Ajanta Pharma


(brijwanth) #622
  1. 16.67% Sales growth Q on Q prev. yr –seems to have slowed down from the 30%ers
  2. Cash is back to normal
  3. Capex seems to be partly expended and T.L. has been increasing
  4. Higher Sales but the rate of growth seems to slowdown
  5. In FY’14, FY’15 Half Year sales were 45% of full FY. assuming the same this First Half FY sales were at 721.18 Cr. So total yr sales by inversion will be at 1602.66 Cr. That’s around 8.5% of Growth YoY vis-à-vis 22.35% previous year a huge deficit. If they have to do 22% then 500 Cr. next 2 qrt. Which requires 50% growth over Prev. Qrt. YoY possible but a tall order.

(Amit Sethia) #623

Brijwanth, You are not considering the potential impact from Generics expected to be on Shelf from Jan 2016 .
Does it mean its impact on revenue would take time. I am still learning about Pharma Space, So keen to know all your views.

Disc : Invested recently 3% of my portfolio


(Amit Sethia) #624

Thanks, Vaibhav. How about 3 to 4 approved ANDA’s. Will it take 2 years for it to have an impact ?


(brijwanth) #625

As I said Amit I considered the impact but in my opinion it felt as a tall order but is not impossible.


(Rakesh ) #626

Ajanta Pharma USA Inc. has launched Montelukast sodium oral granules in US market.
Approval was received in august.

http://www.bseindia.com/corporates/anndet_new.aspx?newsid=56ba66d2-4cd3-41a0-b4b4-718b9bd224b1


(Divi) #627

why it is going for big correction…from 1850 to 1330…
is it right time to bulk up the positions in this business.


(nabendu) #628

Hello Sandeep,
How to find market share information for a particular drug ??


(Sandeep Patel) #629

Hi Nabendu,

Unforunately, no public source AFAIK. IMS Health tracks prescription/OTC sales and derives market share data (for a particular drug); information is behind paywall.

At times, IMS data may not portray full picture. e.g. snippet of Torrent Pharma Q2FY16 transcript


Source: http://www.torrentpharma.com/download/financials/gen_info/Transcript-Q2-FY-16.pdf


(nabendu) #630

Hello Sandeep,
Thank you for your reply and sorry, I did not form my question well !!
Sometime back u posted below content ~~~

It’s heartening to see Ajanta gaining market share in Risperidone in the US market.
Source: https://pbs.twimg.com/media/CJm1APEUAAEA4fZ.png:large

Risperidone is a crowded place too; 12-13% market share is quite an achievement. Not clear to me if it is through Breckenridge Pharmaceuticals or through its own front-end sales and marketing team in the US.

So how to know the market share information for a particular drug in US ??

Thank You
Nabendu


(Sandeep Patel) #631

Ah, that image is a post by one of the twitter handle. The content appears to be behind the paywall type. Thus would refrain naming the handle (have high regard for his/her tweets). Cheers.


(Sandeep Patel) #632

Ajanta gets approval for 5mg/10mg gNamenda (Memantine Hydrochloride)
Source: http://www.accessdata.fda.gov/scripts/cder/ob/docs/obdetail.cfm?Appl_No=206528&TABLE1=OB_Rx

The patent of Namenda (Memantine Hydrochloride), owned by Forest Lab (wholly-owned subsidiary of Actavis), expired in April 2015. According to IMS Health, the Namenda tablets brand had U.S. sales of approximately USD 1.4 billion MAT for the TTM ending in May 2015.

Forest, Teva, Mylan, Sun, Lupin, Auro, DRL, Wockhardt, Torrent, Alembic, Ajanta, Jubilant, Amneal, MacLeods, Puracap, Unichem and Upsher have gNamenda approval.


(nabendu) #633

Ajanta Pharma Announces the Launch of Montelukast IR Tablets and Montelukast Chewable Tablets. This launch extends the breadth of the Montelukast offerings from Ajanta Pharma into three dosage forms (Immediate-Release Tablets, Chewable Tablets, and Oral Granules [announcement on 16th Nov]).


(nikhil) #634

Guys, Ajanta pharma has fallen from a high of 1720 to 1260 .
This is not a normal correction.
Is there something that we are missing out there.


(Jey) #635

I think its the macros thats pulling the scrip down and it makes us to go shopping on this discount
spree


(Akshay) #636

Over the past couple of years (even more in some cases) pharma companies have outperformed a strong market. If you notice it is not just Ajanta, but a whole host of names from the sector that have corrected significantly from their peaks.

This has more to do with the fact that FIIs/ funds/ HNIs are looking to take some of their profits off the table, which is but natural. These investors as others would have made significant returns over these past couple of years in a lot of these names and are now looking to lock in some of their gains -

Why now? In my opinion its because a lot of these names have gone from being undervalued to being fairly and in some cases over valued. This would mean that they may not be able to provide out-sized returns at least in the short to medium term.

