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Weak dose from Ajanta Pharma - Views on News from Equitymaster
 
 
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  • Jun 6, 2000

    Weak dose from Ajanta Pharma

    The number of Initial Public Offerings (IPOs) getting listed below their offer price is on the rise. The latest addition to this list is Ajanta Pharma Limited. The issue, which was offered to public at Rs 225, opened at Rs 190. The scrip reached an intra day high of Rs 230 and closed at Rs 180.

    Ajanta Pharma is engaged in the manufacture and marketing of pharmaceutical products both in India and abroad. Some of the strong brands in the Over The Counter (OTC) range are Thirty plus, Figurin, Pinkoo Gripe water, Livoplus, and Carofit.

    Earnings
    Rs m FY99
    Sales 1,398
    Total revenue 1,399
    Total expenditure 1,040
    Operating profit margin 26%
    Profit after tax 202
    Net profit margin 14.4%

    Valuations
    If one takes a look at the valuations in comparison to the valuation of stocks such as German Remedies the issue was tightly priced. The share was offered at a P/E multiple of 13.2 when the latter (which has a much superior product portfolio) quotes at a P/E of 17.4..

    (Rs) FY99
    Earnings per share 11.8
    P/E (on the offer price of Rs 225) 13.2
    P/E (on the current price of Rs 180) 10.5

     

     

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