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

Sub- Mannalal B
Chairman
Industry Agrawal

House Vimal Agrawal Managing Yogesh M

Director Agrawal
BSE Code 532331
Company Gaurang Shah
NSE Secretary
AJANTPHARM
Symbol
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 Mar 2015
Fin.Year End
BSESMALLCAP, S&P
BSEHEALTH, S&P AGM Date 05-Jul-2016
MIDSMLCAP, S&P ALLCAP, Reuters Code AJPH.BO
S&PBSESMLSEL ,
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
's Office S Marg,Bhandup ,Mumbai 400078 ,Kandivali (W)
Mumbai,Maharashtra
91-022- -400067 .
Registrar
25946970/71/72/73/74/75/76/77/78/
Phone Phone 91-22-66061000
60320 (Phone)
No (Phone)
Registrar 91-022-25946979/91-022-25960329
Fax (Fax) +91-22-
Fax
66061200/300 (Fax)
Registrar
helpdesk@linkintime.co.in Email info@ajantapharma.c
Email Id
ID om
Registrar
www.linkintime.co.in Websit www.ajantapharma.c
Website
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
FII No of Shares(Rs. in Crores ) 0.86
FII % 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
-145.63 -175.57 -98.45
activities
Cash Flow from Finance
-101.18 -19.80 -95.90
activities
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
 Company analysis
Ajantas 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 in
Asia, Africa and Latin America and not only in US with

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

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.
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 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:
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

Agarwals 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
Agarwals: 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.

The change in strategy catapulted Ajantas 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 companys 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.