After delivering phenomenal earnings CAGR of 44% and RoE of 35-40% over FY12- 17, Ajanta Pharma appeared to lose momentum over FY17-19 with sales remaining flat and earnings declining from Rs.500 Cr. to Rs.400 Cr.
DF faced pressure from GST/demonetization/increased share of generic segment and product specific issues. Institutional Anti-malaria business was hurt by reduced procurement from the global fund.
For branded generics business (67% of sales), AJP has guided for 9- 11% YoY growth for the next three years. With 7-8 annual ANDA launches and increased traction in existing products, AJP has guided for 30% CAGR over FY19-22.
With healthy momentum in US sales, renewed focus on delivering results in the derma portfolio in DF, domestic industry outperformance in cardiology/pain and favourable macro scenario for branded Africa/Asia segment company can achieve its targets.
Company is undervalued with projected valuation of AJP at 22x 12M forward earnings.
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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