Ajanta Pharma earnings gain momentum as India, Africa and US sales accelerate

Investment View and 1QFY27 Beat

In its July 30, 2026 results update, Motilal Oswal Financial Services reiterated its BUY recommendation on Ajanta Pharma after a stronger-than-expected 1QFY27. Revenue, EBITDA and adjusted PAT exceeded the broker's estimates by 7 per cent, 9 per cent and 11 per cent, respectively.

The performance was driven principally by strong growth in India, the US and Africa, partly offset by weakness in Asia. Motilal Oswal largely maintained its FY27E and FY28E estimates and expects market-share gains, product launches, geographic expansion and currency tailwinds to support earnings over FY26-28.

Financial Performance

Ajanta Pharma reported 1QFY27 revenue growth of 24.8 per cent year on year to Rs 1,626 crore. EBITDA rose 20.6 per cent year on year to Rs 454 crore, while adjusted for the net forex gain, PAT increased 19.4 per cent year on year to Rs 320 crore.

Gross margin expanded 100 basis points year on year to 80 per cent, helped by product and geographical mix. EBITDA margin nevertheless declined 100 basis points year on year to 27.9 per cent, as other expenses and employee expenses increased by 200 basis points and 20 basis points, respectively, as a percentage of sales. Lower R&D expenditure, down 20 basis points as a percentage of sales, partly offset the cost pressure.

India Formulations Continue to Gain Momentum

India sales grew 24 per cent year on year to Rs 509 crore, representing 31 per cent of sales. Volume growth and new launches were running at about 1.4 times and 1.8 times the Indian pharmaceutical market, respectively.

Ajanta Pharma's chronic-focused portfolio contributes around 65 per cent of India sales and spans cardiac, ophthalmic and dermatology therapies, supporting prescription stickiness. The company has 17 brands with sales above Rs 25 crore, a field force of more than 3,750 medical representatives and launched eight products in 1QFY27. Management expects better field-force productivity and deeper therapy penetration to support continued growth.

Geographic Performance and Expansion

US Generics

US generics sales grew 57 per cent year on year to Rs 487 crore, or 30 per cent of revenue, aided partly by favourable currency movement and stronger traction in existing products. Ajanta Pharma launched two products and received three ANDA approvals during 1QFY27, taking commercialised ANDAs to 51.

The pipeline included 17 ANDAs awaiting approval and five tentative approvals. Management expects mid-single-digit US growth in FY27 because of price erosion and new-launch dynamics. Most new launches are expected in 4QFY27, subject to FDA approvals. The report notes plans for 8-12 ANDA filings in FY27, while detailed management commentary guides for 5-7 filings.

Africa and Asia

Africa branded-generics revenue increased 29 per cent year on year to about Rs 290 crore, supported by leadership in key molecules and expansion across markets. Africa institutional sales rose 84 per cent to Rs 70 crore.

Asia branded-generics revenue fell 16 per cent year on year to Rs 255 crore because of geopolitical disruption. Management nevertheless expects mid-to-high-teen Asia growth in FY27, high-double-digit growth in African branded generics and high-teen consolidated revenue growth. Management also sees scope to scale Semaglutide in Asia and Africa following regulatory approvals.

FY27 Management Guidance

Estimates and Valuation

Motilal Oswal forecasts FY26-28 revenue, EBITDA and PAT CAGR of 15 per cent, 16 per cent and 16 per cent, respectively. Its FY28E forecasts are revenue of Rs 7,230 crore, EBITDA of Rs 2,040 crore and adjusted PAT of Rs 1,430 crore.

Motilal Oswal values Ajanta Pharma at 32 times 12-month forward earnings to derive its Rs 4,000 target price.

Key Risks to the Thesis

• US price erosion and new-launch dynamics.
• Geopolitical disruption in Asia.
• Higher operating costs.
• Dependence on regulatory approvals for planned launches.