Ajanta Pharma (AJANTPHARM)

FairStock Score: 60/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Elite capital efficiency: ROE 26.77% and ROCE 32.37% show strong competitive position.
• Fortress balance sheet: D/E 0.06 and ₹780 Cr FCF give financial flexibility.
• Financial health: Piotroski F-Score 8/9 and Altman Z 7.31 indicate low distress risk.
• Promoter skin in game: 66.25% holding aligns ownership with minority investors.
• Consistent recent momentum: latest quarter sales ₹1,375 Cr and net profit ₹274 Cr; sales growth 14.78%, profit growth 13%.

Concerns

• Expensive valuation: P/E 36.87, P/B 9.16, EV/EBITDA 16.07; PEG 3.86 implies overpaying for growth.
• No margin of safety: price ₹2,779.20 vs Graham Number ₹737.77 and DCF ₹1,984.57; MoS -305.80%.
• Moderate growth relative to multiple: 5yr revenue CAGR 9.97% and profit growth 13% don't justify 36.87x earnings.
• Low dividend yield 0.94% offers little cash return while waiting.

AI Analysis

Let me look at Ajanta Pharma the way I would any business. First, quality. With a return on equity of 26.77% and ROCE of 32.37%, this company earns far more on its capital than the average Indian enterprise. A debt-to-equity of just 0.06 means it does not need to borrow heavily to grow. Free cash flow of ₹780 crore provides real cash backing. These numbers point to a business with some genuine competitive advantage, though I must be careful not to overstate what I can see from a balance sheet alone. Now growth. Sales are growing at 14.78%, and profits at 13%. The five-year revenue CAGR is about 10%. That is steady, not spectacular. For a pharmaceutical company with a promoter holding of 66.25%, owners are still in control. The Piotroski score of 8/9 and Altman Z of 7.31 imply financial soundness. I would call this a stalwart rather than a fast grower. But here is where Graham's discipline becomes vital. At ₹2,779.20, the stock trades at 36.87 times earnings and 9.16 times book. The Graham number is only ₹737.77, and the DCF value is ₹1,984.57. The margin of safety is deeply negative at -305%. The PEG ratio of 3.86 tells me the market is paying far too much for every unit of growth. A great business can still be a poor investment if you pay the wrong price. I would wait for a much lower price, or for growth to improve substantially, before committing capital. The franchise is good; the current price is not.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer