Ajanta Pharma- Visit Note-Fortune- 03092012

7/31/2019 Ajanta Pharma- Visit Note-Fortune- 03092012

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Bloomberg Code FEBL

U nra ted Sep t em ber 03 , 201

Sec tor ou t look : Posi t i ve Pharm aceut i ca

CMP : Rs 41 5 Ajan t a Pha rma ( i nco rpo ra t ed 1979 ) i s a spec i a l t y pha rmaceu t icompany w i t h a l l i t s r evenues com i ng f rom f o rm u la t i ons . Close

34% o f i t s revenues a re de r i ved f rom dom es t i c bus i ness cons i st i ng

b randed gene r i cs as w e l l as t ende r sal es. Rema i n i ng 6 6% o f i t s sa

com e f rom expor ts to Af r i ca , Asia and LATAM.

Domest i c bus iness focuses on se lec t n iche therap ies : Ajanta is qu

strong on three segments domestically, i.e., dermatology, ophthalmology a

cardiology. It enjoys an edge over competition by launching first ti

products in niche segments domestically. This strategy has enabled

company to be counted amongst the fastest growing players domestica

The companys domestic business posted 33.7% growth in FY12.Gaining

ranks in the last two years, it is currently ranked 48th.

The management has decided to enter into three other segments, i.e., E

gastro and orthopedics with similar strategy and success. Focus on thesegments has led the company to raise its field force from 1,300 to 2,000

the past two years. The management has indicated that they would

reducing focus on tender business (contributing 23% to domestic sale

which should reflect positively on the margins. The management stron

believes that the proposed National Pharmaceutical Pricing Policy (NPPP)

not have any significant impact (1-2%) on its sales.

Expo r t s bus i ness on s t rong f oo t i ng : Asia and Africa are the two ma

markets of Ajanta Pharma. Besides, it also has a small presence in the LAT

region. Ajanta currently has a combined field force of 400 for exports. Out

nine ANDAs filed for by the company, it has received approval for two. It h

tied-up with a Florida based distributor, with the first shipment of one of t

products having already left for the US. The management has guided

USD1.5-2mn sales from the two approved ANDAs. They expect the remainapproved ANDAs to get launched towards the tail end of FY14. T

management has guided for up to six ANDA filings annually with continu

focus on niche segment as in the domestic market. Exports have grown a

CAGR of 27.5% from FY08-12 and looking at the products pipeline t

momentum should sustain.

Aggress ive expans ion : The company has very aggressive capex plans

Rs4bn over the next two years for setting up two manufacturing facilit

each for regulated and emerging markets. 70% of the capex will be funded

debt and remaining from internal accruals. The management is currently

talks to raise USD55mn of ECB for the expansion. The company will

capitalizing interest costs and this wont affect FY13-14 financials. T

management believes that the expansion can generate incremental p

sales of up to Rs10bn.Va lua t i on and ou t l ook : We believe that the domestic business will contin

to deliver at the current rate with improvements in field force productiv

The company has a pipeline of 1,300 products that should keep the grow

rate up for exports. Capex for regulated markets and R&D in niche are

augur well for the company in the long run. The management has guided

robust 22%-23% top line growth in FY13 with PAT growth at 30%. It expe

EBIDTA margin to improve by 20-40bps over the next two years. At the C

of Rs415 the stock is trading at 10xFY13E and 8.2xFY14E (consensus EPS).

* Price as on August 31,20 12

532331 Sensex:17,430

AJANTPHARM Nifty: 5,259

AJPH.BO 52 W-H/L: 436/144

AJP.IN Face Value-Rs 5

Market cap (Rs mn) 9,711

Daily vol. (3M NSE avg.) 11,870

Current share O/S (mn) 23.4

Diluted shares (mn) 23.4

Promoters holding (%) 71.84

Pledge shares (%) 4.70

Hi tesh Mahida

[email protected]

+91 22 4300 3861

Conso l i da ted key f i nanc ia l s (Y / E March )

( Rs m n ) FY1 0 FY1 1 FY1 2

Total income 4,091 5,049 6,774

Growth (%) 17.1 23.4 34.2

EBITDA 786 963 1,407

APAT 340 495 810

Growth (%) 39.8 45.7 63.4

AEPS 14.4 21.0 34.3

Source: Company, Fortune Research

V a lu a t i o n / R at i o s

( x ) FY1 0 FY1 1 FY1 2

Adj P/E 28.8 19.8 12.1

P/B 5.3 4.3 3.3

EV/EBITDA 15.2 11.8 8.1

EV/Sales 2.9 2.2 1.7

RoE (% ) 18.4 21.6 27.2

RoCE (% ) 12.1 15.6 18.9


Aj a n ta Ph a r m a


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Conso l ida t ed f i nanc ia l s t a t emen t s (Y / E March ) (Rs m n)

