Synopsis: Ajanta Pharma's shares skyrocket by over 13.5%, hitting a new all-time high, driven by its exceptional performance in the fourth quarter. This surge underscores the pharmaceutical company's robust growth and market confidence in its Q4 results.
Ajanta Pharma shares surged by 13.70% to reach a new high of Rs.2,540 apiece, buoyed by robust Q4 and full fiscal year performance. The company reported a 66% YoY jump in consolidated net profit in Q4 to Rs.122 crore. For FY24, net profit soared to Rs.816 crore.
Ajanta Pharma, a specialty pharmaceutical formulation company, witnessed a 13.70% surge in its shares during morning trade today, reaching a new all-time high of Rs.2,540 apiece. This surge follows the company's stellar performance in the quarter ending March and for the full fiscal year.
On Thursday, after market hours, the company released its financial results, reporting a 66% YoY jump in its consolidated net profit of Rs.203 crore for Q4FY24. The drugmaker reported a net profit of Rs.122 crore in the January-March quarter of the previous fiscal.
Its revenue from operations during the reporting quarter improved by 20% YoY to Rs.1,054 crore, while the EBITDA came in at Rs.278 crore against Rs.149 crore in Q4FY23, which is an increase of 86%. The EBITDA margin surged to 26%.
The strong performance in the quarter was led by solid growth in African institutional sales, which reported 23% YoY growth in Q4 and better-than-expected gross margins (due to the softening of API prices).
Growth in branded markets was strong, which came in line with the analyst estimates. Asia, Africa, and India sales grew by 18%, 13%, and 14%, respectively, on a YoY basis in Q4.
The US market demonstrated exceptional performance this year, attributed to factors such as a reduction in price erosion, mitigated drug shortages, lower logistics costs, and favourable API prices.
Price erosion in the US is projected to range from high single-digits to low double-digits. For FY25, the company aims to file 8–12 ANDAs and plans to launch 5–6 products, with a majority of these launches scheduled for the second half of FY25.
In India, the business exhibited robust sales performance, driven by increased volumes, price adjustments, and the introduction of new products. The company introduced 15 new products, including four first movers.
It has also onboarded approximately 200 new MRs in recent months, bringing the total MR count to around 3,000 as of March 31, 2024, said domestic brokerage firm Systematix Institutional Equities.
For the full fiscal year, the company recorded a 12% year-on-year revenue increase, reaching Rs.4,209 crore. Additionally, the net profit surged to Rs.816 crore from Rs.588 crore, marking a notable 39% improvement.
Moving ahead, the company anticipates revenue growth of low teens for FY25, with the branded generics segment projected to grow at a mid-teens level. In India, growth expectations range from high single-digits to low double-digits.
Management aims to achieve growth rates approximately 200–300 basis points higher than the Indian Pharmaceutical Market (IPM) growth rate. Additionally, US business is forecast to deliver a mid- to high-single-digit growth rate.
Meanwhile, The board has approved the buyback of its equity share at Rs.2,770 per share with a total payout of Rs.351 crore including tax.
Following the company's Q4 performance, Systematix Institutional Equities has adjusted its forecasts for Ajanta Pharma to reflect stronger growth in branded markets. According to its revised projections, the firm anticipates Ajanta Pharma to achieve revenue, EBITDA, and PAT CAGR of 9.2%, 9.3%, and 15.2% over FY24–FY26E.
Additionally, the brokerage has updated its target price-earnings (PE) multiple to 26x and suggests a 'Hold' on the stock, with a revised price target (PT) of Rs.2,235.
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Related Questions
1. What factors contributed to Ajanta Pharma's stock surge?
The surge in Ajanta Pharma's stock was driven by its stellar performance in Q4, where it reported a 66% YoY jump in consolidated net profit, reaching Rs. 816 crore for the full fiscal year.
2. What were the key highlights of Ajanta Pharma's Q4 financial results?
In Q4, Ajanta Pharma witnessed a remarkable surge in revenue, with operations seeing a 20% YoY increase to Rs. 1,054 crore. Additionally, the company's EBITDA surged by 86% to Rs. 278 crore, with an EBITDA margin of 26%.
3. What growth strategies does Ajanta Pharma aim to pursue in the upcoming fiscal year?
Ajanta Pharma plans to focus on launching new products and expanding its market presence. It aims to file 8–12 ANDAs and launch 5–6 products in FY25, targeting growth rates higher than the industry average.
4. What are the expectations for Ajanta Pharma's growth in the Indian market?
Ajanta Pharma anticipates strong growth in the Indian market, with expectations ranging from high single-digits to low double-digits. The company aims to outpace the industry growth rate through various strategic initiatives.
