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COMPANY ANALYSIS

OF

AJANTA PHARMA LTD

-G.S.ABHILASH

-PG2015-003

Introduction

Ajanta pharma is a speciality pharmaceutical company in development manufacturing and marketing of quality finished dosages in domestic and

international markets. Established in 1973 by three Agarwal brothers

(Mannalal. Purushotham and

Madhsudhan) headquarters in Mumbai, India,

company is committed to serve health care worldwide producing high quality affordable medicines to patients in different parts of the world.

Listing Details

 

Other Details

 
   

Sector

Healthcare

Incorporation

31-12 1979

Industry

Pharmaceuticals & Drugs

Year

   

Mannalal B

Sub-

 

Chairman

Industry

Agrawal

Managing

Yogesh M

House

Vimal Agrawal

Director

Agrawal

BSE Code

532331

Company

Secretary

Gaurang Shah

NSE

 

Symbol

AJANTPHARM

 
 

Kapoor &

ISIN NO

INE031B01049

Auditor

Parekh

Face Value

2

Associates

Listing

BSE,NSE,MCX

No of

 

Employees

BSE Group A

 
 

Latest

 

Indices

BSE200, BSE500, MIDCAP, S&P BSESMALLCAP, S&P

Fin.Year End

Mar 2015

BSEHEALTH, S&P

AGM Date

05-Jul-2016

MIDSMLCAP, S&P ALLCAP, S&PBSESMLSEL ,

Reuters Code AJPH.BO

 

NIFTYMIDCAP, NIFTY500,

 

MIDCAP50, NIFTY200,

Bloomberg

AJP IN

NIFTYALPHA, LIX 15 MIDCAP,

Code

NIFTYMIDCAP150,

   
 

Manufacture

NIFTYMIDSMALL400

Of Allopathic

 

NIC Activity

Pharmaceutical Preparations

NIC Code

21002

 

Registrar Details

 

Contact Details

 
   

Registrar Link Intime India Pvt Ltd.

 

Addres

Ajanta

Registrar

C-13 Pannalal Silk Compound,L B

s

House,Charkop ,Kandivali (W)

's Office

S Marg,Bhandup ,Mumbai

400078

Mumbai,Maharashtra

 

91-022-

 

-400067 .

Registrar

25946970/71/72/73/74/75/76/77/78/

Phone

   

60320 (Phone)

 

Phone

91-22-66061000

 

No

(Phone)

 

Registrar

Fax

91-022-25946979/91-022-25960329

 

+91-22-

 

(Fax)

 

Fax

66061200/300 (Fax)

Registrar

Email Id

 
 

Email

   

ID

om

Registrar

Website

 
 

Websit

   

e

om

 

SNAP SHORT

1) SHARE HOLDING PATTERN:

Share Holding Pattern as on 2016/03

 

Promoter No of shares (Rs. in Crores )6.49

 

Promoter %

73.78

73.78

FII No of Shares(Rs. in Crores )

0.86

FII %

9.76

9.76

Total No of Shares(Rs. in Crores )

8.80

Free Float %

26.22

FINANCIAL HIGHLIGHTS OF 3YEARS (STANDALONE)

Year End

Mar 2015

Mar 2014

Mar 2013

 

31-03-

31-03-

31-03-

Currency Rate (INR) As Of

2015

2014

2013

Currency Rate (INR) In INR

1.00

1.00

1.00

Inc / Exp Performance

Net Sales

1356.20

1109.92

839.20

Total Income

1389.90

1127.64

846.61

Total Expenditure

883.64

764.39

631.92

PBIDT

506.26

363.25

214.69

PBIT

449.89

321.28

181.99

PBT

444.88

313.06

163.51

PAT

306.37

220.86

101.12

Cash Profit

355.79

262.83

133.82

Sources of Funds

Equity Paid Up

17.59

17.58

11.71

Reserves and Surplus

768.22

518.08

343.99

Net Worth

785.81

535.66

355.70

Total Debt

70.86

128.94

123.46

Application of Funds

Gross Block

510.93

449.57

410.03

Investments

76.62

78.84

18.86

Cash and Bank balance

105.69

29.08

25.11

Net Current Assets

328.20

189.69

108.03

Total Current Liabilities

244.83

263.96

217.77

Total Assets

1085.85

879.87

675.38

Cash Flow

Cash Flow from Operations

262.92

189.71

205.66

Cash Flow from Investing activities

-145.63

-175.57

-98.45

Cash Flow from Finance activities

-101.18

-19.80

-95.90

Free Cash flow

167.29

70.40

73.02

Key Ratios

Debt to Equity

0.09

0.24

0.35

Current Ratio

2.34

1.72

1.50

ROCE

59.10

56.12

38.68

RONW

46.37

49.56

32.23

PBIDTM (%)

37.01

32.50

25.40

PATM (%)

22.40

19.76

11.96

CPM (%)

26.01

23.52

15.83

Market Cues

Price (Unit. Curr.)

