Motilal Oswal - Ajanta Pharma (AJANTPHARM) MOSL: AJANTA PHARMA (Buy)-DF, US, Africa drive revenue growth; US ANDA filings to improve going forward

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Motilal Oswal

Tushar Manudhane

EUR 120.00 For Business Accounts Only

MOSL: AJANTA PHARMA (Buy)-DF, US, Africa drive revenue growth; US ANDA filings to improve going forward

AJANTA PHARMA: DF, US, Africa drive revenue growth; US ANDA filings to improve going forward

(AJP IN, Mkt Cap USD2.8b, CMP INR2394, TP INR2780, 16% Upside, Buy)

Ajanta Pharma (AJP) delivered 1QFY22 earnings marginally below our expectation. Robust growth in Domestic Formulation (DF) / Branded Generics (Africa) was offset by moderate growth in US / Branded Generics (Asia) and enhanced opex towards marketing and promotional activities. AJP is on track to outperform in the Branded Generics segment across DF/Asia/Africa and build a product pipeline for the US market.
We tweak our estimates for FY22E/FY23E, factoring in a) a better outlook for the Pain Management, Opthal, and Derma therapies in the DF segment, b) higher opex in DF due to the ophthalmic unit’s commercialization, and c) enhanced growth in branded formulations in EMs, with the easing of the COVID situation. We value AJP at 25x 12M forward earnings to arrive at Target Price of INR2,780. Reiterate Buy.

30/07/2021 10 EN

Underlying

Ajanta Pharma

Ajanta Pharma Limited. Ajanta Pharma Limited is a holding company. The Company is a specialty pharmaceutical company engaged in developing, producing and marketing a range of branded and generic formulations. Its business includes branded generics in emerging markets of Asia and Africa, generics in the developed markets of the United States and Institutional sales. The branded generics business is spread in India and over 30 emerging countries across Africa, Commonwealth of Independent States (CIS), the Middle East and South East Asia. The Company serves a range of therapeutic segments, such as anti-biotic, anti-malarial, anti-diabetic, cardiology, gynecology, orthopedics, pediatric, respiratory and general health products. Ajanta has six formulations manufacturing facilities located in India and 1 in Mauritius. In addition, the Company also has an API manufacturing facility located at Waluj, India. The Company's subsidiaries include Ajanta Pharma (Mauritius) Ltd., and Ajanta Pharma USA Inc.

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INE031B01049 National Stock Exchange of India India

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Tushar Manudhane

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MOSL: AJANTA PHARMA (Buy)-DF, US, Africa drive revenue growth; US ANDA filings to improve going forward

Ajanta Pharma Ltd: 2 directors

MOSL: AJANTA PHARMA (Buy): Branded Generics on a strong footing

An unfavourable environment weighs on AJANTA PHARMA, which sees a downgrade to Neutral

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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