Download Report

Ajanta Pharma Ltd.
4
Recommendation
HOLD
CMP (28/1/2015)
Rs. 2680
Target Price
Rs. 2870
Sector
Pharmaceuticals
Stock Details
BSE Code
532331
NSE Code
AJANTPHARM
Ajanta Pharma (APL) posted yet another stellar result with higher than
expected EBITDA margins at 36.2% v/s 32.8%qoq/33.0% yoy. This is the the
highest ever margins in the history of the company. Key reason for the
improvement is the higher contribution from branded business (as against
institution business which is stagnant due to the new tender rule). Sales has
come in-line of expectations at Rs 362.6 cr, a growth of 20.5%. The
management has maintained its full year sales growth guidance of 20% with
higher EBITDA margins of 32-33% (earlier it was 30%).
Bloomberg Code
AJP IN
Key Highlights
Market Cap (Rs cr)
9,429

Free Float (%)
26.17
52- wk HI/Lo (Rs)
Initiating Coverage
Margins Surprise
2749/901
Avg. volume NSE (Quarterly)

54,530
Face Value (Rs)
5.0
Dividend (FY 14)
200%
Shares o/s (Cr)
2.36
Relative Performance
1Mth
3Mth
1Yr
Ajanta
Sensex
12.8%
43.3%
185.3%
8.5%
10.0%
42.9



