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Ajanta Pharma: Net Profits Muted Due to Higher Tax Outgo - Views on News from Equitymaster

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  • Feb 1, 2018 - Ajanta Pharma: Net Profits Muted Due to Higher Tax Outgo

Ajanta Pharma: Net Profits Muted Due to Higher Tax Outgo
Feb 1, 2018

Ajanta Pharma has announced its results for the third quarter of financial year 2017-18 (3QFY18). Net sales grew by 10.1% YoY (year on year) and net profits have increased by 3.4% year on year (YoY). Here is our analysis of the results.

Performance summary
  • Topline increased by 10.1% on the back of strong growth in the Asian market excluding India. Domestic markets grew by 4% YoY for the quarter. In the domestic business, Cardiology and Ophthalmology were the major contributors with 41% and 30% share of revenues respectively.
  • In the Exports business, Africa was the major contributor despite a 14% YoY de-growth in revenues. This was mainly due to its Institutional Anti Malaria (AM) business. It is expected to decline over the next few quarters due to lower allocation by the global fund. Overall Institutional AM business is expected to be lower in FY18 than FY17.
  • US business grew by 21% this quarter as compared to last year. Ajanta is expected to file 10 to 12 ANDAs in FY18 of which 1 was filed in Q3 FY18 (6 in 9 months of FY18). More products are expected to be launched in the Q4 of FY18.
  • Operating margins remained relatively flat at 33.6% in Q3FY18 as compared to 33.3% in Q3FY17. Net profits improved slightly by 3.4% Y-o-Y for the quarter.

    Financial performance: A snapshot
    (Rs m) 3QFY17 3QFY18 Change 9MY17 9MY18 Change
    Net sales 5,331 5,871 10.1% 15,248 16,006 5.0%
    Other operating income       0 0  
    Total Operating Revenue 5,331 5,871 10.1% 15,248 16,006 5.0%
    Expenditure 3,557 3,895 9.5% 10,056 10,886 8.3%
    Operating profit (EBDITA) 1,774 1,975 11.3% 5,192 5,119 -1.4%
    EBDITA margin (%) 33.3% 33.6%   34.0% 32.0%  
    Other income 191.9 151.5 -21.1% 283 259 -8.5%
    Interest (net) 2.8 1.4 -50.0% 10 3 -69.1%
    Depreciation 153.0 149.8 -2.1% 423 430 1.6%
    Profit before tax 1,811 1,975 9.1% 5,042 4,945 -1.9%
    Exceptional Items 0 0   0 0  
    Tax 385 501 30.2% 1,114 1,204 8.1%
    Minority Interest 0 0   0 0  
    Profit after tax/(loss) 1,426 1,475 3.4% 3,928 3,742 -4.8%
    Net profit margin (%) 26.7% 25.1%   25.8% 23.4%  
    No. of shares (m)         88.5  
    Diluted earnings per share (Rs)         55.2  
    Price to earnings ratio (x)*         25.5  

    *based on trailing 12 months earnings


    Business Mix
    (Rs m) 3Q FY17 3Q FY18 Change
    India 1540 1600 4%
    Africa 2110 1800 -15%
    Asia 900 1610 79%
    USA 590 710 20%
    Others 10 30 200%
    Total Sales 5150 5750 12%
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