Ajanta Pharma

Ajanta came up with a good set of nos in Q3, with sales growing by 14% and EPS by 59%. They have increase their EBITDA margin guidance to 28% EBITDA for FY24 and subsequently to 30%+ in the next few years. Concall notes below.

FY24Q3 concall

• Sales grew at 13%, Gross margin 73%, EBITDA margins ~ 28%, PAT margins ~ 19%

• Paid dividends of 642 cr. in 9MFY24 (51/share)

• Expect significant increase in logistics cost in Q4 due to Red sea crisis (7% QoQ increase in other expenses over Q3), EBITDA margin will be lower in Q4 vs 9MFY24. Expect 27±1% EBITDA margins for FY24

• Will see some increase in inventory due to transit time increase

• US:

  • (-5)% YOY decline (2 new launches, 44 launched products, plan to launch 1 products in Q4). Decline in sales was because of higher flu season last year

  • Filed 1 ANDA (22 under approval), will file 8 ANDAs in FY24

  • Plan to file 8-12 ANDAs in FY25

  • High single digit price erosion, market is favorable

• Domestic:

  • 5% YOY growth, launched 3 new products (0 first launch in India)

  • MAT December 2023: Volume 4% (vs 2.6% IPM), Price: 3.9% (vs 4.3% IPM), New product: 3.7% (vs 3% IPM). Price growth is lower for Ajanta due to NLEM impact in MetXL

  • Cardiac MAT growth of 6% in December 2023 (vs 10% for IPM). MetXL NLEM price impact was in December 2022

  • Competitive intensity has increased dramatically in cardio division (have seen some market share loss in statin combinations)

  • Looking to regain market share through more doctor outreach activities. This is the current focus

  • In ophthalmology division, have been #1 in generating prescriptions for quite sometime

  • Covered market IPM rank: 4

  • Trade generics: 38 cr. (vs 38 cr. in Q3FY23)

• Emerging market (branded generics)

  • Africa branded grew by 7%. Growth was lower this year because of rationalization of inventory to distributors. Confident of regaining growth momentum in FY25 (launched 5 new products in Africa in 9MFY24)

  • Asia branded grew by 28% (launched 15 new products in Asia in 9MFY24)

  • Launched 10 new products in emerging markets

• Africa institution

  • Growth of 179% YOY (9M growth of 33%). Preponement of few supplies from Q4 led to higher growth

  • Anti-malaria vaccine rollout has been very slow in Africa and its efficacy is also lower (GSK + 1 other company has rolled out). Don’t expect meaningful impact in next 3-5 years

• CAPEX of 80 cr. in 9MFY24 (full year planned capex of 125 cr., revised from 150 cr. earlier)

• R&D stood at 5% of sales

Disclosure: Invested (position size here, sold shares in last-30 days)