Prabhudas Lilladher has initiated a BUY call on Ajanta Pharma, urging investors to seize this opportunity based on the company’s robust branded generics (BGx) franchise, promising financial performance, and vigorous global expansion. With a current market price (CMP) of Rs2,550, the stock is being targeted at Rs3,200, signifying a 25% upside potential. Ajanta’s strategic focus on specialty therapies, increased penetration in emerging markets, and disciplined innovation positions it as a formidable player in the pharmaceutical sector. Investors are encouraged to leverage Ajanta Pharma’s strengths amid key sectoral risks, poised for a potent combination of growth, profitability, and resilience in the coming years.

Investment Rationale and Recommendation

Prabhudas Lilladher’s research desk places a strong BUY recommendation, setting a target price of Rs3,200—representing a 25% upside from current levels for Ajanta Pharma. Ajanta’s commanding play in branded generics (BGx), significant innovation in new therapies, and a pioneering approach in both domestic and international markets cement its position as an industry leader. The company’s unique portfolio, with over 50% of products holding a first-to-market advantage, ensures enduring growth and market outperformance.
Strategically, Ajanta’s business model is designed for sustainable revenue escalation, targeting a 13% CAGR through FY25-FY28E, powered by branded formulations and deepening penetration into the US generics space. The research house recognizes Ajanta’s operational finesse and prudent capital allocation, with clear signals towards margin improvement and healthy returns on equity (RoE) and capital employed (RoCE).

Operational Excellence and Franchise Expansion

The BGx segment continues to drive Ajanta Pharma’s growth momentum, contributing 74% to total revenue in FY25, with a 12.5% CAGR over FY22-25. The company operates across 30 countries in Asia and Africa, utilizing a strategic field force and bespoke product offerings tailored for local therapeutic needs.
Ajanta’s domestic business, comprising 32% of revenues, is anchored in high-growth specialty therapies—cardiology, ophthalmology, dermatology, and pain management. Nearly 65% of the portfolio targets chronic therapies, delivering stickiness and market leadership. Over the last three years, Ajanta has consistently outperformed the Indian Pharmaceutical Market (IPM) by 200-300bps, with robust new product launches that set industry benchmarks.

Specialty-driven Approach and Innovation

Ajanta’s focus on high-growth therapeutic areas is amplified by its notable first-to-market launches and continuous pipeline expansion. The company’s manufacturing footprint—seven cutting-edge facilities—supports regulatory compliance and global reach, with USFDA-approved plants enabling expansion in the highly regulated US generics sphere.
In FY25 alone, Ajanta introduced 107 products, with 27 innovations classified as first-to-market, further cementing its reputation for differentiation and value creation. Its agile R&D capabilities underpin this innovation, driving Ajanta’s ability to swiftly adapt and scale new therapies and product lines.

Financial Performance and Key Levels

Ajanta Pharma’s consolidated financials reveal critical growth dynamics and compelling investor metrics, establishing clear levels for stock trading decisions.

Current market price: Rs2,550. Target price: Rs3,200. Trading levels for investors: Accumulate if below Rs2,550, maintain till Rs3,200 and consider partial profit-taking beyond this threshold.

Peer Comparison: Ajanta’s Competitive Edge

Ajanta Pharma demonstrates superior return metrics and branded generic exposure among peers, reflected in its higher RoCE and disciplined financial multiples.

Risks and Strategic Mitigation

Investors must weigh key risks: Government price controls impacting 11% of Ajanta’s domestic portfolio, execution risk in the US generics sector, geographic concentration in Africa and Asia, and regulatory compliance across diverse regions. Ajanta’s proactive stance to reduce institutional business in Africa and drive growth in more scalable markets underpins its risk management philosophy.
The company’s net cash position, healthy free cash flow generation (Rs7-10bn annually), and strategic dividend and share buyback policies further contribute to Ajanta’s investment appeal.

Investor Action Points

Ajanta Pharma stands as a high-conviction BUY, reinforced by strong franchise advantages, innovative momentum, and ambitious expansion strategies. Prabhudas Lilladher’s recommendation sets precise investment levels: Accumulate below Rs2,550, anticipate robust price appreciation toward Rs3,200, and remain vigilant on sectoral risks. Institutional discipline, prudent financial management, and exemplary returns solidify Ajanta Pharma as a premier pharmaceutical investment for sophisticated investors seeking growth and stability.