EUR 120.00 For Business Accounts Only

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

• AJP delivered a better than expected 1QFY23 performance, led by strong growth in the Domestic Formulation (DF), Asia, and African segments. The US also exhibited moderate growth, despite pricing headwinds.
• We have maintained our FY23 and FY24 estimates. We continue to value AJP at 22x 12M forward earnings to arrive at our TP of INR1,500. We expect 12% earnings CAGR over FY22-24, led by 14.5%/16% sales CAGR in the Branded Generics/US segment. We remain positive on AJP on the back of steady outperformance in DF, Africa, and Asia and certain niche launches in the US market. We maintain our BUY rating.

 

Lower realization and raw material cost pressures drag profitability

• Revenue grew by ~27% YoY to INR9.5b (est. INR8.3b), led by growth across the domestic and Branded Generics segment in Asia and Africa.
• DF sales rose by ~23% YoY to INR2.5b (26% of sales). Branded Generics sales in Asia/Africa grew by ~46%/~34% YoY to INR2.4b/ INR1.8b (25%/18% of sales). US Generic sales rose by ~6.5% YoY to INR1.8b (19% of sales). Institutional Antimalarial sales grew 15% YoY to INR770m (8% of sales).