Ajanta Pharma:: Growth tempo maintained… :: ICICI Securities PDF link

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Growth tempo maintained…
• Revenues grew 22.3% YoY to | 331.2 crore vs. I-direct estimate of
| 344.4 crore driven by 24% growth in emerging markets to | 216
crore and 32% growth in Indian branded formulations to | 103 crore
• EBITDA margins improved 259 bps to 32.8%, higher than I-direct
estimate of 29% driven by 450 bps improvement to gross profit
margins to 71%. EBITDA in absolute terms increased ~31% YoY to
| 110.7 crore vs. I-direct estimate of | 99.9 crore
• Net profit increased 40.9% YoY to | 78.6 crore, higher than I-direct
estimate of | 61.7 crore driven by improvement in EBITDA margins
Domestic formulations - Focus on new launches, few therapies
Domestic formulations constitute 33% of the total consolidated turnover
(FY14). The main distinguishing factor for APL compared to its peers is
the uncanny knack of launching maximum number of first time launches
with focus on new drug delivery system (NDDS). Out of 160 actively
marketed brands, 119 were first in India. The focus on specialty therapies
and niche product led APL to post strong growth at 27% CAGR in FY10-
14, far higher than industry growth of ~9%. Going ahead, we expect
domestic formulations to grow at a CAGR of 22% in FY14-17E to | 706
crore driven by a mix of existing products and new launches.
Exports traction mainly from emerging market
Export formulations constitute 66% of the total consolidated turnover
(FY14). APL is currently deriving almost its entire export revenues from
emerging regions such Africa (Franco Africa), Asia and Latam having a
presence in more than 35 countries. As opposed to the common practice
of forging alliances with local/regional pharmaceutical players, APL’s
front-end marketing team interacts directly with doctors. The company
has consistently introduced new products in these markets. Overall
export formulations have grown at a CAGR of 32% in FY10-14 to | 793
crore. We expect exports to grow at a CAGR of 24% in FY14-17E to
| 1517 crore driven mainly by consistent product launches.
Low profile but focused; US foray important for scalability
With its focus on niche therapies in domestic formulations and a
calculated approach in the exports market, APL remains an interesting
candidate from the midcap pharma space with a high growth rate, strong
margins, commendable return ratios and a lighter balance sheet. Defying
the normal trend of targeting the developed markets for generic generics
initially, the company focused on branded generics in the semi-regulated
markets. At this juncture, the company is well poised to foray into the US
market, especially once the newly constructed Dahej plant gets USFDA
approval. The company has filed 25 ANDAs with the USFDA and has
received two product approvals.
Well rounded growth; maintain BUY
The Q2 numbers have once again demonstrated Ajanta’s consistency in
delivering above average numbers both in India as well as abroad. In
domestic formulations, the company continues to register above average
growth in all three therapies, namely cardiology, dermatology and
ophthalmology. In the exports space, both Philippines and Franco-African
markets continue to thrive on the back of consistent product launches
and base business growth. We expect revenues, EBITDA and net profit to
grow at a CAGR of 24%, 20% and 18%, respectively. We have ascribed a
target price of | 2151 based on 20x FY17E EPS of | 107.5


LINK
http://content.icicidirect.com/mailimages/IDirect_AjantaPharma_Q2FY15.pdf