Ajanta Pharma came out with FY22 annual report, here are my notes.
http://www.ajantapharma.com/AdminData/AnnualReports/AnnualReportFY2021-22.pdf
Product launches:
- Launched 16 (vs 21 in FY21) products in India out of which 4 (vs 5 in FY21) were first to market. Have a basket of 300+ products (vs 300 in FY21) with 50% being 1st to market
- 3 launches in USA
- Developed 14 APIs (vs 23 in FY21)
Branded Generics (73% of revenues; grew @23% to 2’382 cr.):
- Indian branded generics (982 cr.) grew at 21% (IQVIA reported Ajanta growth of 18% vs 18% for IPM). IPM rank dropped to 29 from 28 in FY21
- India ophthalmology: Growth of 25% vs industry growth of 21% (IPM rank maintained at 2)
- India cardiology: Growth of 11% vs industry growth of 10% (IPM rank maintained at 18)
- India dermatology: Growth of 17% vs industry growth of 10% (IPM rank maintained at 15)
- India pain management: Growth of 28% vs industry growth of 22% (IPM rank improved from 33 in FY21 to 32 in FY22)
- Emerging market branded generics (1’400 cr.) grew at 24%
Generics and Institutional (27% of revenues; de-grew @(-1%) to 902 cr.):
- Africa anti-malaria institutional business (206 cr., 6% of revenues) de-grew at (–24%)
- US generics business (696 cr., 21% of revenues) grew at 9%. Filed 8 ANDAs (vs 2 in FY21) vs target of 10-12 ANDAs and launched 3 new products. Plans to file 10-12 ANDAs in FY23. Awarded as the Best Overall Generic Manufacturer in the category of less than USD 100 million sales for the 2nd time by Distribution Industry for Notable Achievements (DIANA)
R&D
- Developed Extended-Release/Delayed-Release oral solid dosage form products using Matrix technology (repeat of FY21 AR)
- Developed products based on solid dispersion technology similar to innovator products (repeat of FY21 AR)
- 750+ scientists
- Total R&D expenses was 6% (vs 5% in FY21) of revenue (204 cr. vs 139 cr. in FY21) most of which was expensed
Financial Performance:
- Consolidated revenue grew by 16% to 3’341 cr.
- EBITDA margin normalized at 28% (vs 35% in FY21) due to resumption of marketing and R&D activities
- PAT grew by 9% to 713 cr.
- Cash ~ 334 cr. (vs 375 cr. in FY21), Paid back 436 cr. (vs 250 cr. in FY21) (buyback + dividend) and generated operating free cashflow of 453 cr. (vs 284 cr. in FY21)
- Gross margins compressed from 78% to 75% due to API price increase, USA price erosion, and product mix change
- ROCE was down from 30% in FY21 to 27% in FY22
- Employee cost remained at 19% of sales and other expenses increased from 24% of sales in FY21 to 28% in FY22
Strategy:
- Three pillars: Smart product selection, superior formulation development capabilities, focused business segments
- Will focus on branded generic business and allocate more resources on product registrations, team, and launch of new products which will increase marketing expenses
- Be a niche player in global pharma space with a customized market specific product portfolio focusing on 1st to market products
- US: Launch of limited competition products and have an impeccable service record thus becoming a preferred partner for customers
Share issuances:
- ESOP: During the year, 4’000 shares were issued against options exercised (vs 5’500 in FY21) and 3’000 new options were granted (vs 3’000 in FY21)
- Bought back 1’120’000 shares at 2’550 price (vs 735’000 shares at 1’850 price in FY21)
Other Points:
- Spent 154 cr. on CAPEX (vs 145 cr. in FY21). FY23 maintenance capex will be ~200 cr.
- Net fixed asset turns improved to 2x in FY22 (vs 1.8x in FY21)
- Receivable days increased to 113 days (vs 95 days in FY21) due to US
- Inventory days reduced to 88 days (vs 98 days in FY21) due to supply chain normalization
- Trade payable was reduced to 70 days (vs 91 in FY21) to take advantage of early payment discounts from suppliers
- Sources raw materials from over 2,550 suppliers
- Invested 25 cr. in ABCD Technologies LLP (to be renamed as Indo Health Services LLP) for 4% equity
- Auditor remuneration at 1.1 cr. (vs 0.99 cr. in FY21)
- Hedging policy: ~70% of company’s income via exports with major currency exposure being in USD, the company generally does currency hedging up to a maximum period of 6 to 18 (vs 12 in FY21) months and up to the extent of 50% to 150% (vs 75% in FY21) of its net foreign exchange earnings.
- No major contingent liability (~7 cr.)
- Employee count: 7‘234 (vs 7’035 in FY21) (median salary increase: 12.67%)
- Non managerial remuneration hike was 12.67% and managerial remuneration hike was 41% (in-excess of performance)
- CSR: Spent 13.13 cr. vs obligation of 12.60 cr. (0.53 cr. available for set off)
- Share price high: 2435, low: 1631.15
- Number of shareholders: 62’139 (vs 45’826 in FY21)
- Ajanta Pharma Mauritius Limited (APML) closed down its 25-years old manufacturing unit as it needed upgrade involving major capex that was commercially unviable. Company has sufficient manufacturing capacity in India and all supplies would be catered from India. APML will continue to operate with trading activities. APML’s subsidiary Ajanta Pharma Mauritius (International) Limited located in the Free Trade Port is being wound up as it has lost its relevance due to rationalization of tax structure in Mauritius
Disclosure: Invested (position size here, no transactions in last-30 days)