Our recent interaction with Ajanta Pharma (AJP IN) management has strengthened our conviction on business of the company. We raise the PE multiple from 17x to 20x to factor AJPs efforts to have strong footing in regulated market over next 2-3 years and sustained momentum in existing business in domestic formulation segment and emerging markets. The capex as well as R&D work is on track for next phase of growth. Accordingly, we raise our PT from Rs1,569 to Rs1,846. Despite our PT being 21.6% lower than current market price, we upgrade from SELL to HOLD. We have not yet factored the potential upside in earnings from regulated market as it is subject to approvals. The under-estimation has also led to lower price target. However, we maintain positive stance on the stock.
Valuation: We raise PE multiple from 17x to 20x to factor enhanced visibility for growth in revenue as well as profitability from regulated market and sustained growth in earnings from existing branded business in domestic formulation segment and emerging market. Accordingly, we raise our price target from Rs1,569 to Rs1,846. Despite our price target being lower by 21.6% from current market price, we upgrade the stock from SELL to HOLD on increased confidence on business as well as management execution. Also, we have not yet factored any upside in earnings from regulated market in our current estimates, which makes our earning estimates look subdued. However, we remain positive on the stock on long term basis.