Ajanta Pharma has just struck a deal with Biocon to sell the diabetes drug semaglutide in 26 overseas markets.
What the agreement means
The company will handle the registration process and use its existing sales team to push the drug, which should bring healthy profit margins.
Financial impact
- Estimated extra sales of about Rs 2 billion by fiscal year 2028.
- Free cash flow expected to stay strong at Rs 8–10 billion per year.
- Projected compound‑annual growth of EBITDA at 17% and profit after tax at 14% for FY25‑FY28.
- Return on equity and capital expected to be 28% and 35% respectively in FY27.
Valuation and recommendation
At the end of September, the stock was trading at roughly 24 times earnings and 17 times EV/EBITDA. Using a 30‑times earnings multiple, the target price comes to around Rs 3,200 per share. The recommendation remains a BUY.
Key takeaways for investors
- The semaglutide deal could add a sizable revenue stream and improve margins.
- Strong cash flow gives the company room for further investments or acquisitions.
- The valuation suggests upside potential if the growth forecasts are met.
Remember, this is just an analysis, not a prediction. Do your own research before making any investment decisions.