Ajanta Pharma aims to file 10-12 ANDAs per annum

India business is growing as per projections; whereas US business will bounce back soon.

Ajanta's Q1 revenue was in line, as strong India and Africa businesses offset the muted Asia, US, and institutional businesses. EBITDA margin came in lower-than-expected at 29% (~200bps miss), primarily on account of higher-than-expected staff costs and other expenses according to a research report released by HDFC securities.

During the conference call, the management stated that they aim to file 10-12 ANDAs per annum.

Ajanta's India business is on a strong footing and grew by 32% YoY (~9% 2-yr CAGR), led by outperformance across therapies. While the US business was muted (+13% YoY, -3% QoQ), the research team expects it to improve in the coming quarters as the company plans to ramp up its recent launches. HDFC Securities expects the EBITDA margin to stabilise around 30% in FY22 (vs. 26%/34% in FY20/21) and improve to ~32% in FY23, aided by operating leverage.

Revenue grew by 12% YoY as strong growth in India (+32% YoY), Africa (+16% YoY) offset muted growth in the US (-3% QoQ, lack of new launches), institutional business (-13% YoY) and Asia (+2% YoY, lockdown-led disruption). EBITDA margin declined to ~29% (-484bps QoQ) on account of moderation in gross margin (-76bps QoQ), increase in staff costs (+186bps QoQ, incentives, commissioning of ophthal block) and other expenses (+221bps QoQ). Adj. PAT came in line, aided by higher other income (INR 250mn forex gain) and lower tax rate of 21%.

 Key therapies continue to outperform in Indi: Ajanta's India revenue grew by 32% YoY, primarily led by market share gains in key therapies, new launches, and price increases. As per the AIOCD, cardiac, ophthalmic and derma outperformed the therapy growth by 3%, 24% and 11% respectively in Q1. Ajanta is confident of outperforming the industry growth of ~11-13%, led by a ramp-up in existing brands and new launches. It will focus on scaling up newly launched brands and plans to introduce 4-5 new products in FY22.

 Africa branded business recovered strongly, growing 16% YoY while the Asia business grew at a modest 2% YoY as some countries continued to face COVID-led disruptions. Ajanta expects to outperform in these markets, led by market share gains and new launches. The US business grew by 13% YoY but declined 3% QoQ to ~USD23mn, primarily due to fewer launches (QoQ). The company plans to launch ~3 more products in FY22 and ramp up the recent ones (nine in FY21). HDFC Securities expects 19% US sales CAGR over FY21-23e.