Ajanta Pharma shares rise over 2% after large trade deal

The lower end of the price range has been fixed at Rs 1,113, at a 5 percent discount from the current market price (CMP), according to multiple people familiar with the development.

The Mumbai-based drug maker operates eight manufacturing facilities in India and Mauritius, including two plants that have been approved by the US Food and Drug Administration (USFDA).

Ajanta Pharma currently employs over 7,000 people worldwide and its products are sold in over 30 countries, including in the US -- the world's largest market for pharmaceutical products.

For the July-September quarter the company’s profit after tax fell 20 percent to Rs 156.6 crore compared to Rs 195.94 crore during the year-ago quarter.

Ajanta Pharma reported a sharp fall in EBITDA margin during the September quarter. The company’s September quarter margins tumbled to 20.9 percent from 29.7 percent in the year-ago quarter and 23 percent in the previous quarter.

A jump in raw material freight cost, price erosion in US generics, and preponement of certain costs impacted the margin. However, it said it expects the second half of the fiscal year to be better, guiding for around 26 percent (+/-1 percent) EBITDA margin for the period.

Ajanta Pharma’s EBITDA stood at Rs 196 crore, down 25.5 percent from Rs 263 crore in the year-ago quarter.

Revenue from operations rose marginally by 6 percent to Rs 938 crore in the second quarter against Rs 885 crore a year ago.

Ajanta Pharma's India sales stood at Rs 314 crore, up 27 percent from Rs 248 crore in the year-ago quarter.

The company announced an interim dividend of Rs 7 per share. The record date for the same has been set as November 24.

Brokerage house Motilal Oswal maintained its ‘buy’ rating on Ajanta Pharma with a target price of Rs 1560. It cut FY23/FY24 earnings estimates by 6 percent and 5 percent, respectively, to factor in a lack of launches in US generics and moderation in growth prospects in Africa.