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Ajanta Pharma impresses with 42% jump in net sales

Ajanta Pharma, part of our Kensource stockletters, has delivered another strong quarter
 

Ajanta Pharma, a speciality pharmaceutical formulation company, has announced impressive fourth quarter results for the period ended 31 March 2013. Its net sales for the quarter went up 42% year-on-year (y-o-y) to Rs249.44 crore, from Rs176.10 crore in the year-ago period. Similarly, its net profit was Rs27.09 crore for the quarter ended 31 March 2013 when compared to Rs23.60 crore for the corresponding period last year, an increase of 14.79%.  Exports contributed to 71% of the total operating income for the quarter. The total assets of the company as at 31 March 2013 stood at Rs675.38 crore.

The stock is part of our Kensource stockletter recommendation list. For more information on our stockletter, check out this link.
 

The company has been putting on a string of good quarterly performances, with net sales rock solid and in high double-digit figures. While it grew 42%, its average three-quarter y-o-y growth rate was 40%. Similarly, its operating profit is even more impressive, growing at 67% y-o-y, when compared to the three-quarter growth rate of 76%. Despite the strong performances, the company’s valuation remains somewhat low, with market capitalisation quoting 5.56 times its operating profit. The return ratios are also impressive with return on networth and return on capital employed at 37% and 24%, respectively.
 

SBI Cap Securities has pinned down the value of the company at Rs716 per share and has advised clients to “Hold” the stock. According to their report, the management of Ajanta Pharma expects sales to grow over 20% in 2014 fiscal, with operating profit margin expanding by 25% and net profit growth of 10%-15%. In 2015, the company expects 5-6 new product launches.
 

During the quarter, Ajanta Pharma filed three more ANDAs with USFDA which takes the basket of ANDAs to 14 (2 approved and 12 waiting for approval).
 

Commenting on the results, Yogesh Agrawal, managing director said, “Sound results for the quarter demonstrates our comprehensive strategic planning, robust execution capability and strong management bandwidth. We have been consistently making an effort to move up the value chain in business quality by developing challenging complex products and building brands across geographies”.
 

Ajanta Pharma is ranked 45th in the Indian formulation market as per IMS MAT findings on March 2013, and is involved in manufacturing formulations in the ophthalmology, dermatology and cardiology segments. It exports generics formulations to USA, Asia, Africa and Latin America, as well as 11 EU countries including UK.
 

The board of directors have recommended dividend of Rs6.25 per equity share, on face value of Rs5 per share, for the year ended 31 March 2013.
 

For more company results, do check out.

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