1225.45

400.56

171.57

Market Capitalization

10777.83

3520.92

1506.84

EPS

34.83

25.13

11.51

Price / Book Value

13.72

6.57

4.24

CEPS

40.45

29.90

15.24

Equity Dividend %

300.00

200.00

125.00

Enterprise Value

10743.00

3620.78

1605.19

Dividend Yield %

0.49

1.00

0.97

Stock performance

Dividend Yield % 0.49 1.00 0.97 Stock performance
Dividend Yield % 0.49 1.00 0.97 Stock performance

Company analysis

Ajanta’s products are sold over 40 countries.co-operates with 5 state of the art manufacturing facilities that produce high quality

pharmaceutical

products. Its

focus is on commercializing unique

genetic products and processing synergistic combination products in the therapeutic areas of anti-malarial, cardiovascular, dermatology, Musculoskeletal and ophthalmology with primary focus on new product innovation and introduction. It has been consistently identifying unmet medical needs and introducing many first-to-market products to cater to those needs.

Its products provide patients complacence and convenience over existing therapeutic options gaining first mover advantages in its respective segment. Ajanta has extensive presence in many countries

Customized product portfolio to suit the needs of each country. (More

in

Asia, Africa and Latin America and not only in US with

than 40 countries).

The company is having factories in Maharashtra and Gujarat .and has a top class Research and Development unit called “ADVENT” in Mumbai for formulations and active pharmaceutical ingredient synthesis of different dosage forms, working continually for innovative products for various markets across the globe.

They have top class warehouses in Mumbai, Aurangabad and many other places and a unique quality control section to ensure best international quality for its products.

 They have top class warehouses in Mumbai, Aurangabad and many other places and a unique
 They have top class warehouses in Mumbai, Aurangabad and many other places and a unique

FINANCIALS

Financial statement Analysis Of Ajanta Pharma

(Amounts in Crores)

Sl. Particulars

2013- 2014

2014- 2015

2015- 2016

  • 01 Sales

1109

1356

1551

  • 02 Operating Profit

345

472

515

  • 03 Net Profit

220

306

414

  • 04 Share Capital

18

18

18

  • 05 Reserves & Surplus

519

768

1018

  • 06 Share Holding Promotors

74%

74%

74%

General Public

13%

13%

13%

Foreign Investors

10%

10%

10%

MF/FII/n BKG/others

3%

3%

3%

  • 07 EPS

62

35

47**

(Face Value of the share reduced from Rs.5 to Rs.2.00 in 2014)

  • 08 CAGR

Revenue

22.53%

 

Net Profit

32.00%

EPS

32.00%

09

OPM*

31%

35%

33%

10

GPM

31%

36%

36%

11

NPM

19%

22%

25%

12

Return on Capital

49%

54%

56%

13

Return on Net worth

41%

38%

40%

OPM-Operating Profit Margin=Operating Profit/Net sales

 
 

2014

2015

2016

(345/1109)

(472/1356)

(515/1551)

NPM

Net Profit Margin =Net Profit/Sales

 
 

(220/1109)

(306/1356)

(414/1551)

EPS-Earnings Per Share=Net Profit by number of shares

 
 

(13640/220)

(10710/306)

(19458/414)

RATIOS (REASONS)

 Company has witnessed consistent rise in ROCE in the past five years. Companies approach in
Company has witnessed consistent rise in ROCE in the past five years.
Companies approach in concentrating on branded formulations of new
drugs.
Has worked out very well for its growth, a come a long way to become
a specialist even in cardiovascular medicines.
Between 2015 to 2016
Sales turnover has increased from 1356.20 cr to 1551.76
Operating profit has increased from 472.56 cr to 515.85
PBDT more from 494.30 cr to 594.00cr
PBT more
from 444.88cr to 551.32cr
Tax paid is 136.84 cr & 136.84cr
Dividend declared is 300% Dividend Yield is around 39%
Average return on equity is @ 38%
Net profit growth by 38%, sales growth by 25 % market cap growth by
54% EPS, its growth share in the market is excellent.
Sale price performance is excellent, as on date a Rs.2.00 face value

share is quoted at Rs.1547.00 and expected to touch Rs.1780.00and one of the top 50 preferred shares in the market. Market cap is Rs.13575.95 cr. Book value is at Rs.136.45.

Focus on select generics has rewarded Ajanta with healthy margins and now entry into US & EU markets is likely to be the key growth driver for the company. A debt equity ratio of 0.6 will support its ambitious capex plan of Rs.390 cr in the next two years & Rs.1000 cr to its top line .

Free Cash Flow-is a measure which is ignored by many investors

. FCF

represents the cash that a company is able to generate after spending the

money required to maintain or expand its property, plant & equipment(PPE) called capital expenditure(capex) Company has maintained good FCF- Rs.750 cr in 2014,Rs.1550 cr in 2015 & Rs.1750 cr in 2016.

The current ratios

for 2014 is 1.75, for 2015 -2.5 & for 2016 it is 2.75

(expected ideal CR is 1:1.5) Interest coverage ratio more than 1.5 and the overall performance of the company is on the growing trend.

Product line:
Product line:

The company manufactures tablets, dry powder, Jelly, Liquid, Ayurvedic, active pharma ingredients, eye drops, ointments etc., & the list goes on ...