If as an investor you have a long term view of the business/ industry I don’t think these corrections are anything to worry about. Whether or not this provides a buying opportunity though is very stock specific and is dependent on your understanding of the future potential of the business.

Personally, I would not blindly go out and buy the names that are falling - we tend to do that more out of a price anchoring bias.

Buy if you truly understand the business and its growth path and believe that the current price does not completely reflect current or future value.

Disc: Pharma companies > 60% of my PF


(Hitesh Patel) #637

I think Ajanta unlike Alembic or Torrent is a fairly predictable business.

Management has indicated that co would grow between 15-20% for fy 16 and going by half yearly figures it seems on track. It could have eps figures between 42-46 by my estimates. (It has done 20.89 per share for half year ended sep 2015 on consolidated basis as per their results available on bse.)

Also looking at the balance sheet statement given with q2 results co is net cash. (no debt)

The good news could be recent spate of approvals in namenda, and monteleukast tablets. It earlier also had a couple of approvals (I think risperidone was there earlier). Now over next year or two I expect the US business to become the growth engine once the expanded capacities come into place and some more USFDA approvals come through. Till that time growth may remain in the 20% or thereabouts range.

What I like about Ajanta is its clean balance sheet, calibrated growth plans and management smarts.

I think as a great business it has proven itself over past few years.

disc: Had exited above 1600 plus (no problems with company as such but it seemed overvalued) levels to convert into torrent pharma and waiting to get into ajanta again. Currently no position.


(Aditya) #638

Using the formula: (1 - g/ROCE)/(WACC - g) from Valuation by McKinsey (page 66), I tried to find out a reasonable PE for Ajanta. Results are displayed in table below. Seems a lot depends on long term growth rate which the market is currently implying at 16% (PE of 32)

WACC picked up from http://www.gurufocus.com/term/wacc/NSE:AJANTPHARM/Weighted%2BAverage%2BCost%2BOf%2BCapital%2B%28WACC%29/Ajanta%2BPharma%2BLtd

Disclosure: Invested. Forms a significant part of portfolio


(gautham1) #639

Hi Hitesh,
that is interesting. i always wonder how one manages to do that. for such high quality, secular growth companies, how do you decide when to get back in?. because you tend to wait for a better reentry price. moreover, if one has a fairly large position, it will be very difficult. (not for executing the transaction. but to renter with the same value or sitting on cash)
for lesser mortals like us, would you recommend stay invested and bear the time plus price correction for a while?
can you please share your views? thanks
disc: hold both ajantha and torrent


(Hitesh Patel) #640

gautham1,

I have been tracking ajanta now for a long time and of late had been feeling that while the company’s growth esp the topline was likely to be lower than the earlier heady days mainly bcos of higher base effect, the valuations accorded to the company when it went up to 1600 plus levels were very high.

As I said before ajanta is a predictable business where one can put in a figure which one is comfortable with and then come out with expected figures. Though this might not be too accurate one can broadly get a ball park estimate.

I did not expect ajanta to grow its earnings more than 35% for fy 16 and putting that figure into context, I felt it was difficult for ajanta to sustain at above 1600 levels. And at the same time Torrent Pharma had the abilify opportunity and stock price was not going anywhere (still is going nowhere :yum:) and I felt that there was a better opportunity in torrent. I follow a concentrated approach and so it had to be an allout switch.

Till now the fundamentals of both companies have played out as I had expected and I remain hopeful in torrent. Till now I have been positively surprised by its results and the kind of juice they have squeezed out of their opportunity.

Even Peter Lynch in his book One Up mentions about some stocks taking time for their earnings to catch up. Ajanta seems to be doing exactly that.

Sitting on cash is still difficult for me.

Regarding bearing the pain and sitting tight with ajanta, let me tell you that at the current prices I am inclined to re enter ajanta but since I dont find a favorable switch, I am still in wait mode.

But if one reads Phil Fisher, he used to remain invested for decades and if one has his kind of mindset I dont see any harm in sticking around with ajanta.

Its always a tricky call of when to switch and what to switch into and you often get things right and sometimes wrong. If it doesnt cause too much regret and heartburn, one can try these switches. For those who keep pinching themselves when things dont work out, its better to buy and remain invested and sit tight even in obvious situations of overvaluations.


(Dhwanil Desai) #641

Hiteshbhai,

What an articulation! The way you have laid out why & how of switching from Ajanta to Torrent (which we may extend to many such opportunities), without an iota of exaggeration, I feel anybody else on VP could not have articulted in such a simple yet effective manner… Thanks for sharing your thought process for people like us who continue to learn from you time and again