MOSL: AJANTA PHARMA (Buy)-In-line results-Outlook remains positive
​Ajanta Pharma: In-line results; Outlook remains positive
(AJP IN, Mkt Cap USD2.2b, CMP INR1658, TP INR2028, 22% Upside, Buy)
- AJP posted in-line sales of INR4.8b (est. of INR4.7b). EBITDA margin of 35.9%, adjusted for forex loss accounting for mark-to-market, was significantly better than estimate of 33.8% due to a superior product mix. Higher depreciation on account of commercialization of the Guwahati facility and lower-than-expected other income led to PBT growing at a lower rate than EBITDA. As a result, adjusted PAT grew 4% YoY to INR1.2b (est. of INR1.2b).
- US, India and Asia drive sales growth: Sales grew 12% YoY, led by healthy growth in India sales and strong momentum in US sales. Currency stabilization led to a revival in Asia segment sales (+15% YoY) after two quarters of decline. Africa sales declined 24% YoY due to lower anti-malaria sales, impacting overall growth for the quarter.
- Aggressive ANDA filings expected in FY18: AJP continued to post robust performance in the US, with sales at INR450m v/s INR50m in the previous quarter, led by sustained business from approved products. AJP has ~15 ANDAs pending for approval and intends to file 12-15 in FY18.
- Inspection update: In 4QFY17, AJP had successful 1st USFDA inspection at its Dahej facility. The USFDA issued one observation at its Paithan facility, which is minor in nature, in our view.
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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