Dospin for reduction of BP Alorvaslalin for hypertension Benzalkonium chloriocin / ceflaxil for infections Chopidiagrel for anty platelet agent-blood clot prevention Norflaxin/Latonopost/Gate DX for eye care Guaimburo-for chest congestion Haloperidol- a tranquiliser for schizopheria Lafulidine for ulcer Strptomicin for fever Lacom T for allergies and so the names goes on ...

Valuation- Companies momentum has created an expectation in the market. Revenue has compounded at 23.50% in the last decade while earnings by 57% in the same period. The stock trades at 36 times earnings.

This four decade old company started outdoing institutional business, selling anti-malarial drugs to the government. Only a decade ago Ajanta

changed its focus and started concentrating on branded formulations in

a heavily crowding market. Ajanta took the approach of launching new

drugs in the country. Today of the 175 plus drugs

that it markets in the

country, about 125 are first time launch and new drugs delivery system. (NDDS) and this decision has paid off very well .branded formulations have grown at 34% annually in the last ten years.

What makes the company special? It took a second generation of Agarwal’s to change the future of Ajanta which, from being missed as debt has seen a 65 gold growth in market value to date yesteryear Bollywood superstar Jeetendra has appeared in only one television

commercial to enclose a product that was 1990's for a popular over- the

- counter(OTC) energized capsule for men called

“ 30 PLUS” and it

was sold like hot cakes but later it was sold

to Dabur in 2011.

The company which was trading at Rs 24 per share on BSE with negligible interest from investors and reeling under a debt burden of Rs 130 crore up to 2001-2002, found its antidote in the new generation of Agarwal’s: Mannalals sons -Yogesh and Rajesh. Company faced a tough situation with creditors and debtors But the brothers changed the company's trajectory by focusing on the specialty generic drug market and pulling an end to the company's legacy business which included OTC drug sales and supplying to Government Health Agencies in India and other countries.

A risky move but it paid off very well. Ajanta closed FY 2015 with a considerable net sales of Rs.1481crore and a net profit of Rs.310crores (a compounded annual sale growth rate of CAGR of 57% for four years since 2011. Net sales recorded a CAGR of 31% for the same period a very encouraging growth. It's market value currently stands at around Rs.13500 crore.

A small player in the market full of giants such as Sun Pharma,Cipla,Ranbaxy and such others, started concentrating on

first' of-its kind generic drugs and caught the attention of analysts and investors and showed excellent opportunity for investment as they poised for rapid growth and the trading shot upto Rs1554 on the stock market by 2014-15.

Ajanta's return on investment

stood at an impressive 43% while

return on capital was at 52%.It reported one of the highest earnings before interest, tax ,depreciation and amortization.(EBITDA) margin among its listed Pharma section at 34%, achieved all this with a small presence in US market which is the golden goose.

Today it stands net debt free with a Cash Reserve of Rs.100 crore.

 

They concentrated on speciality brands (medicines that can only be prescribed by Specialist Doctors and not by General Physicians) in four areas -ophthalmology, dermatology cardiovascular and pain management. where the competition was less intense and of course

needed funds and SBI and Exim Bank agreed to extend loan facility with the companies strategies and funds in place, Company has since built a Rs. 418 crore business in India and is ranked 36 out of top 300 Indian companies.

needed funds and SBI and Exim Bank agreed to extend loan facility with the companies strategies

The change in strategy catapulted Ajanta’s margin from 14% in 2005 to 36.5%. as on date. Going ahead, gross profit margins are likely to sustain 70-72% levels though EBDITA margins are expected to come down from 31% in FY 2014 to 28% level by 2017 on a/c of the commencement of new facilities. Company has consistently improved its ROCE from 8.5% in 2005 to 54.50% as of now, its focus in niche therapies and exports to Africa Asian countries are expected to help it maintain its momentum. Revenues are likely to grow by 22% CAGR by 2017 and PAT by 25%.

The prospect of strong growth comes with certain challenges, most important being consistently meeting USFDA standards but Co.is well equipped with a strong R & D to take care of these challenges.

Another challenge is about its cost of its essential medicines controlled by Govt. But with focus on niche therapies in domestic formulations and a calculated approach in the export market, Ajanta remains an interesting Pharma company with high growth rates, strong margins, commendable return ratios and lighter balance sheet.

Beta:

1.27

Market Cap(Mil.):

Rs140,152.41

Shares Outstanding(Mil.):

88.00

Dividend:

8.00

Yield (%):

0.50

FUTURE PROJECTIONS

The company’s revenue to grow @ a CAGR of 19% during by and to touch Rs.2072 crore. Exports are expected to grow @ 17.30% to Rs1309 crore,

around 63%

of the estimated turnover EBITDA margin to sustain @ 32-

34% revenue growth.

Ajanta Pharma is committed to patient care since inception, accelerating its growth over the years with the desire to fulfill its mission “A COMMITMENT TO SERVICING GLOBAL HEALTHCARE NEEDS” with Empathy, Innovation and Technology and this is the secret of the company's success

New platform technologies development like multi-particulate

and OROS being worked out. Continue to develop cost-effective formulations for ever expanding phase.