By Ks Badri Narayanan

Copyright thehindubusinessline

Target: ₹3,200

CMP: ₹2,545.80

We initiate coverage on Ajanta Pharma (AJP) with ‘Buy’ rating and target price of ₹3,200. AJP’s play on high growth branded generics (BGx) market spread across India, Asia and Africa contributed 74 per cent to total revenue in FY25 and delivered 12.5 per cent CAGR over FY22-25.

We expect AJP to clock 13 per cent revenue CAGR over FY25-28E driven by increased focus on branded formulations, penetration into newer therapies and scaleup in US generics.

Domestic formulations constituted 32 per cent of the total turnover in FY25. AJP is focused on 4 high-growth specialty therapies: cardiac, ophthal, derma and pain management. Thus, the portfolio is driven by chronic therapies with ~65 per cent contribution, which is very sticky. Over the last 3 years, AJP has outperformed IPM by ~200-300 bps. During FY25, the company entered 2 new therapies – nephrology and gynecology – and acquired 3 brands in pain management. New therapeutic additions, market share gain and new launches will help domestic business register about 13 per cent revenue CAGR over FY25-28E.

Overall, we expect EBITDA/PAT CAGR of 17/ 16 per cent over FY25-28E with healthy RoE/RoCE of 28.5/35.6 per cent in FY27E. At CMP, AJP is trading at 24x P/E and 17x EV/EBITDA as of Sep FY27E.

Published on September 19, 2025