Shareholding Pattern
Promoters Holding
st
31 Dec 14
73.83

Domestic markets grew by 36.1% yoy, much higher than industry average
and its peers led by all around healthy growth like in Cardio (37% yoy),
Dermatology (15%) and Ophthalmology (37%) segments.
The company has launched six products in the domestic segment including
two first to market. Management has reiterated its stance of growing
deeper in the existing therapies and not intended to foray into any new
therapy as of now.
Exports to Emerging Markets posted growth of 15% yoy, backed by 25%
growth in Asia and 4% in Africa (sales was impacted due to new rule of
tender business). APL has launched 8 new products in the emerging
markets and has a strong pipeline of 1672 products under registration to
ensure the continued growth.
The company has maintained its share in the Risperidone product (only
product launched in US) and got Rs 1 cr of sales from it in Q3FY15 (YTD Rs 3
cr). It expects to garner around $1mn revenues in next year. Albeit small,
we believe it is a start of revenues from regulated markets. We expect FY17
to be meaningful year for the company in terms of US revenues.
APL’s Dahej formulation facility’s (Rs 196 cr spent) construction is
completed and is undergoing qualification. The company expects
regulatory filing batches to commence from Q1FY16. Savli facility (Rs 180 cr
capex, spent Rs 15 cr) construction is marginally delayed and expected to
start now from Q1FY16 and likely to be completed by Q4FY17.
The company has announced stock split from Rs 5 FV to Rs 2 FV.
Institutional (Incl. FII)
8.76
Valuation & Recommendation
Corporate Bodies
1.88
We have factored in 21% growth with 32% EBITDA for FY15 (against 30% earlier
assumption). The company has healthy balance sheet (debt:equity is 0.13x) and
strong return ratios (more than 35%). The stock has re-rated substantially in
last four years. The growth momentum and improving profitability gives
comfort gives support to our long term outlook, however, due to stretched
valuations (24.5x on FY16E) we recommend investors to book partial profits at
current levels and HOLD balance for long term for price target of Rs 2870 (22x
of FY17E EPS)
Public & others
15.53
Runjhun Jain
022 – 39268177
Sr. Research Analyst
[email protected]
Year
Consolidated
Sales
(Rs cr)
Growth
(%)
EBITDA
(Rs cr)
Margin
(%)
PAT
(Rs cr)
Margin
(%)
EPS (Rs)
P/E
(x)
RoE (%)
FY14A
FY15E
FY16E
FY17E
1208.3
1461.1
1780.2
2185.4
29.8%
20.9%
21.8%
22.8%
368.8
467.7
574.7
709.9
30.5%
32.0%
32.3%
32.5%
233.9
297.9
372.4
458.1
19.4%
20.4%
20.9%
21.0%
66.5
84.7
105.9
130.3
40.3
31.7
25.3
20.6
47.4%
41.6%
37.5%
34.3%
1|Page
Ajanta Pharma Ltd.
Initiating Coverage
Quarterly Result
Standalone (Rs cr)
Net sales
Cost of Materials
Staff cost
Other Exps
Total Expenses
EBITDA
margins
Depreciation
EBIT
Interest
Other income
Exchange
gain/(loss)
PBT
Tax
Tax rate
PAT
Equity Capital
FV
EPS
Q3FY15
362.6
100.3
48.2
82.7
231.2
131.4
36.2%
12.6
118.8
1.2
3.6
Q3FY14
300.9
91.5
38.4
71.8
201.6
99.2
33.0%
9.5
89.7
2.2
4.0
yoy
20.5
9.7
25.5
15.2
14.6
32.4
2.7
123.9
39.2
31.6%
84.7
17.7
5.0
24.0
-2.0
89.6
27.2
30.3%
62.4
17.7
5.0
17.7
-232.5
38.3
44.3
Q3FY15
Africa
Asia
32.7
32.4
-45.0
-10.2
Q2FY14
337.3
96.7
44.5
85.4
226.6
110.7
32.8%
12.2
98.5
1.3
14.7
qoq
7.5
3.8
8.2
-3.2
2.0
18.7
3.2
20.6
-10.4
-75.4
124.6
9.5
13.7
35.7
1.2
113.1
34.5
30.5%
78.6
17.7
5.0
22.2
Q3FY14
yoy
Q2FY14
qoq
110
115
-4.3%
112
-1.8%
109
78
39.7%
101
7.9%
4
2
100.0%
3
33.3%
Total Exports
223
195
14.4%
216
3.2%
Doemstic
132
97
36.1%
114
15.8%
Others
7.6
8.9
-14.5%
7.3
3.7%
362.6
300.9
20.5%
337.3
7.5%
35.7
7.7
7.7
Revenue Breakup
Particulars (Rs cr)
Latam
Total Sales
2|Page
Ajanta Pharma Ltd.
Forward PE Chart
27x
22x
17x
Initiating Coverage
12x
3|Page
Ajanta Pharma Ltd.
Initiating Coverage
Financials (consolidated)
P&L (Rs. Cr)
Net Sales
% change
EBITDA
EBITDA margin
Depn & Amort
Operating income
Interest
Other Income
PBT
Tax
MI & EO
PAT
PAT margin (%)
Sh o/s - Diluted
Adj EPS
Cash EPS
Qtrly-Stdalone
Revenue
EBITDA
Dep & Amorz
Op Income
Interest
