Ajanta Pharma

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994

**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

2 Likes
995

This growth for q4 is qoq or yoy?

996

They r guiding for 15 pc YoY growth for Q4

1 Like
997

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)

8 Likes
998

I see a pledge being created by one of the promoters for refinancing. Normally share pledge by promoter is viewed negatively. Ofcourse, it can be viewed positively, if the fund is used for right reason. Share price of Ajanta pharma has raised. Does anyone know the reason and explain?

1 Like
999

In past also multiple times they did same. It’s a small pledge. Nothing to worry about. It’s a cash rich company.

1 Like
1001

A few observations from the Ajanta Annual Report FY2023-24:

  1. As per IQVIA MAT March 2024, Ajanta’s faster growth is contributed mainly by volumes and new launches. Volume was about 2x to IPM, and new launches were about 1.4x to IPM.

  2. In India, over 50 % of the 300+ strong product portfolio is first-to-market.

  3. During the year, manufacturing facilities at Paithan and Dahej have cleared the US FDA inspections with zero observations (among 4 % in the world).

  4. During the year, 7 new ANDAs were filed, 6 ANDA approvals received. Totally 44 products available on shelf and 22 ANDAs are awaiting approval with the US FDA.

  5. In India, a total of 10 Dossiers filed to DCG(I) for Domestic Market. DCG(I) Approval for 6 products received including 3 products approvals for 1st time in country - 2 for products having novel triple drug combination of antihypertensive therapeutic category and 1 for new dosage form (Jelly) for drug of 1 therapeutic category.

  6. A total of 516 product Dossiers filed for export registration in ROW markets and 469 approvals received.

  7. Strengthened the branded generics business by penetrating deeper into existing markets, expanding into new promising countries, and increasing field force to widen reach with medical professionals through segment-focused marketing.

  8. Scaled up margins on the back of the enhanced contribution of Branded Generics business and normalisation of freight costs. Saved about 300 basis points in API procurement and Rs.100 crore in logistics costs during the year. EBITDA margin stood at 28 % which is among the best in the industry. Expect this to now remain at this level or see small improvement in coming years.

  9. One of the key additions to the company’s capability during the year was the first-ever ‘Form Fill Seal’ machine for drinkable ampoules at one of the facilities. A drinkable ampoule is an airtight container that holds a single dose of liquid medication for patient use and the company is probably the first in India to use this technology.

  10. Commissioned a new 6.4 MW solar power plant at Partur in Maharashtra, taking renewable energy portfolio to 30 %+ of total energy consumption. Aim to take this to 50 % in the next two years and 100 % by FY2032.

  11. In FY 2025, expect the U.S. business to grow at a much slower pace in the wake of fewer launches, that too towards the end of the financial year.

  12. No new capex expected in FY25 except maintenance capex estimated to be about Rs.250 cr.

  13. Five growth levers:

  • New product launches across markets
  • Increased market share in existing products
  • Increasing the field presence as needed
  • Add new countries
  • Focus on digitalization & data analytics

(Disc.: Invested)

4 Likes
1002

Ajanta continues its steady execution, sales grew by 12% and EPS by 18%. Concall notes below.

FY25Q1 concall

  • Sales grew at 12%, Gross margin 77%, EBITDA margins ~ 29%, PAT margins ~ 21%

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

  • Employee costs increased by 33% as they took one-time gratuity provisions of 30 cr. (ex-of that, employee costs increased by 19%)

  • US :

    • 7% YOY growth (2 new launches)

    • Target to file 8-12 products in FY25 and mid-single digit growth in FY25

    • Higher single digit price erosion, market is favorable

  • Domestic :

    • 10% YOY growth, launched 1 new product (1 first launch in India)

    • MAT June 2024 : Volume 0.4% (vs 0.5% IPM), Price: 4.8% (vs 4.2% IPM), New product: 3.8% (vs 2.9% IPM)

    • Cardiac quarterly growth was 14.8% in Q1FY25 (vs 12.2% for IPM)

    • PCPM has touched 4 lakhs in Q1 (vs 3.5 lakhs in FY24)

