Ajanta Pharma: To maintain growth trajectory and superior fundamentals; buy
The company has a marketing workforce of 700 people that reach 75,000 doctors and 125,000 pharmacies. It supplies its products to various government institutions like defence, state and national government hospitals under purchase schemes.
APL caters to therapeutic areas like cardiology, ophthalmology and dermatology. It manufactures various dosage forms such as tablets, capsules, injections, ointments and powders. Company manufacturing facilities are located at India, Mauritius and Turkmenistan.
The company’s research and development division conduct activities in three aspects namely new drug delivery system (NDDS), formulation and development and herbal/ nutraceutical.
Ajanta's first brand, Pinkoo Gripe Water, continues to be one of the leading products in the market.
Products
- Allopathic - This division manufactures drugs for anthelmintics, antibiotics, anti–diarrhoeal, anti-histaminics anti–malarials, anti–retrovirals, anti-tussives / bronchodilator, anti–TB, cardiovascular and many more. APL has created products like Uniminth, Apmox, Cetazone, Norfloxacin, Oral Rehydration Salts, Apifen and many more.
- Herbal - Under this company manufactures various pharmaceutical products such as Apcosule, Figurin, Apdyl-H, Imnohans and many more.(Source: Shine.com)
Q1FY13 Result Update
Ajanta Pharma reported excellent results for Q1FY13. Sales inclined 36.7% YoY. EBITDA Margins expanded 460 bps to 21.3% on a YoY Basis. Net Profit margins expanded 140bps to 11.2% YoY. Going forward these 20%+. Margins are sustainable according to the Management. Sales and Profits have grown at a 3 year CAGR of 24 and 52% respectively in the past.
|
Projections |
|
|
|
|
In Rs Crs |
FY13E |
FY14E |
|
|
Sales |
816.875 |
972.615 |
|
|
EBITDA |
172.075 |
206.33 |
|
|
EBITDA M |
21.07% |
21.21% |
|
|
PBT |
119.275 |
142.855 |
|
|
PBT M |
14.60% |
14.69% |
|
|
PAT |
99.55 |
119.95 |
|
|
No of Shrs |
|
|
|
|
Crs |
1.18 |
1.18 |
|
|
EPS |
84.36441 |
101.6525 |
|
|
Debt |
165.55 |
235.55 |
|
|
Interest |
|
21.94 |
|
|
NW |
384.81 |
488.93 |
|
|
ROE |
29.16% |
27.46% |
|
|
BVPS |
326.11 |
414.35 |
|
|
#Consensus Estimates |
From Brokerage Reports |
||
|
PEER COMPARISON |
|
|
|
|
|
(Source: Edelweiss) |
|
|
|
|
|
COMPANIES FUNDAMENTAL COMPARISON Valuation |
AJAPHA |
LUPLTD |
DIVLAB |
MATLAB |
|
PE (x) |
11.03 |
26.97 |
28.43 |
8.13 |
|
Price to Book Value (x) |
2.8 |
6.3 |
6.74 |
2 |
|
EV to Sales (x) |
1.35 |
3.62 |
7.7 |
1.34 |
|
EV to EBITDA (x) |
6.16 |
17.45 |
19.2 |
5.64 |
|
Dividend Yield (%) |
1.05 |
0.6 |
1.2 |
0 |
|
Valuation Matrix |
|
|
|
|
|
|
CMP |
733.55 |
Rs |
|
|
|
|
|
Sales |
NP |
P/E |
P/Bv |
ROE(%) |
|
FY13E |
816.875 |
99.55 |
8.695018 |
2.249393 |
29.16% |
|
FY14E |
972.615 |
119.95 |
7.216248 |
1.770374 |
27.46% |
So what is the justifiable P/E and PT for Ajanta Pharma?
|
Ajanta Pharma |
Consensus |
FY14E |
|
|
|
|
Debt |
235.55 |
t rate |
0.18 |
|
|
|
Networth |
488.93 |
Beta |
0.7 |
|
|
|
D+E |
724.48 |
D/(D+E) |
0.32513 |
|
|
|
ROE |
27.46 |
E/(D+E) |
0.67487 |
|
|
|
TGR |
3 |
Interest |
21.94 |
RFR |
|
|
WACC |
10.79092 |
Risk Prem |
6 |
8.11 |
|
|
Cost of Debt |
|
7.637784 |
WACD |
2.483271 |
|
|
Cost of Equity |
|
12.31 |
WACE |
8.307653 |
|
|
|
|
|
|
|
|
|
TGR/WACC-TGR |
|
0.385063 |
|
|
|
|
ROE-WACC |
|
16.66908 |
|
|
|
|
ROE*WACC |
|
296.3188 |
|
|
|
|
((TGR/WACC-TGR)*((ROE-WACC)/(ROE*WACC)) |
|
2.166131 |
|||
|
1/WACC*100 |
|
|
|
|
9.267047 |
|
JUSTIFIABLE P/E |
|
|
|
|
11.43318 |
|
|
|
|
|
|
|
|
Coloured Cells are output cells and not to be touched |
|
||||
|
|
|
|
|
|
|
|
Method 2 |
|
|
|
|
|
|
g |
0.03 |
|
|
|
|
|
1+g |
1.03 |
|
|
|
|
|
DPS |
12.2 |
|
|
|
|
|
EPS |
101.6525 |
|
|
|
|
|
1-D Payout |
0.879983 |
|
|
|
|
|
r |
0.107909 |
|
|
|
|
|
Justifiable PE |
|
11.63383 |
|
|
|
|
TP |
1182.608 |
|
|
|
|
|
|
|
|
|
|
|
|
Method 3 |
|
|
|
|
|
|
Div Payout Ratio |
|
0.120017 |
|
|
|
|
COE |
|
0.1231 |
|
|
|
|
Ret Rate |
|