Other Inc.
PBT
Tax
EO
PAT
EPS (Rs.)
Performance Ratio
EBITDA margin (%)
EBIT margin (%)
PAT margin (%)
ROE (%)
ROCE (%)
FY14A
1208.3
29.8%
368.8
30.5%
43.9
324.9
11.6
10.8
329.9
96.0
0.0
233.9
19.4%
3.5
66.5
79.0
Mar.14
311.1
112.3
14.9
97.4
2.2
3.0
96.5
26.4
0.0
70.1
19.8
FY14A
30.5%
26.9%
19.4%
47.4%
54.1%
FY15E
1461.1
20.9%
467.7
32.0%
48.6
419.0
9.7
14.0
423.3
125.4
0.0
297.9
20.4%
3.5
84.7
98.6
June.14
287.5
78.7
12.0
66.7
1.4
8.6
73.9
26.2
0.0
47.7
13.5
FY15E
32.0%
28.7%
20.4%
41.6%
51.3%
FY16E
1780.2
21.8%
574.7
32.3%
55.4
519.3
8.2
18.0
529.1
156.7
0.0
372.4
20.9%
3.5
105.9
121.7
Sept.14
337.3
110.7
12.2
98.5
1.3
14.7
113.1
34.5
0.0
78.6
22.2
FY16E
32.3%
29.2%
20.9%
37.5%
48.8%
FY17E
2185.4
22.8%
709.9
32.5%
75.6
634.3
6.6
21.0
648.6
192.2
0.0
456.5
20.9%
3.5
129.8
151.3
Dec.14
362.6
131.4
12.6
118.8
1.2
3.6
123.9
39.2
0.0
84.7
24.0
FY17E
32.5%
29.0%
20.9%
34.2%
46.0%
PAT growth (%)
108.6%
27.4%
25.0%
22.6%
Debt/Equity (x)
0.2
0.1
0.1
0.0
FY14A
40.3
4.5
7.9
25.8
FY15E
31.7
3.2
6.5
20.3
FY16E
25.3
2.3
5.3
16.3
FY17E
20.7
1.8
4.2
12.8
Valuation Ratio
Price Earnings (x)
Price/BV (x)
EV / Sales
EV / EBITDA
Balance Sheet (Rs Cr)
Share Capital
Reserves & Surplus
Net Worth
Net Deferred Tax Liab
FY14A
17.7
575.6
593.3
23.0
Other Non-Current Li a b.
2.5
Total Loans
130.5
Tra de Pa ya bl es
Prov. & Other CL
Total Liabilities
Net Fixed Assets
Capital WIP
Investments
Cash & Bank
Invetories
Debtors
Loans & Advances
Total Assets
Cash Flow (Rs. Cr)
Op CF before tax
Change in WC
Tax
CF from Operation
Investing
Capex
Oth Inc & Investments
CF from Investing
Financing
Diviend Paid
Share Capital
Loans
Interest
Others
CF from Financing
Net Chg. in Cash
Cash at beginning
Cash at end
Per Share Data
Adj EPS
BV per share
Cash per share
Dividend per share
FY15E
17.7
821.9
839.5
23.0
2.5
112.9
FY16E
17.7
1129.8
1147.4
23.0
2.5
92.9
FY17E
17.7
1507.1
1524.8
23.0
2.5
72.9
124.5
75.5
149.8
75.5
182.6
75.5
224.5
75.5
949.4
279.4
93.6
63.5
60.4
155.4
202.2
94.9
949.4
FY14A
371.7
-102.7
-96.0
173.0
1203.2
280.8
250.0
63.5
37.0
194.8
243.5
133.6
1203.2
FY15E
467.7
-94.1
-125.4
248.1
1523.9
375.4
250.0
63.5
130.4
247.2
296.7
160.7
1523.9
FY16E
574.7
-99.9
-156.7
318.1
1923.1
599.8
0.0
63.5
397.0
303.5
364.2
195.1
1923.1
FY17E
709.9
-116.4
-192.2
401.3
-132.9
10.8
-122.1
-206.5
14.0
-192.5
-150.0
18.0
-132.0
-50.0
21.0
-29.0
-41.1
5.9
5.7
-8.7
1.6
-36.8
14.2
46.2
60.4
FY14A
66.5
168.7
17.2
10.0
-51.7
0.0
-17.6
-9.7
0.0
-79.0
-23.3
60.4
37.0
FY15E
84.7
238.8
10.5
12.6
-64.5
0.0
-20.0
-8.2
0.0
-92.7
93.4
37.0
130.4
FY16E
105.9
326.3
37.1
15.8
-79.2
0.0
-20.0
-6.6
0.0
-105.8
266.5
130.4
397.0
FY17E
129.8
433.7
112.9
19.4
4|Page
Initiating Coverage
Ajanta Pharma Ltd.
Disclaimer:
This Document has been prepared by Nirmal Bang Research (A Division of Nirmal Bang Securities PVT LTD). The information, analysis and
estimates contained herein are based on Nirmal Bang Research assessment and have been obtained from sources believed to be reliable. This
document is meant for the use of the intended recipient only. This document, at best, represents Nirmal Bang Research opinion and is meant for
general information only. Nirmal Bang Research, its directors, officers or employees shall not in anyway be responsible for the contents stated
herein. Nirmal Bang Research expressly disclaims any and all liabilities that may arise from information, errors or omissions in this connection. This
document is not to be considered as an offer to sell or a solicitation to buy any securities. Nirmal Bang Research, its affiliates and their employees
may from time to time hold positions in securities referred to herein. Nirmal Bang Research or its affiliates may from time to time solicit from or
perform investment banking or other services for any company mentioned in this document.
Nirmal Bang Research (Division of Nirmal Bang Securities Pvt Ltd)
B-2, 301/302, Marathon Innova,
Opp. Peninsula Corporate Park
Off. Ganpatrao Kadam Marg
Lower Parel (W), Mumbai-400013
Board No : 91 22 3926 8000/8001
Fax : 022 3926 8010
5|Page