    • Trade generics : 41 cr. (vs 36 cr. in Q1FY24)

  • Emerging market (branded generics)

    • Africa branded grew by 45% (launched 2 new products in Africa)

    • Asia branded grew by 9% (launched 7 new products in Asia)

    • Launched 9 new products in emerging markets

    • Might add 100-150 MRs towards end of FY25

    • Will focus on growing aggressively in Central Asia and Anglo Africa

    • Currently they have hedged currency for next 6-month sales, they go upto 9-10 months depending on their view on currency

  • Africa institution

    • Decline of (-)36% YOY

  • Running at 60-65% capacity utilization

  • R&D stood at 4.5% of sales

  • Renewable energy contributed 30% of energy needs

Disclosure: Invested (no transactions in last-30 days)

12 Likes
1003

I guess the most important point in the concall is this – after a long time, Ajanta talks about entering into new therapies. This will be the fifth one, after Derma, Cardio, Opthal and Pain Management. An announcement can be expected soon.

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1 Like
1004

Ajanta continues growing quite well and keeps generating (and distributing) very healthy cashflows. They are looking to get into newer therapies and pushing their branded generics business. Concall notes below:

FY25Q2 concall

  • Sales grew at 15%, Gross margin 78%, EBITDA margins ~ 26%, PAT margins ~ 18%

  • Announced dividend of 28/share; H1FY25 payout is 701 cr. (90% of CFO)

  • US :

    • (-2)% YOY decline (no new launches). Launches lined up for Q4 (4 launches in H2)

    • ANDA approvals reduced to 55 (vs 58 in Q1)

    • Target to file 8 products in FY25 (reduced from 8-12 earlier)

  • Domestic :

    • 9% YOY growth, launched 10 new products (3 first launches in India)

    • Looking to get into newer specialties

    • Cardiology growth rate continues reviving (Q2 according to IQVIA: 16% vs 12% for IPM)

    • 12 brands with 25 cr.+ revenues (vs 11 in Q1)

    • Trade generics : 46 cr. (vs 45 cr. in Q2FY24). India has 15,000 Janaushadhi stores (vs 7-8 lakh chemists)

    • MR productivity (PCPM) has increased to 7.5 lakhs/month

  • Emerging market (branded generics)

    • Africa branded grew by 35% (launched 1 new product in Africa). Growth will be lower in H2FY25 (overall expect mid to high teens growth in FY25)

    • Asia branded grew by 28% (launched 6 new products in Asia)

    • Launched 13 products in emerging markets

  • Africa institution

    • Increase of 16% YOY

  • MRs increased to 5100+ (vs 4800+ in Q1). Indian MRs increased to 3200+ (vs 3000+ in Q1)

  • Other expenses increased by 36% (25.65 cr. was forex losses in Q2, H1: net forex loss was 5 cr.). H2 other expenses will be in-line with H1. Excluding forex losses, H1FY25 other expenses were 590 cr. (vs 534 cr. in H1FY24) and this is in-line with their growth

  • Capex: 130 cr. in H1 and expected to be 200 cr. in FY25

  • Working capital improved with debtors reducing to 81 days (vs 109 days in FY24) and inventory reducing to 67 days (vs 73 days in FY24). Payables reduced to 74 days (vs 85 days in FY24)

  • R&D stood at 5% of sales

Disclosure: Invested (sold shares in last-30 days)

11 Likes
1005

Does this affect Ajanta Pharma anti-malaria drug business ?

1006

PEPFAR is for AIDS, the funding for malaria comes from TGF (The Global Fund). The decision to pause all such funding will impact TGF as well. But the importance of anti-malaria institutional business to Ajanta’s revenues has been declining over the years. So there is an impact, but it will be minor.

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6 Likes
1007

Ajanta had a muted quarter with 4% sales growth but higher 14% EPS growth as their branded generics business contribution was higher. They have entered into 2 new therapies in domestic market and have added 200+ MRs in India which should ensure continued growth in domestic market. Concall notes below:

FY25Q3 concall

  • Sales grew at 4%, Gross margin 78%, EBITDA margins ~ 28%, PAT margins ~ 20%
  • US:
    o 6% YOY growth (2 new launches, 1 new approval). Expect double digit growth in FY26 (with 2-3 limited competition products)
    o ANDA approvals reduced to 51 (vs 55 in Q2)
    o Target to file 8 products in FY25 (4 filed in 9MFY25)
  • Domestic:
    o 12% YOY growth, launched 15 new products (4 first launches in India)
    o Entered two new therapies (nephrology, gynaecology) launching 12 new products with 200+ MRs. It will take atleast one year for the new MRs to be productive. They are now present in 6 therapies vs 4 therapies earlier
    o Trade generics: 43 cr. (vs 38 cr. in Q3FY24)
    o MR productivity (PCPM) for all therapies combined is 3.9 lakhs/month
  • Emerging market (branded generics)
    o Africa branded grew by 12% (launched 7 new products in Africa)
    o Asia branded grew by 8% (launched 9 new products in Asia)
    o Launched 10 products in emerging markets
  • Africa institution
    o Decrease of (-61%) YOY due to lower procurement from agencies. Expect (-40%) drop in FY25 vs FY24. USA withdrawing funding to adversely impact business
  • MRs increased to 5400+ (vs 5100+ in Q2, 4800+ in Q1). Indian MRs increased to 3500+ (vs 3200+ in Q2, 3000+ in Q1)
  • Employee costs increased by 15% vs only 4% sales growth thereby increasing employee costs to ~23% of sales. This is due to MR increase in India. Despite this increase, they expect to maintain EBITDA margin of ~28±1% in FY26
  • R&D stood at 5% of sales

Disclosure: Invested (no transactions in last-30 days)

1 Like
1008

AJANTA PHARMA -

Q4 and FY 25 results and concall highlights -

Q4 outcomes -

Revenues - 1170 vs 1054 cr, up 11 pc
Gross margins @ 76 vs 75 pc
EBITDA - 297 vs 278 cr, up 7 pc (margins @ 25 vs 26 pc)
PAT - 225 vs 203 cr, up 11 pc

FY 25 outcomes -

Revenues - 4648 vs 4209 cr, up 10 pc
Gross margins @ 77 vs 75 pc
EBITDA - 1260 vs 1172 cr, up 7 pc ( margins @ 27 vs 28 pc ) Lower EBITDA growth is due to accelerated increase in personal costs @ 21 pc due change in Gratuity policy. This should get normalised in next FY
PAT - 920 vs 816 cr, up 13 pc

Q4 segmental performance -

India branded formulations - 369 vs 326 cr, up 13 pc
Asia branded formulations - 303 vs 281 cr, up 8 pc
Africa branded formulations - 133 vs 113 cr, up 17 pc
US generics - 325 vs 261 cr, up 25 pc
Africa generics - 28 vs 61 cr, down 53 pc

FY 25 segmental performance -

India branded formulations - 1452 vs 1308 cr, up 11 pc
Asia branded formulations - 1191 vs 1057 cr, up 13 pc
Africa branded formulations - 750 vs 585 cr, up 28 pc
US generics - 1047 vs 964 cr, up 9 pc
Africa generics - 147 vs 249 cr, down 41 pc

Full yr R&D expenses @ 224 vs 208 cr

US generics business has witnesses 13 pc CAGR growth in last 4 yrs. Company has a total of 47 products on the shelf ( including 5 products launched in FY 25 ). Filed 6 products in FY 25. Aim to file another 8-12 products in FY 26

Asia and Africa branded businesses have grown @ 14 pc and 16 pc CAGR respectively in last 4 yrs. Company launched a total of 38 new products in Asia + African mkts in FY 25. Key mkts include - Africa, SE Asia, ME, East and Central Asia

India branded business has grown @ 12 pc CAGR in last 4 yrs. Company’s main therapies in India include - Cardiac, Ophtal, Derma and Pain management

