Ajanta Pharma Ltd. share price target

Q4 revenue 6% ahead of our estimate but margins disappointed with gross/EBITDA margin contraction of 530bps/1050bps YoY to ~72%/24%

AJP delivered 13% sales CAGR from Dec'18 to Dec'21, led by steady traction in existing therapies and ramp-up in newly added therapies and the Trade Generics segment. It delivered a sales growth of 23% YoY to INR7.3b (30% of sales) in 9MFY22. With the easing of COVID-19 cases, doctor-patient connectivity has significantly improved, particularly in the Ophthalmology/Dermatology segment (39% of DF sales in 9MFY22). This bodes well for better growth prospects for AJP. This, along with enhanced marketing efforts in the Cardiology segment (~41% of DF sales in 9MFY22)...

Q3 revenue up 12% YoY spurred by branded formulations business in India and Africa; US sales down 14% QoQ to US$ 22mn

Q1 PAT robust at Rs 1.7bn, up 17% YoY. Sales grew 12% YoY while EBITDA declined 2%

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,...