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Robust performance continues, maintain BUY with the target price of Rs 1,032
Current CMP : Rs.904 Rating : BUY Target : Rs.1,032
STOCK INFO Bse Nse Bloomberg Reuters Sector Face Value (Rs) Equity Capital (Rs mn) Mkt Cap (Rs mn) 52w H/L (Rs) Avg Daily Vol (BSE+NSE) SHAREHOLDING PATTERN
(as on 31st Dec. 2013)
532331 AJANTPHARM AJP IN AJPH. BO Pharmaceutical 5 177 32,002 1,020/327 64,567 % 73.60 2.74 0.04 23.62
On exports front companys African business grew ~35% y-o-y to Rs 1150 mn & Asian region grew 25% y-o-y to Rs 780 mn, while LAta declined 75% y-o-y to Rs 20 mn.
Outlook
On the back of strong growth momentum in domestic market as well as in the exports in the last 5 years, (During FY08-13), companys revenue has grown at 24.3% CAGR & PAT at 38% CAGR. During the same period, benefiting from strategy of focusing on branded formulations in domestic market, healthy ramp up in exports business & due to healthy operating leverage, companys EBITDA margins has improved by ~650 bps from 16.6% in FY08 to 23.2% in FY13. We expect companys EBITDA margins to expand further from 23% level in FY13 to ~29% in FY15E on account of better product mix & favorable operating leverage. We expect revenue/ net profit CAGR of 28%/60% CAGR during FY13-15E.
Valuations
AjantaPharma Sensex
Daljeet S. Kohli Head of Research Mobile: +91 77383 93371, 99205 94087 Tel: +91 22 66188826 daljeet.kohli@indianivesh.in Bhagwan Singh Chaudhary Research Analyst Mobile: +91 77383 93427 Tel: +91 22 66188835 bhagwan.chaudhary@indianivesh.in
Since June 2011, we had recommended buy rating on the stock at prevailing adj market price of Rs 97 level (adjusting 1:1 split & 2:1 bonus issue) . Our recommendation was based on the continuity in robust performance and expansion in P/E multiple to Industry level. In line with our expectations, company has maintained robust performance & its valuations have expanded accordingly from forward P/E multiple of 4-5x to 15x level. At CMP of Rs 904, the stock is trading at P/E multiple of 13.3x of FY14E & 11.1x of FY15E earnings estimates. Given continuous out-performance, capacity expansion, entry into regulated markets & penetration in emerging markets, companys outlook seems robust. We believe that valuation gap is likely to narrow down further between its closest peer of Ipca labs. We continue to maintain BUY rating on the stock with the target price of Rs 1,032, (which translates to ~13x of FY15E).
IndiaNivesh Research
Ratios Gross margins EBITDA margin Net Margin Material cost/Net Sales Employee Cost/ Net Sales Other Expenditure/ Net Slaes Tax Rate
Source: Company Filings; IndiaNivesh Research
IndiaNivesh Research
Balance sheet
Y E March (Rs m) Share Capital Reserves & Surplus Non Current Liabilities Long term borrowings Deferred Tax liabilities Other long term Liabilities Long term Provisions Current Liabilities Short term borrowings Trade payables Other current liabilities Short term Provisions Total Non Current Assets Net Block CWIP Non current investment Long term loans and advances Other non curent assets Current Assets Inventories Sundry Debtors Cash & bank Balances Loans & Advances Other curretn Assets Total FY12 118 2,862 2,980 761 171 25 49 1,006 953 1,013 431 105 2,502 6,488 2,461 25 13 85 507 3,091 1,678 1,410 115 187 7 3,397 6,488 FY13 118 3,816 3,934 733 237 25 30 1,025 513 1,317 194 199 2,223 7,182 2,851 71 85 486 3,492 1,476 1,505 462 240 7 3,690 7,182 FY14E 177 6,000 6,177 1,933 237 25 30 2,225 513 1,730 478 199 2,920 11,321 5,736 71 85 507 6,399 2,009 2,009 531 367 7 4,921 11,321 FY15E 177 8,642 8,819 2,033 237 25 30 2,325 513 2,121 552 244 3,430 14,573 7,101 71 85 507 7,764 2,486 2,486 1,377 454 7 6,809 14,573 FY16E 177 11,644 11,821 1,433 237 25 30 1,725 513 2,505 485 302 3,805 17,350 7,573 71 85 507 8,236 2,936 2,936 2,699 536 7 9,114 17,350
Cash Flow
Y E March (Rs m) PBT Depreciation Interest Other non cash charges Changes in working capital Tax Cash flow from operations Capital expenditure Free Cash Flow Other income CWIP Cash flow from investments Equity capital raised Loans availed or (repaid) Interest paid Dividend paid (incl tax) Inc from other investments Cash flow from Financing Net change in cash Cash at the beginning of the year Adjusted cash Cash at the end of the year FY12 960 319 154 41 (636) (174) 663 (493) 170 2 (491) 165 (238) (68) (140) 32 115 (69) 78 FY13 1,734 342 191 0 385 (331) 2,321 (912) 1,409 2 (910) (748) (195) (102) (1,045) 366 80 446 FY14E 3,581 350 76 22 (487) (1,182) 2,360 (3,055) (695) (3,055) 1,200 (76) (240) 884 189 342 531 FY15E 4,284 450 242 59 (532) (1,414) 3,089 (1,815) 1,274 (1,815) 100 (242) (287) (429) 846 531 1,377 FY16E 5,091 600 185 (607) (1,680) 3,589 (1,072) 2,517 (1,072) (600) (185) (409) (1,194) 1,323 1,377 2,699
Key ratios
Y E March Adj EPS (Rs) Cash EPS (Rs) DPS (Rs) BVPS ROCE ROE Inventories Days Sundry Debtors Days Trades Payable days PER (x) P/BV (x) P/CEPS (x) EV/EBITDA (x) Dividend Yield % m cap/sales (x) net debt/equity (x) net debt/ebitda (x) FY12 23.2 32.2 1.9 84 12.9% 27.6% 92 77 161 38.9 10.7 28.0 26.0 0.2% 4.8 0.6 1.3 FY13 30.7 40.4 2.9 111 15.7% 27.6% 59 60 159 29.4 8.1 22.4 15.3 0.3% 3.5 0.3 0.4 FY14e 67.8 77.7 6.8 174 18.7% 38.8% 60 60 160 13.3 5.2 11.6 9.7 0.7% 2.6 0.4 0.5 FY15E 81.1 93.8 8.1 249 18.1% 32.5% 60 60 160 11.1 3.6 9.6 7.6 0.9% 2.1 0.3 0.3 FY16E 96.4 113.3 11.6 334 17.7% 28.9% 60 60 160 9.4 2.7 8.0 6.0 1.3% 1.8 0.2 -0.1
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IndiaNivesh Research
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