Ajanta Pharma Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹3,320.20−₹39.20 (−1.17%)

DalalBaazaar Score

73 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by high debt relative to equity.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

The 60-second version of Ajanta Pharma Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Ajanta Pharma Limited, together with its subsidiaries, a pharmaceutical formulation company engages in the development, manufacture, and marketing of specialty pharmaceutical finished dosages.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees10,421

Annual revenue₹5,407 Cr

How does it make money?

Turns over ₹5,407 Cr a year. Of every ₹100 of sales, about ₹20 reaches shareholders as profit, with ₹31 left at the operating level before interest, tax and depreciation. Each of its 10,421 employees supports ₹51.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹51.9 lakh

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, DR. REDDY S LABORATORIES, CIPLA LTD, DIVI S LABORATORIES LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 29.4%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 23.3% against a peer median of 14.5% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE14.5%

What is the outlook?

13 analysts covering the stock expect revenue to grow about 12.8% and earnings to grow about 16.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+12.8%

Est. earnings growth+16.4%

Analysts13

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +46% while net margin moved +23% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+46%

Margin effect+23%

DalalBaazaar Score

73/ 100

Good

Weighted across six categories. Every point is explained below.

• P/E of 36.6x already prices in growth
• P/E is close to its own historical median of 41.8x
✗ P/B of 9.16x is a steep premium to book

Quality vs. Valuation

Company Quality

80/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

43/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

36.6x

3Y Median

41.8x

40 monthly readings · mean 42.6x · range 32.7x–58.7x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 12% below its 3y median of 41.8x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟡Against its sector it is priced broadly in line with the peer median of 33.3x.

vs. its own history

Fair

41.8x median over 40 months · -12%

vs. sector peers

Fair

33.3x median of 4 peers · +10%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

25.1x

PEG

1.70

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 24.0% to 30.7% over 3 years.
Return on equity is rising
ROE has improved from 17.4% to 23.3%.
Return on capital is rising
ROCE has improved from 21.2% to 29.4%.
High return on capital employed
ROCE of 29.4% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 630% over 3 years, from ₹36 Cr to ₹260 Cr.
🔴High leverageFinancial
Debt/Equity of 5.87x — earnings must service borrowings before shareholders see anything.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Receivables growing faster than salesFinancial
Receivables up 75% against revenue up 46% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 29.4% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 24.0% to 30.7%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 5.87x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 75% against revenue up 46%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 10% a year✓ 13.4% CAGR
Latest reported year was 24.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 29%✓ 30.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹164 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 26%✓ 29.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 3 neutral · 2 weak

Market Cap

₹41,489 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

36.6x

Fair

Fairly valued against the generic band

P/B Ratio

9.16x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹90.79

Profitable

Profitable on a per-share basis

ROE

23.3%

Strong

Strong capital efficiency

ROCE

29.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

5.87x

High

High leverage

Revenue Growth (YoY)

24.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

30.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.93%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹164 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

28.5x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

25.2%

Good

Healthy core-business profitability

Net Margin

19.6%

Good

Strong bottom-line conversion

Current Ratio

2.64

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.22

Defensive

Steadier than the market

52W Range Position

66%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

3487.7 / 3530.8

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

34.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹3,708 Cr	₹4,162 Cr	₹4,588 Cr	₹5,407 Cr	+13.4%
EBITDA	₹891 Cr	₹1,228 Cr	₹1,352 Cr	₹1,662 Cr	+23.1%
EBITDA Margin	24.0%	29.5%	29.5%	30.7%	—
PAT (Net Profit)	₹588 Cr	₹816 Cr	₹920 Cr	₹1,056 Cr	+21.6%
EPS	₹45.89	₹64.77	₹73.53	₹84.51	+22.6%
ROE	17.4%	22.9%	24.3%	23.3%	—
ROCE	21.2%	30.0%	30.1%	29.4%	—
Total Debt	₹36 Cr	₹35 Cr	₹47 Cr	₹260 Cr	+94.0%
Free Cash Flow	₹618 Cr	₹633 Cr	₹839 Cr	₹164 Cr	-35.7%

🟢 Revenue has grown at 13.4% a year over 3 years.

🟢 EBITDA has grown at 23.1% a year over 3 years.

🟢 EBITDA Margin has risen from 24.0% to 30.7% over 3 years (+6.7 pts).

🟢 PAT (Net Profit) has grown at 21.6% a year over 3 years.

🟢 EPS has grown at 22.6% a year over 3 years.

🟢 ROE has risen from 17.4% to 23.3% over 3 years (+6.0 pts).

🟢 ROCE has risen from 21.2% to 29.4% over 3 years (+8.2 pts).

🔴 Total Debt has grown at 94.0% a year over 3 years.

🔴 Free Cash Flow has shrunk at 35.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹6,155 Cr

Total Liabilities

₹1,628 Cr

Cash & Equivalents

₹103 Cr

Operating Cash Flow

₹529 Cr

Capex

-₹365 Cr

Shareholding (proxy)

Institutional Holding

24.3%

Insider Holding

54.3%

Corporate Actions

Dividend Rate

₹64

Ex-Dividend Date

05 Aug 2026

Analyst Consensus

Recommendations

11 Buy · 2 Hold · 1 Sell

Target Price (Mean)

₹3,808.38

+14.7% vs CMP

Target Range

₹3,109 – ₹4,155

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
DR. REDDY S LABORATORIES	31.0x	8.8%
CIPLA LTD	31.8x	9.8%
DIVI S LABORATORIES LTD	83.0x	17.5%

Recent News

2 mixed1 negative3 general

Top 14 Pharma Stocks To Buy In India October 2026

Samco, 17 Oct

Ajanta Pharma Share Price rises 2.64% today

Univest, 15 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Compare with AJANTA PHARMA

Equitymaster, 16 Oct

AJANTPHARM Forecast — Price Target — Prediction for 2027

TradingView, 27 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Stock to buy today: Ajanta Pharma (₹3,073) – BUY

BusinessLine, 11 Jun

Ajanta Pharma Shares Rise After ₹1,024 Cr Promoter Stake Sale

HDFC Sky, 10 JunOwnership

🔴Potentially negativePromoter selling or pledging is a signal worth understanding, though the reason is often personal rather than about the business.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Growth · Profitability

MiddlingFinancial Health · Risk

WeakValuation

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 3 high-severity red flags sit above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