FY 25 India growth @ 10.6 pc. Breakup of growth - Volume @ 2.5 pc, Price @ 5 pc, New Products @ 3.1 pc

14 of company’s brands in India now clock an annual sales of > 25 cr. 65 pc of company’s India sales come from Chronic therapies. 11 pc of company’s India sales are under NLEM. Company’s MR strength stands @ 3450

Some of company’s popular brands include -

Aquasoft ( moisturising cream and lotion )
Feburic ( to treat Gout )
Apdrops ( Ophthalmic antibiotic )
Met XL ( anti Hypertensive )
Soft Drops ( used to treat dry eyes )

Company has ventured into Gynaecology and Nephrology in the Indian mkt in FY 25. Have hired 200 MRs for the same. Added another 250 MRs in the 4 traditional therapies. Company acquired 3 brands in the pain management segment in Q4

Out of a total sales of 1452 cr from the India business in FY 25, Rs 170 cr sales came from trade generics segment

Breakup of India sales -

Cardio - 38 pc
Opthal - 29 pc
Derma - 23 pc
Pain management - 10 pc

Company expects EBITDA margins to expand to around 28 pc levels in FY 26 vs 27 pc in FY 25

Capex @ 318 cr in FY 25. Expect Capex for FY 26 @ 300 cr

Have added 450 MRs in FY 25. This should offset some of the gains in margins that would have otherwise accrued to the company in current next next FY due increased percentage of sales from Branded formulations

Expect the US business to grow in mid to high teens and the branded formulations business to grow in low teens in FY 26

Expecting R&D spends to continue to be around 5 pc of sales for next FY as well. Half of R&D expenses are directed towards US business

Company launched 4 new products in US mkt in H2 FY 25 and is planning to launch 7 new products in FY 26. These two factors combined give them the confidence of being able to grow @ mid to high teens in US in next FY

In India, company aspires to keep growing @ 2-3 pc higher than IPM growth rates. It should take 3-4 yrs for the company to make a meaningful mark in the new therapies that they have recently entered in India mkt ie Gynae and Nephro

The pain management brands that the company has acquired in Q4 have an annual revenues of 17 cr. Aim to grow them @ fast pace

Company believes, there r only 3 ways to spend their accumulated profits ie Capex, Dividends and Acquisitions. As long as they r not making any significant acquisitions, the dividend payments r likely to be liberal

Company believes that company should be able to keep growing in low to mid teens in the African and Asian mkts for foreseeable future - on the back of new products and deeper mkt penetration

At present, the tariffs on China vs India on Pharma product sales to US are @ 20 pc vs NIL. However, India is already far ahead of China in US mkt wrt formulations

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

5 Likes
1009

Results seem to have disappointed the markets. While sales growth was in line, margins for the quarter were lower leading to a dip in profitability. However,

  1. New product launches were 32 in India, a significant jump from 15 last year while launches in Emerging Markets were also higher 38 against 27.

  2. ANDA filings were 6 for the year while the target for FY26 stands at 10 to 12.

  3. Entered 2 new verticals - Nephrology and Gynecology.

  4. Acquired three small brands in Pain Management for about Rs.40 crore. These have a revenue base of Rs.17 crore, and the management says they can scale them up quickly and get a fast payback. This is the first acquisition they have made at least in the last 5 years.

  5. The number of MRs in India has risen to 3450 plus. That’s a more than 20 % increase in last six quarters. MR count in Emerging Markets has also increased.

  6. R&D expenses for the quarter were Rs.63 crore, the highest ever and a jump from Rs.53 crore the previous quarter.

  7. Lastly, some part of the growth last few years was being “eaten up” by low margin Africa institutional business, which has been declining in absolute terms last few years. It has now become significantly small at 3 % of revenues in FY25. So, its negative impact on the overall company growth will become less and less pronounced.

All these are minor points individually but cumulatively should add up to increased acceleration for the business the coming days. Tariff remain a wild card, though.

(Disc.: Invested)

5 Likes
1010

Very aggressive expansion recently. I think recent acquisition and expansion in sales tells the story. Will take some time though
Disc: not invested but tracking

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