Ajanta Pharma Stock Hits All-Time High with Strong Q4 Performance

Ajanta Pharma share price, a speciality business house with a focus on pharmaceutical formulations, jumped sharply by 13.70% during the morning session today, touching an all-time high of ₹2,540 per share. That gain follows strong performance by the company in the quarter ended in March and the full fiscal year. 

The company, post market hours on Thursday, had reported its financial results, with consolidated net profit having risen by 66% to ₹203 crore for Q4FY24 against ₹122 crore in the year-ago period.

During the quarter under review, operating revenues saw a 20% year-on-year (YoY) increase, reaching ₹1,054 crore. EBITDA rose significantly by 86%, amounting to ₹278 crore compared to ₹149 crore in Q4FY23. Consequently, the EBITDA margin expanded to 26%.

Fueling the robust performance this quarter was robust growth in African institutional sales, which grew 23% YoY in the fourth quarter coupled with better than expected gross margins as active pharmaceutical ingredients (API) prices declined. Branded market growth remained robust and in line with analysts' expectations. In regional sales, Asia reported an increase of 18% YoY, while Africa and India had increases of 13% and 14%, respectively, for the quarter of the outgoing calendar year.

Market performance in the United States this year was very outstanding, pushed by reduced price erosion, reduced drug shortages, and logistics costs. In addition to that, the US had a favorable pricing environment for active pharmaceutical ingredient pricing. Price erosion in the US is expected to be between the high single digits and low double digits. For FY25, the company is targeting to file 8-12 ANDAs and aims at commercializing 5-6 products, most of which are planned for launch during the second half of FY25.

In India, the company demonstrated strong sales performance, fueled by higher volumes, price adjustments, and the introduction of new products. The company launched 15 new products, including four that were the first of their kind in the market. Additionally, it has recruited approximately 200 new medical representatives (MRs) recently, increasing the total to around 3,000 MRs as of March 31, 2024, as reported by domestic brokerage firm Systematix Institutional Equities.

For the full financial year, the company achieved a 12% YoY increase in sales, which represents a 12% increase in sales ₹4,209 million. Moreover, net profit increased to ₹816 crore of ₹588 crore, which represents a remarkable improvement of 39%.

Looking forward, the company anticipates modest sales growth in FY25, with expectations for the branded generics segment to grow in the mid-teens. In India, sales growth is projected to be between high single digits and low double digits. The management aims for growth rates that exceed the Indian Pharmaceutical Market (IPM) by about 200 to 300 basis points. Furthermore, in corporate America, growth is expected to be in the mid- to high-single-digit range.

Following the company’s fourth quarter performance, Systematix Institutional Equities has adjusted its guidance for Ajanta Pharma to reflect stronger growth in branded markets. As per the revised forecasts, the company expects Ajanta Pharma to achieve revenue, EBITDA and PAT CAGR of 9.2%, 9.3% and 15.2% during 24-26E. Additionally, the brokerage updated its price-to-earnings (PE) ratio to 26x and suggests a ‘Hold’ on the stock, with a revised price target (PT) of ₹2,235.