Impressive improvement in margins
Ajanta Pharma (APL) has yet again posted better than expected results with Q4FY13 sales growth of 42% yoy. EBITDA margins rose by 481 bps yoy to 27.4% on account of higher economies of scale.
Key Highlights
Sales grew by 41.6% YoY on account of volume growth which contributed to the 80% of the growth. Price increases contributed 15% to growth and rest by new product launches.
EBITDA margin rose significantly to 27.4% led by operating leverage and lower cost of materials. This is the third consecutive quarter of improvement in EBITDA margins
Despite strong operational performance PAT growth got restricted at 14.8% yoy due to one-time exceptional tax expense (of Rs 15.75 cr) resulting in decline in PAT margins. However, adjusting for exceptional expense PAT showed an impressive growth of 81.5% yoy to Rs 42.8 cr.
Company is undertaking capex of rs 400 cr at Dahej and Salvi to cater to regulated and domestic markets respectively. Both the plants are expected to operation by April’15.
For FY14 the management seemed more confident and has given guidance of 23% sales growth with 24-25% EBITDA margins which we believe is achievable
APL has filed three more ANDAs during the quarter taking the total number to 14 out of which 12 are awaiting approval. Going forward, Company intends to file 5-6 ANDAs per year.
Valuation & Recommendation
We had recommended partial book profits at Rs 690. However, considering the continuous outperformance, healthy outlook investors can hold the balance shares at current levels with price target of Rs 840 (12x of FY15E EPS)
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