Thanks, just feel it is a wrong time, when pharma stocks are in the dumps.
Most of the pharma stocks that we discussed here just find it difficult to scale the 15000cr market cap barrier.
Have doubts crept into the promoters minds.
Torrent had a few observations at their Dahej plant.
Just wrote a mail to Yogesh Agarwal on what the reasons could be, I doubt if he would reply.
For the time being Ajanta Pharma is going to go nowhere in my opinion. I had 33% holdings which I exited fully in March.A racehorse like Ajanta suddenly started slowing from last Aug and it continues till date.US business needs to grow significantly to make up slowing growth in Africa and elsewhere.There are lots of headwinds for the company and the industry.After some time again it will start but opportunity cost in this market is very high so it is better to get out at the first sign of slowing growth. Page Industries was a similar story and Titan at some point.Of course everyone has his/her own views and calculations
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Got a reply from Rajeev Agarwal.It says the funds were for their personal requirement and they didnt want to do it by further pledging of shares and the mail ends with âdo not panicâ.The business is intact.
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I guess, premium valuations commanded by Ajanta has cooled of now due to derating commensurating with cool down in growth. We should wait for quarterly numbers before the story is written off⌠I believe if quarterly numbers dont show degrowth and if the stocks corrects 10-15% or more from these levels, it may at some point provide an interesting entry point for long-term value investorsâŚ
Disclosure: Invested but trimmed down my exposure to 50% couple of months back.
Iâm surprised to see the concerning messages (got some personal emails also) on just a 3% selling by promoters when they already hold above 70%. I donât think it means too muchâŚatleast one shouldnât panic. The co has an extra-ordinary track record and it should be a case study on what a fantastic work has been done in a short span of about 10 years!
Now coming to Ajanta Pharma and its prospects - I think on VP, we all have been discussing for sometime that it seems that the growth part has stagnated for the company and given the high base, it wonât be easy for them to grow maintaining the margins they have had till now. I agree with that. At the same time, I think the company is excellent. They have a branded drugs portfolio with field staff on the ground and they have very good ranking in so many regionsâŚthis should be considered like an FMCG. They have one of the highest margins in the whole industry + super efficient balance sheet.
On the growth - I like that they continue to invest + increase R&D expense and are putting up two new plants and investing more than 500 Cr into the same etc etc. But will all this translate into meaningful growth - I donât have an answer.
I think the valuations are ok and not expensive given the quality of earnings though the future returns will depend on how they grow the business from here. But I feel we should be patient and see how things evolve.
Regards,
Ayush
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Hi,
Sharing my quick notes from Ajantaâs Annual Report 2017.
Regards,
Yogansh Jeswani
Disclosure: Not Invested
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An article in Moneycontrol.com on Ajanta Pharmaâs play in the US :
Excerpts from the article :
But analysts say those days of high margins (in the US generic business) are over owing to intense competition and consolidation of the distribution channels.
âEarlier Indian generic drug makers used to enjoy margins of over 35-40 percent with relatively less competition in US, but now margins have contracted to 15-20 percent,â said an analyst tracking the pharma sector. âHowever 15-20 percent margins are still decent for late entrants, also given the low base, Ajanta Pharma is expected to grow much faster than its Indian counterparts in US."
Would be interesting to see how Ajanta positions its products in the US., inspite of being a late entrant.
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https://stockdailyreview.com/traders-keeping-ajanta-pharma-limited-ajantpharm-ns-on-close-watch-as-shares-move/
the technicals are suggesting an oversold situation and a trend reversal situation.
Results are out, sales 473 vs 476(Q1 17-18 vs 16-17)
PAT 95 VS 120
EBIDTA 131(28%) VS 166(35%)
Just got a feeling of being taken for a ride by the promoters after their selling(personal needs storytelling).
Major increases are employee benefits and other expenses.
completely taken aback. I can see that sinking feeling, post this Q1
âŚworst is, trust is lost
Discl - very concerned investorâŚand holding onto a cracked raft, amidst hi seas
I have written to the guy who asked me not to panic ,asking him where his ethics were. I have also asked for an explanation on âother expensesâ. Looks like these guys donât do concalls.
Company changed depreciation policy at the group level. This resulted in depreciation being lower by 10.55 Cr. Without this change profits would have been even lower. Earnings management from Ajanta? Now thatâs not expected.
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Yogesh,thanks for that. Kindly correct me if my understanding on this is correct.
Written down value method is the one accepted for taxation.
Since Ajanta has gone for the SLM,they will end up creating a deferred tax asset on the balance sheet.
Can they keep changing this every now and then?
Normally, I tend to avoid reactions on any Quarterly results or even one-off poor annual results. It is just part & parcel of a business.
Nor, does a fraction of stake sale looks a big thing. It is the fundamental right of the founder / promoter of the company to offload a part of his stake in lieu of cash.
But, there was something intriguing, which my mind didnât want to overlook., i.e. the timing of the stake sale.
- It was done immediately after the AGM (probably to avoid questions from minority share holders during the AGM).
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This is most important. 27 lakh shares sold at a price of Rs. 1500/- per piece., when just a few months back the share price was Rs. 2000/- sorts. The difference is a cool Rs. 135 crore.
Normally, the promoters tend to sell stake at the peaks or all-time highs.
But here, the promoter taking a loss (for the lack of a better word) of Rs. 135/- crore., did give an inkling of what is coming in the future.
Personally, I am still playing the wait-and-watch game. If it was just a poor quarterly show, with the fundamentals intact, I would have used this an opportunity to garner more.
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Hi all⌠I might hv a chance to meet somebody from ajantaâs finance team for a short meeting tomoro morning. Incase there are any queries, pls feel free to post here.
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Good observations. Ajanta is going through a perfect storm of high valuation, slowing growth and industry headwinds. Add to that the issues you mentioned. Normally, all these issues individually arenât strong enough to knock down a stock like this one but taken together can have an impact which is what is happening.
India business slowed in Q1 while export business did OK. This could well be a one off event due to GST related destocking and growth should resume next quarter albeit at a slower rate. Ajanta had done better than industry peers due to its low exposure to US markets but other issues are being noted by the investing community.
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After reading investors presentation, I feel they are doing okayâŚAll companies are going thru GST impact in this quater, so Ajanta can not escape that⌠Export has increaed by 8% even appreciating Rupees and issues in Afrian Market.
I feel we should not make this promoter selling a big issue, as they have put lots of money in Dahej Plant & then now they are building another facility in Assam, So they are clearly looking for more growth and this quater is justs one-off due to GST.
Also to note that Entire Pharma industry is going thru tough time, so that also has impact on Ajanta on stock PriceâŚNatco Pharma went down more than 15% in just 2 days even after good results. We can not question Promoterâs integrity due to one quater results.
my 2 centsâŚ
Disclosure: Holding Ajanta Pharma since more than one year now.
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Just one question. Why did the promoters pare their shareholding? Was it to take care of expansion or personal reasons? Where were the funds used if for business. Would be nice to understand.
Disc-Not invested.