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Ajanta Pharma Q3FY13 result update

Contributed by Angel Broking

Ajanta Pharma posted better than expected results with 40% growth in sales. EBITDA margins also improved to 26.1% in Q3FY13 from 23.2% in Q2FY13 and 24.4% in Q3FY12.

Key Highlights

- Sales grew by 39.7% YoY mainly on account of volume growth and aided by weakening rupee

- Exports contribution for the quarter was higher at 67% (as against 65% in Q2FY13) due to higher contribution from WHO’s anti-malarial program.

- EBITDA margin rose significantly to 26.1% led by operating leverage and lower cost of materials

- PAT grew by 76% yoy and 49% qoq. PAT margins rose by 293 bps yoy and 246 bps qoq.

- For full year management is guiding for 30% growth with around 22% EBITDA margins

- The company has recently received marketing authorization in UK for Sildenafil tablets (better known as Viagra) for 50mg and 100 mg. Company expects to launch the same in UK post patent expiration in June 2013.

- Company has filed two more ANDAs with USFDA taking the total number of pending approval to nine and total filings to 11. Company intends to file ~ three more ANDAs in Q4FY13 meeting it annual target of 5-6 ANDAs per year.

Valuation & Recommendation

The stock has surpassed our target price of Rs 441. Considering the continuous outperformance, healthy outlook and recent re-rating we have given a higher multiple of 12x to the stock. Based on our FY14E EPS of Rs 55.7 and multiple of 12x, target price comes to Rs 669, a potential upside of 24%. Hence, we recommend to ‘BUY on Decline’.