Mehabe score: 6 G Factor: 3 Piotski Score: 8 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 8.
Description
Ajanta Pharma is primarily engaged in development, manufacturing and marketing of speciality pharmaceutical quality finished dosages.(Source : 202003-01 Annual Report Page No:70)
Main Points
India – Branded Generic business (30% of revenues)
Focused on niche and first-to-market drugs in 4 therapeutic areas – cardiology, ophthalmology, dermatology, pain management #
Has an MR strength of ~3000 #Site:AJANTPHARMMain Symbol:AJANTPHARM
Stock trades at 2332.0, above its 50dma 2063.68. It also trades above its 200dma 1828.62. The stock remains bullish on techicals
The 52 week high is at 2365.00 and the 52week low is at 1422.15
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– has been maintaining a healthy dividend payout of 19.14%
-‘s median sales growth is 18.72% of last 10 years
Weakness
– The company has delivered a poor sales growth of 10.56% over past five years.
Competition
– The industry trades at a mean P/E of 38.4x. Medicamen Biotec trades at the industry’s max P/E of 59.02x. AJANTPHARM trades at a P/E of 30.8x
– Industry’s mean G-Factor is 3.3 while the mean Piotski score is 9.0. AJANTPHARM has a G-Factor of 3 and Piotski scoreof 8.
– Average 1 month return for industry is 9.5%. The max 1- month return was given by Caplin Point Lab: a return of 37.37 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 748.0 cr compared to Rs 668.0 cr for period ended Jun 2020, a rise of 12.0%
Operating Profits reported at Rs 220.0 cr for period ended Jun 2021 vis-vis 223.0 for period ended Jun 2020 .
Operating Margins contracted -397.1 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 20.08 compared to Rs 18.4 for previous quarter ended Mar 2021 and Rs 16.93 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2969.0 cr for period ended TTM vis-vis sales of Rs 2890.0 cr for the period ended Mar 2021, a growth of 2.7%. The 3 year sales cagr stood at 13.0%.
Operating margins shrank to 34.0% for period ended TTM vis-vis 35.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 680.0 cr for period ended TTM vis-vis sales of Rs 654.0 cr for the period ended Mar 2021, rising 3.8%.
Company recorded a healthy Net Profit CAGR of 20.7% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 576.0 cr for period ended Mar 2021 vis-vis Rs 457.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 23.0% compared to 21.0% over the last 3 Years. – The stock has given a return of 57% on a 1 Year basis vis-vis a return of 27% over the last 3 Years. – The compounded sales growth on a TTM bassis is 12% vis-vis a compounded sales growth of 11% over the last 3 Years. – The compounded profit growth on a TTM basis is 39% vis-vis a compounded profit growth of 12% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 8.94% vis-vis 8.37% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 8.47% vis-vis 8.67% for Mar 2021
Conclusion
– has reduced debt.
– is almost debt free.
– has been maintaining a healthy dividend payout of 19.14%
-‘s median sales growth is 18.72% of last 10 years – The company has delivered a poor sales growth of 10.56% over past five years.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 2063.68 and is trading at 2332.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
