Ajanta Pharma Ltd announced an in-licensing agreement with Biocon this week to market semaglutide across 26 emerging markets, including Africa, West Asia, and Central Asia. The patent for the weight loss drug expires in most of these markets by March, with commercialisation expected post regulatory approvals in late 2026 or early 2027. While this will not immediately impact earnings, it can potentially influence Ajanta’s medium-term growth.
To start with, Ajanta is not stepping into unfamiliar territory. The company already has a strong branded generics presence in over 30 countries, supported by over 2,000 medical representatives. This significantly reduces execution risk.
PL Capital expects semaglutide to provide additional around ₹200 crore of sales for Ajanta with healthy margins in FY28. The broking firm estimates Ajanta’s consolidated FY28 revenue at ₹6,966 crore. Biocon will handle manufacturing, while Ajanta leverages its existing field force and infrastructure across emerging markets.
This keeps incremental costs low and helps preserve Ajanta’s strong return ratios, rather than diluting them through heavy capital investment.
GLP-1 therapies such as semaglutide sit at the intersection of diabetes and obesity, both large and fast-growing markets globally. These therapies typically involve long treatment durations, which improves earnings predictability and durability.
Better business mix
Over the past few years, Ajanta has consciously reduced its exposure to the African institutional (anti-malarial) business, which is tender-driven and structurally has a lower margin compared to branded generics, and has now declined to 3% of total revenue versus 9.3% in FY21.
The branded generics business, which has the highest margins, now accounts for 74% of total revenue, up from 68% in FY21, driven by strong execution across India, Asia, and Africa.
In H1FY26, Ajanta’s India-branded business grew 14% year-on-year, outperforming the broader Indian pharmaceutical market in both value and volume, supported by new therapy forays into gynaecology and nephrology.
Meanwhile, the US generics business has emerged as the strongest growth engine, delivering 42% growth in the first half (H1FY26), aided by new launches and market-share gains.
As of H1FY26, Indian branded generics contributed 32% of total revenue, Asia branded generics accounted for 23% and Africa branded generics for 17%. Outside branded generics, the US generics business contributed 25%, while the Africa institutional (anti-malarial) business accounted for just 3% of total revenue.
Management expects low-teens growth in Asia branded generics for FY26, following a relatively modest 7% growth in H1FY26, and expects the growth momentum in US generics to sustain. The company has guided for Ebitda margins of 27% for FY26 versus 26.6% in H1FY26.
Cash deployment and growth
Ajanta’s future growth is likely to be driven less by balance-sheet expansion and more by how effectively it deploys its cash flows. Over the last decade, the company has converted 99.7% of its cumulative profits into operating cash flows.
Its strong cash generation provides ample headroom to pursue capital-light growth opportunities, such as in-licensing differentiated products like semaglutide, without stretching the balance sheet.
The stock is down about 10% year-to-date and trades at a price-to-earnings multiple of about 28 times FY27 estimated earnings, as per Bloomberg.
Given Ajanta’s improving business mix and robust cash generation, the valuation appears reasonable for a company transitioning into a cleaner, higher-visibility healthcare compounder.