Ajanta Pharma

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**Ajanta Pharma - **

Q3 concall highlights -

Revenues @ 1105 vs 972 cr, up 14 pc
EBITDA @ 314 vs 170 cr, up 85 pc !!!
PAT @ 210 vs 135 cr, up 56 pc !!!

Geography wise sales performance -

India branded - 308 cr, up 5 pc ( led by strong growth in Ophthalmology segment @ 15, Cardiology segment growth at 6 pc. Launched 14 new products in India in FY 24 including 4 new to Mkt products ). India business operates in 4 main areas - Cardio, Derma, Opthal, Pain management

Asia branded - 292 cr, up 28 pc ( launched 15 new products in FY 24 in Asia AoR )

Africa branded - 155 cr, up 7 pc ( launched 5 new products in FY 24 in Africa AoR )

US Generics - 252 cr, down 5 pc ( launched 4 new products in US in FY 24 )

Africa institutional generics - 86 cr, up 180 pc ( basically anti-malarial products )

Money spent on R&D @ 86 cr for Q3 @ 5 pc of sales

Expect logistics costs to go up in Q4 due ongoing red-sea issues

EBITDA margin guidance for full FY 24 @ 27 +/- 1 pc. Margins should inch up further for next 2-3 yrs !!!

Capex for entire FY 24 expected @ 125 cr ( including maintenance capex, Rs 80 cr already spent )

Company expanded its number of MRs for its Asia, Africa branded business over the last few Qtrs. Hope to see increased MR productivity and mid to low teen top line growth in these geographies over next 2 yrs

Company is open for inorganic growth in the domestic mkts as they r generating healthy cash flows

If they r not able to identify acquisition tgts, they ll keep paying hefty dividends

Price erosion in US Mkts is abating, general mkt conditions turning favourable

On malarial vaccines having an impact on their Africa institutional business - vaccine efficacy isn’t very good. Plus the roll outs have been very slow. Don’t see a major impact on their business in next 3-5 yrs

Likely to file 8-12 ANDAs in US in next FY vs 6-8 ANDAs this FY. Hence the R&D costs should be higher

Company’s rank in the covered Mkts -

Opthal - 02

Cardio - 10

Derma - 05

Pain Management - 10

Company aspires to grow by 15 pc on topline in Q4

Disc : hold a tracking position, biased, not SEBI registered

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995

This growth for q4 is qoq or yoy?

996

They r guiding for 15 pc YoY growth for Q4

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Ajanta came up with another good set of nos, with sales growing by 20% and EPS by 69%. Management seemed confident of maintaining (and potentially improving) their EBITDA margins in FY25. They have been very disciplined with their capital return program and have announced another buyback at 2770. This makes it their 5th buyback since 2019. Concall notes below.

FY24Q4 concall

  • Sales grew at 20%, Gross margin 75%, EBITDA margins ~ 26%, PAT margins ~ 19%

  • Expect low teens sales growth in FY25 with branded generics growing in mid-teens and 28% EBITDA margins

  • Buyback of 285 cr. at Rs.2770/share

  • US :

    • 32% YOY growth (FY24 growth of 16%) (0 new launches)

    • Target to file 8-12 products in FY25 and growth of low double-digit

    • FY25: Expect 6 launches (1 launch in Q1, Q2, and remaining in Q3/Q4)

    • 8-10% price erosion, shortages have gone up, market is favorable

  • Domestic :

    • 14% YOY growth (FY24 growth of 11%), launched 2 new products (0 first launch in India). In FY24, launched 15 new products (4 first launch in India)

    • MAT March 2024 : Volume 1.3% (vs 0.7% IPM), Price: 4% (vs 4% IPM), New product: 4.1% (vs 2.9% IPM)

    • Cardiac MAT growth of 4% in March 2024 (vs 10% for IPM). Ex MetXL, growth was 11%. Q4 growth was 14% as price impact of MetXL got nullified

    • Trade generics : 41 cr. (vs 42 cr. in Q4FY23), 161 cr. (vs 151 cr. in FY24)

    • Added 200+ MRs in India (MRs increased to 3000+ vs 2800+ in Q3FY24)

  • Emerging market (branded generics)

    • Africa branded grew by 13% (FY24 growth of 5%) (launched 9 new products in Africa in FY24)

    • Asia branded grew by 18% (FY24 growth of 10%) (launched 18 new products in Asia in FY24). 75-80% of portfolio is chronic

    • Launched 7 new products in emerging markets (27 in FY24)

  • Africa institution

    • Growth of 23% YOY (FY24 growth of 31%)

  • FY24 CAPEX: 160 cr. (expect 175-200 cr. capex + maintenance in FY25). Don’t need to add capacity for next 2 years

  • R&D stood at 5% of sales (expect it to be at 5% going ahead)

  • Global MR count is 4,800+ (vs 4,500+ in Q3FY24). Indian MRs increased to 3,000+ (vs 2,800+ in Q3FY24). Majority of global MRs are in Africa

Disclosure: Invested (position size here, no transactions in last-30 days)

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