Ajanta Pharma Set to Reach Rs 3400: Prabhudas Lilladher Maintains Bullish Outlook
Ajanta Pharma Posts Strong Q4FY26 EBITDA Growth
Ajanta Pharma's Q4FY26 EBITDA growth has surpassed expectations, registering a strong 26% year-over-year (YoY) increase to INR3.75 billion, with an operating profit margin (OPM) of 26.4%. This beat was primarily driven by higher revenues and margins in the US market. The research report by Prabhudas Lilladher notes that the recent in-licensing agreement with Biocon for marketing semaglutide in 26 countries across Rest of World (RoW) markets is a good fit, given Ajanta Pharma's existing strong franchise across these markets.
Ajanta Pharma's focus on the high-growth branded generics (BGx) market, which spans India, Asia, and Africa, has contributed significantly to its revenue growth. In FY26, the BGx market accounted for 70% of the company's total revenue. Furthermore, the strong annual free cash flow of INR8-10 billion will enable Ajanta Pharma to sustain its investments and explore potential inorganic opportunities, reinforcing its medium-term growth visibility. As a result, Prabhudas Lilladher has increased its FY27E and FY28E earnings per share (EPS) estimates by 1-3%.
Medium-Term Growth Outlook
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Looking ahead, Prabhudas Lilladher expects Ajanta Pharma's EBITDA and profit after tax (PAT) to grow at a compound annual growth rate (CAGR) of 17% over FY26-28E, with a healthy return on equity (RoE) and return on capital employed (RoCE) of 25% and 31%, respectively, in FY27E. The company is currently trading at a price-to-earnings (P/E) ratio of 25x and an enterprise value-to-EBITDA (EV/EBITDA) multiple of 17x as of FY28E.
| Metric | FY26 | FY27E | FY28E |
|---|---|---|---|
| P/E Ratio | - | - | 25x |
| EV/EBITDA | - | - | 17x |
Recommendation
Given the company's strong growth prospects, Prabhudas Lilladher maintains its BUY rating on Ajanta Pharma with a revised target price of INR3,400 per share, based on a P/E multiple of 30x for FY28E EPS.
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Investor Takeaway
Maintain BUY rating with revised TP of INR3,400/share (30x FY28E EPS).
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