Ajanta Pharma surges 11% in subdued market on healthy business outlook

In the past two months, the stock has surged 35 per cent after it reported a healthy set of numbers for June quarter

Ajanta Pharma

Photo: Twitter @AjantaPharmaLtd

SI Reporter Mumbai

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Shares of Ajanta Pharma hit a record high of Rs 1,903.85 as they rallied 11 per cent on the BSE in Wednesday's intra-day trade on improved business outlook. The stock of the pharmaceutical company surpassed its previous high of Rs 1,805.70 touched on August 17.

At 11:08 AM, Ajanta Pharma was trading 8 per cent higher at Rs 1,852.60, as compared to 0.03 per cent rise in the S&P BSE Sensex.

In the past two months, it has surged 35 per cent after it reported a healthy set of numbers for the June quarter (Q1-FY24). Thus far in the calendar year 2023, it has zoomed 53 per cent, as against 10 per cent gain in the benchmark index.

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Ajanta Pharma is a specialty pharmaceuticals formulation company with a well-diversified Branded Generics business spread across India, the rest of Asia, and Africa. Ajanta's business also consists of two more verticals: US Generics and Institutional business in Africa. These two verticals are facing headwinds and the company said it remains cautiously opportunistic for them.

The management is confident to scale up margins again in the coming years on the back of the enhanced contribution of Branded Generics business, and normalisation of freight costs. This will also add surety, scalability, and sustainability to the business.

Meanwhile, for Q1-FY24, Ajanta Pharma had reported a strong operational performance as it reported earnings before interest, taxes, depreciation, and amortisation (Ebidta) growth of 22 per cent year-on-year (YoY) at Rs 271 crore in the June quarter. Ebidta margin improved 321 bps at 26 per cent.

The company's revenue grew 7 per cent YoY to Rs 1,021 crore mainly driven by Branded generics as well as the US generics, both of which grew 6 per cent YoY and 19 per cent YoY, respectively. Profit after tax rose by 19 per cent at Rs 208 crore.

"The excellent performance during the quarter was on the back of the market share gain, price increase and new product launches. India business contributed 32 per cent in the total revenue with sales of Rs 319 crore against Rs 279 crore posted a healthy growth of over 14 per cent. During the quarter," the company had launched 3 new products and said it has a pipeline of launches lined up for the coming year.

After the disruptions of the past three years, the outlook for global spending on medicines has become clearer as the uncertainties give way to more predictable challenges. Policymakers across developed and emerging economies are shifting from crisis to rebuilding modes with a focus on longer-term sustainability issues, Ajanta Pharma said in its FY23 annual report.

The use of medicines globally plateaued in 2022 following a significant rebound in 2021 as markets recovered from the pandemic. As per the IQVIA report, 'Global use of Medicines 2023'. Overall volume is expected to grow 1.6 per cent CAGR through 2027 driven by Asia-Pacific, India, Latin America, Africa, the Middle East, and China. All of these regions are expected to exceed global volume growth, the company said.

First Published: Sep 13 2023 | 11:33 AM IST

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