I n c o m e st a t e m e n t FY 09 FY 10 FY 11 FY 12

To ta l i ncome 3 ,493 4 ,091 5 ,049 6 ,774

Y oY ( % ) 13 .0 17 .1 23 .4 34 .2

To ta l expenses 2 ,843 3 ,306 4 ,086 5 ,367

Cost of goods sold 1271 1398 1729 2138

Staff cost 427 478 637 851

Other manufacturing

expenses1145 1430 1719 2378

EBIDTA 6 5 1 7 8 6 9 6 3 1 , 4 0 7

Y oY ( % ) 26 .7 20 .7 22 .6 46 .1

EBI D T A ( % ) 18 .6 19 .2 19 .1 20 .8

Depreciation 142 207 247 319

EBI T 5 0 9 5 7 8 7 1 6 1 , 0 8 8

Interest 236 202 178 154

Other income 14 11 17 12

Exceptional items (11) 0 (12) 37

PB T 2 9 8 3 8 8 5 6 6 9 0 9

Less: Taxation 44 48 59 137

Effective tax rate ( % ) 14.7 12.3 10.3 15.1

Minority interest/Profit inassociates

0 0 0 0

PA T 2 5 4 3 4 0 5 0 7 7 7 2

YoY (% ) 16.2 33.7 49.1 52.3

PAT (% ) 7.3 8.3 10.0 11.4

APAT 2 4 3 3 4 0 4 9 5 8 1 0

APAT (% ) 7.0 8.3 9.8 12.0


Balance sheet FY 09 FY 10 FY 11 FY 12

Equity capital 118 118 118 118

Reserves 1,453 1,731 2,170 2,862

N e t w o r t h 1 , 5 7 1 1 , 8 4 9 2 , 2 8 8 2 , 9 8 0

Total borrowings 2,502 2,280 1,683 1,714

Other liabilities 6 53 134 196

To ta l l i ab i l i t i es 4 ,079 4 ,182 4 ,105 4 ,889

Gross b lock 1 ,925 2 ,426 3 ,131 3 ,780

Less: Acc. depreciation (542) (741) (991) (1,319)

Net block 1,383 1,685 2,140 2,461

CWIP 552 470 172 25

I n v e s t m e n t s 8 5 8 5 8 5 8 5

Inventories 1,039 1,196 1,131 1,678

Debtors 1,001 967 1,040 1,410

Cash and bankbalances

81 148 115 115

Other current assets 0 0 0 7

Loans & advances 452 400 505 694

Current liabilities 455 693 1,008 1,445

Provisions 57 76 109 154

Net cu r ren t asse ts 2 ,060 1 ,942 1 ,675 2 ,306

Others 0 0 33 13

To ta l asse ts 4 ,079 4 ,182 4 ,105 4 ,890



Ratios FY 09 FY 10 FY 11 FY 12

Per sha re (Rs)

Diluted EPS (Rs) 10.8 14.4 21.5 34.3

AEPS (Rs, excl.

exceptional items) 10.3 14.4 21.0 34.3

Book value (Rs) 67 78 97 126

Dividend per share (Rs) 1.2 1.7 2.5 3.7

Dividend yield (%) 0.3 0.4 0.6 0.9

Leve rage ra t i os

Debt equity ratio 1.6 1.2 0.7 0.6

Debt/EBITDA 3.8 2.9 1.7 1.2

Opera t i ng pe r .

Inventory days 109 107 82 90

Debtor days 105 86 75 76

Fixed asset turnover 2.5 2.4 2.4 2.8

Retu rn ra t i os

ROCE (% ) 10.6 12.1 15.6 18.9

ROE (% ) 15.5 18.4 21.6 27.2

Va lua t i on Ra t i os

PE (x) 40.2 28.8 19.8 12.1

Price/book value (x) 6.2 5.3 4.3 3.3

Market cap/sales (x) 2.8 2.4 1.9 1.4

EV/sales (x) 3.5 2.9 2.2 1.7

EV/EBITDA (x) 18.8 15.2 11.8 8.1

Cash f lo w FY 09 FY 10 FY 11 FY 12

Net profit 254 340 507 772

Depn and w/o 142 207 247 319

Deferred tax 35 47 57 62

Change in working cap 320 (185) (235) 632

O p er a t i n g c a sh f l o w 7 6 7 3 3 9 8 9 4 5 9

Capex 822 419 408 502

Investments - - - -

I n v e s t i ng c as h f l o w ( 8 2 2 ) ( 4 1 9 ) ( 4 0 8 ) ( 5 0 2 )

Dividend 34 48 68 102

Debt 767 (223) (597) 31

Other financing activities (0) - - -

F in a n c in g c a sh f l o w 7 3 2 ( 2 7 0 ) ( 6 6 5 ) ( 7 1 )

N e t c h a n ge i n c a sh ( 1 3 ) 4 3 ( 8 4 ) ( 1 1 3 )

Open ing cash 58 81 148 115

Clos ing cash 44 124 65 2



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I n v e st m e n t r a t i n g s ( R et u r n s )

Buy (>10%) Hold (-10 to 10%) Sell (

Ajanta Pharma- Visit Note-Fortune- 03092012

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