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Ajanta Pharma share price has been under sell-off heat for around a year and every rise in the pharma stock has been seen as sell on rise opportunity. In year-to-date time, Ajanta Pharma shares have fallen from around 2214 to 1680 apiece levels, descending around 25 per cent this year. However, Yes Securities is expecting the stock to come out of consolidation phase and give strong upside in long term. The brokerage sees Ajanta Pharma share price to go up to 2350 per share levels, logging around 42 per cent upside from its current market price of 1680 levels.

Highlighting the reason for being being bullish on Ajanta Pharma shares, Yes Securities research report says, "Ajanta Pharma guided to 75% gross margin in FY23 and margin similar to FY22. Management unveiled enhanced capex of Rs2bn coupled with investments in promotion, product registration and R&D. Hence, current fiscal is likely to witness EBIDTA growth at best matching revenue growth. With significant R&D for India/emerging markets, expected relief in US price erosion, reckon gross margin have bottomed out aided by price increase in domestic business in the non NLEM portfolio. Guidance for increased investments in opex leads to ~200bps & 9% cut in FY24 margin & EPS estimates respectively."

On its suggestion to positional investors in regard to Ajanta Pharma shares, Yes Securities report says, "Reduced FY24 estimate lead to corresponding cut in TP to 2,350 though BUY stays based on unchanged 26x PE. Key trigger would be a successful FDA inspection which would open up approval to several important products."

Ajanta Pharma has recently announced bonus issue in the ratio of 1:2. The pharma company informed about its Board of Directors decision in an exchange communication citing, "We hereby inform that at the Board meeting held on Tuesday, 10th May 2022, the Board has inter alia approved issue of bonus shares in the ratio of 1:2 i.e. One new fully paid-up equity shares of Rs. 2/- each to be issued for every Two equity shares held, subject to approval of shareholders of the Company."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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