0.879983 |
|
|
|
|
Exp Growth in Div |
|
0.108326 |
|
|
|
|
Justfiable P/E |
|
8.123477 |
|
|
|
|
PT |
|
826 |
|
|
|
|
Avg Justifiable P/E |
|
10.39683 |
|
|
|
|
PT |
|
1056.864 |
|
|
|
|
Justifiable P/BV |
|
|
|
|
|
|
|
|
|
|
|
|
|
ROE |
27.46 |
|
|
|
|
|
TGR |
3 |
|
|
|
|
|
ROE-TGR |
24.46 |
|
|
|
|
|
COE |
12.31 |
|
|
|
|
|
COE-TGR |
9.31 |
|
|
|
|
|
Justifiable P/BV |
|
2.627282 |
|
|
|
|
P/BV |
1.770374 |
|
|
|
|
|
CMP |
733.55 |
|
|
|
|
|
PT |
1088.608 |
|
|
|
|
|
#Inputs Based on Concensus Estimates |
|
|
|
||
|
Method 4 |
Source |
Of Formula |
Vectorvest |
|
|
|
Value of the stock(V)=100*(E/I)*SQRT((R+G)/(I+F)) |
|
|
|||
|
E=EPS |
|
|
|
|
|
|
I=RFR |
|
|
|
|
|
|
R=1*SQRT(ROCE/I) |
|
|
|
|
|
|
E=Earnings Growth |
|
|
|
|
|
|
F=CPI |
10.02 |
|
|
|
|
|
100*(E/I) |
1253.422 |
|
|
|
|
|
N+I+T |
167.6039 |
|
|
|
|
|
CE |
637.42 |
|
|
|
|
|
ROCE |
26.29411 |
|
|
|
|
|
R |
1.800606 |
|
|
|
|
|
G |
20.49221 |
|
|
|
|
|
SQRT((R+G)/(I+F)) |
1.108878 |
|
|
|
|
|
Value of the stock(V)=100*(E/I)*SQRT((R+G)/(I+F)) |
1389.892 |
|
|||
|
Altman's Z Score |
In Crs |
|
|
|
|
Ajanta Pharma |
|
FY12A |
|
|
|
EBIT |
108.9 |
|
|
|
|
Total Asset |
648.8 |
|
|
|
|
EBIT/TA*3.3 |
|
0.5539 |
|
|
|
|
|
|
|
|
|
WC |
82.07 |
|
|
|
|
WC/TA*1.2 |
|
0.151794 |
|
|
|
|
|
|
|
|
|
Net Sales |
677.4 |
|
|
|
|
NS/TA*0.9 |
|
0.939673 |
|
|
|
|
|
|
|
|
|
Retained |
|
|
|
|
|
Earnings |
286.23 |
|
|
|
|
RE/TA*1.4 |
|
0.617636 |
|
|
|
|
|
|
|
|
|
M.Cap |
865.589 |
|
|
|
|
CMP |
733.55 |
|
|
|
|
No of Sh |
1.18 |
|
|
|
|
|
|
|
|
|
|
M.cap/TL*0.6 |
|
0.800483 |
|
|
|
|
|
|
|
|
|
Z score |
|
3.063486 |
|
|
|
|
|
|
|
|
|
Coloured cells are Output cells and are Not to be Touched |
||||
Ajanta Pharma trades at attractive valuations of 8.7x and 7.2x FY13E and FY14E EPS. The record date for stock split is 10th August 2012. The FV shall reduce from 10 to 5. Given the stock's high growth trajectory the valuation gap between Ajanta Pharma and its peers should get reduced. Value the stock at 11.6x FY14E EPS of ~102 with a price objective of Rs1183. Upside potential of ~61% in the medium term. Maintain BUY. An Altman’s Z-score of 3.06 makes the company immune to adverse macroeconomic circumstances. Company to maintain growth trajectory and superior fundamentals.
Disclaimer: The author has taken due care and caution to compile and analyze the data. The recommendations are his/her personal views. He/she shall not accept any liability whatsoever arising from the use of any of the above content.
Sources have been mentioned at relevant places in the article. In spite of this, the author does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
The author does not hold positions in the stock.
|
BSE
979.00 -9.85 (-1.00%) NSE
979.45 -9.75 (-0.99%) |
Read More
|
World News
Other Articles
- Ajanta Pharma Q4FY13: Impressive improvement in margins
- Ajanta Pharma: Impressive improvement in margins
- Ajanta Pharma: Buy at CMP and add on dips
- Ajanta Pharma: Stellar performance continues
- Ajanta Pharma: Book partial profits
 |
Motilal Oswal |
- Macroeconomic indicators & Stock markets
- Midcap/Smallcap Indices - Time to catch up and stop under performing?
- MF Scheme Analysis: Franklin India Bluechip Fund (G)
- Note on RBI's Monetary Policy Announcement for 2013-14
- South Indian Bank Q3FY13: Results in line with expectations, retain accumulate More
Also On Valuenotes.Com
The Art and Science of Buying Life InsuranceInvest early in your careerKnow your PAN card betterRallis India: Industry environment gradually improvingJ&K Bank Q4FY13: Risk Reward favourable, Maintain BUYTech Mahindra Q4FY13: Beaten expectation, but challenges aheadWeek ahead: Nifty surging higher, the bulls remain in controlDow Theory: A tool for technical analystsEquity markets witnessed a choppy session of trade
Reader's Comments
Discussion
22nd May 2013 | 06:45 am
Stock Tips : 22 May Intraday Stock Tips
22nd May 2013 | 05:36 am
Stock Tips : Intraday Single Target Profitable TIps In Stock Futures