Ajanta Pharma (AJANTPHARM) Q4 19/20 earnings summary

Executive summary

• FY20 consolidated revenue grew 26% to ₹2,588 cr and PAT rose 21% to ₹468 cr, with growth across major markets and a meaningful US generics contribution.

• Branded generics represented nearly 70% of revenue; the business model’s geographic diversification supported growth amid COVID-19 disruption in March 2020.

Financial highlights

• Consolidated EBITDA was ₹683 cr, up 22% YoY; EBITDA margin was 26% versus 27% in FY19.

• Consolidated EPS was ₹53.60 versus ₹43.97; revenue from operations was ₹2,588 cr versus ₹2,055 cr.

• Operating cash flow was ₹457 cr; operating free cash flow was ₹235 cr despite FY20 capex of ₹240 cr, per management’s shareholder letter.

• Material costs rose to 25% of revenue from 19%, reflecting higher US business mix and some raw-material price increases; other expenses improved to 29% from 33% of revenue.

Outlook and guidance

• Branded generics growth expected in the low teens; US generics expected to grow at a high-teens rate over the next couple of years, supported by 10–12 annual filings.

• US plans called for 10–12 ANDA filings annually and 7–8 launches in FY21.

• New plants are expected to provide operating leverage and improve EBITDA margins and return ratios as utilisation rises; capacity is expected to support demand for the next five years.

• FY21 priorities included cost optimisation, efficient operations, delivery automation and cash conservation amid COVID-19 uncertainty.