Buy Ajanta Pharmaceuticals; target of Rs 1495: ICICI Direct

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

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ICICI Direct's research report on Ajanta Pharmaceuticals

Ajanta Pharma is a focused player in branded, which constitutes ~72% of overall sales, spread across geographies including India. As of FY22, overall exports: domestic formulations ratio was at 70:30 • Among exports, Asia accounts for ~35% of export formulations, Africa 34% & US 30%. The company also participates in anti-malarial tenders in Africa (included in Africa).

Outlook

We maintain BUY as it remains a compelling play on branded generics (~72% exposure) with strong execution track record and financials. Valued at Rs 1495 i.e. 21x P/E on FY24E EPS of Rs 71.1.

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Ajanta Pharmaceuticals - 290722 - ic