Ajanta Pharma Q1 Results: Strong India & US Growth Fuels Stock

Ajanta Pharma has delivered a robust Q1 performance, significantly exceeding market expectations, primarily fueled by strong growth across its India and US operations. This impressive showing has prompted Jefferies to reaffirm its ‘Buy’ rating and elevate the target price for the pharmaceutical company.

Key Financial Highlights

• Consolidated net profit soared 30.9% year-on-year, reaching Rs 334 crore.
• Revenue from operations saw a substantial 24.8% increase, totaling Rs 1,626 crore for the quarter.
• Operating performance remained healthy, with EBITDA climbing 20.5% to Rs 423 crore.
• The EBITDA margin slightly eased to 26%, down from 26.9% in the prior year.

The company’s strong top-line growth was underpinned by exceptional contributions from key geographical segments. While the US Generics business led the charge, India’s domestic market also demonstrated considerable strength, reinforcing Ajanta Pharma’s core business resilience.

Segmental Performance Breakdown

• The US Generics business emerged as the primary growth engine, with revenue surging 57% year-on-year to Rs 487 crore.
• India’s domestic business recorded a strong 24% increase, contributing Rs 509 crore in revenue.
• The Africa business also grew by 30%, achieving Rs 295 crore in revenue.
• Conversely, the Asia business experienced a 16% decline, settling at Rs 255 crore during the quarter, attributed to temporary disruptions.

Jefferies acknowledged the temporary nature of the Asia business’s decline, anticipating a rebound following disruptions linked to the Middle East conflict. The brokerage expects Ajanta Pharma’s domestic business to continue its strong outperformance, a crucial factor in its optimistic outlook.

Despite potential moderation in US business growth due to intensifying competition, Jefferies has raised its target price for Ajanta Pharma from Rs 3,550 to Rs 4,050. This revised target reflects confidence in the company’s overall trajectory and its ability to navigate competitive landscapes. Shareholders will also benefit from an interim dividend of Rs 32 per equity share, amounting to a total payout of Rs 400 crore.