Ajanta Pharma Limited Just Beat Revenue Estimates By 5.0%
Investors in Ajanta Pharma Limited (NSE:AJANTPHARM) had a good week, as its shares rose 9.1% to close at ₹3,078 following the release of its yearly results. Results overall were respectable, with statutory earnings of ₹84.51 per share roughly in line with what the analysts had forecast. Revenues of ₹56b came in 5.0% ahead of analyst predictions. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Ajanta Pharma's ten analysts are now forecasting revenues of ₹62.8b in 2027. This would be a meaningful 12% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 16% to ₹97.70. In the lead-up to this report, the analysts had been modelling revenues of ₹60.8b and earnings per share (EPS) of ₹98.65 in 2027. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.
Check out our latest analysis for Ajanta Pharma
Even though revenue forecasts increased, there was no change to the consensus price target of ₹3,242, suggesting the analysts are focused on earnings as the driver of value creation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Ajanta Pharma analyst has a price target of ₹3,742 per share, while the most pessimistic values it at ₹2,605. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Ajanta Pharma'shistorical trends, as the 12% annualised revenue growth to the end of 2027 is roughly in line with the 12% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 12% per year. It's clear that while Ajanta Pharma's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at ₹3,242, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Ajanta Pharma. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Ajanta Pharma analysts - going out to 2029, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Ajanta Pharma (including 1 which is significant) .
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