Ajanta Pharma share price surges 9% to a 52-week high after Q1 results; what should investors do?

livemint.com:

Ajanta Pharma surged almost 9 per cent to hit their fresh 52-week high of ₹1,682.05 in morning trade on BSE on Friday (July 28), a day after the company released its June quarter scorecard. The stock opened at ₹1625.10 against the previous close of ₹1546.20 and soon jumped 8.8 per cent to the level of ₹1,682.05. The stock has gained about 31 per cent in the last one year against a 22 per cent gain in the BSE Healthcare index and a 16 per cent gain in the equity benchmark Sensex in the same period.

Ajanta Pharma Q1 Results: Ajanta Pharma reported revenue from operations at ₹1,021 crore and EBITDA at ₹271 crore for Q1FY24. Profit after tax (PAT) came at ₹208 crore against ₹175 crore. Brokerage firms expressed their positive views on the stock after the June quarter number and see a significant upside in the stock price from hereon.

Brokerage firm Motilal Oswal Financial Services maintained a 'buy' call on the stock with a target price of ₹1,800, citing earnings outlook and attractive valuation. "Ajanta Pharma posted in-line sales with better-than-expected profitability in Q1FY24. The company benefited from the lower raw material and freight cost in Q1FY24 and expects the same to sustain over the near-to-medium term," Motilal pointed out.

"We raise our earnings estimates for FY24 and FY25 by 7.5 per cent each factoring in (a) the lower intensity of price erosion in the US generics segment, (b) superior execution in branded generics segment and (c) lower operational cost. We value Ajanta Pharma at 22 times 12-month forward earnings to arrive at our target price of ₹1,800," said the brokerage firm. The brokerage firm expects a 23 per cent earnings CAGR over FY23-25, led by a 15 per cent sales CAGR in Domestic Formulation