Ajanta Pharma Shares Climb 13% Amid Buyback Plan And Strong Q4 Results

Mumbai-based Ajanta Pharma Ltd on Friday surged 13% in Friday's trading session. This surge was primarily fueled by the unveiling of its March quarter (Q4) results and the announcement of a substantial share buyback plan amounting to Rs 351 crore, inclusive of tax, at Rs 2,770 per share.

Ajanta Pharma shares climb 8.60% to Rs 2,424.95 on the BSE, while the stock also rises 8.55% to Rs 2,422.95 on the NSE.

The buyback price represented a significant premium of 24% over Ajanta Pharma's previous closing price of Rs 2,233.10. Despite this surge, analysts remain divided on whether the stock still holds potential for further gains.

"Ajanta Pharma (AJP IN) Q4 FY24 Revenue and EBITDA were above expectations, led by strong growth in Africa Institutional Sales, which reported 23% YoY growth and better than expected gross margins (due to softening of API prices). Growth in branded markets was strong and in line with our expectations. Asia, Africa, and India sales grew by 18%, 13%, and 14%, respectively, on a YoY basis," Systematix Institutional Equities said.

However, despite the positive performance, some analysts caution that the stock's upside potential may be limited. Target prices for Ajanta Pharma shares range between Rs 2,560 and Rs 2,613, indicating a subdued outlook for further appreciation.

"Ajanta Pharma's guidance for a flattish EBITDA margin of 28% for FY25, citing challenges such as the Red Sea issue and increased expenses. Nevertheless, the company remains optimistic about potential improvements, anticipating stabilization of raw material prices and easing pricing pressures in the US market" Systematix Institutional Equities added it.

The company's business segments also demonstrated mixed results, with Asia business sales witnessing a healthy uptick of 18% year-on-year but experiencing a slight decline of 3.8% quarter-on-quarter.

Conversely, US business sales showcased robust growth, expanding by 32.5% year-on-year and 3.6% quarter-on-quarter. Ajanta Pharma has continued to bolster its presence in the US market, receiving six ANDA approvals during the financial year and filing an additional seven ANDAs.

Currently, the company boasts a portfolio of 44 commercial products in the US.

"With new launches, MR additions, and increased market share in existing products, AJP remains in good stead to outperform in the branded generics market (70 percent of FY24 sales). AJP continues to build the ANDA pipeline for the US market and implement efforts towards consistent compliance," Ajanta Pharma said.

The financial results for Q4 FY24 underscore Ajanta Pharma's robust performance, with consolidated net profit surging by 66% to Rs 202.72 crore compared to the same period last year. This impressive growth was supported by a substantial increase in revenue, which soared by 20% to Rs 1,054.08 crore.

Moreover, the company's EBITDA witnessed commendable growth, reaching Rs 278.4 crore, reflecting a significant improvement from the previous year.

Ajanta Pharma's stellar Q4 results and the announcement of a share buyback plan have propelled its shares to new heights. While analysts remain cautious about its future upside potential, the company's strong performance and strategic initiatives position it well for sustained growth in the pharmaceutical industry.