Reviews
In this edition, we have reviewed Ajanta Pharmaceuticals Ltd. and Infosys Ltd. We suggest our reader-investors to HOLD in Ajanta Pharmaceuticals Ltd. and Infosys Ltd.
We had recommended Ajanta Pharmaceuticals Ltd. in Volume 36, Issue No. 2, dated December 22, 2020 to January 3, 2021, under the ‘Cover Story’ segment. The recommended price for the stock was Rs1,686.45. It was given a positive tag on the basis of the optimistic outlook regarding the company’s position in the pharmaceutical sector. Established in 1973, Ajanta Pharmaceutical Ltd. is a multinational company based in India which is engaged in development, manufacturing and marketing of pharmaceutical formulations. The company has a strong presence in India, the United States and about 30 other countries in Africa, Asia, Middle East, and the Commonwealth of Independent States (CIS).
On the consolidated financial front, the company’s net sales and other operating income was Rs756.84 crore in Q4FY21 as compared to Rs681.96 crore in Q4FY20, registering growth of 10.98 per cent. The operating profit ascended by 25.91 per cent from Rs208.03 crore in Q4FY20 to Rs261.94 crore in Q4FY21. The net profit improved by 23.3 per cent in the quarter which registered at Rs159.26 crore in Q4FY21 as compared to net profit of Rs129.16 crore in Q4FY20. On the annual front, the net sales and operating income gave a rise of 11.66 per cent from Rs2,587.87 crore in FY20 to Rs2,889.69 crore in FY21.
The operating profit grew by 32.11 per cent in FY21 as compared to FY20. The net profit on an annual basis increased 39.81 per cent at Rs653.87 crore in FY21 as compared to Rs467.70 crore in FY20. In India, the company had 21 new launches in FY21 of which five are ‘first to market’. The productivity of the company’s medical representatives is of high quality in the ophthalmic segment. It also has scope to improve in cardiac care and dermatology. Internationally, Ajanta Pharmaceuticals plans to file 10-12 ANDAs per year consisting of oral solid dosages (OSDs). Hence, given the steady growth of the company in key markets, we recommend HOLD.
We had recommended Infosys Ltd. in Volume 36, Issue No. 2, dated December 22, 2020 to January 3, 2021 under the ‘Low Price’ segment. The recommended price for the stock was Rs1,154.40. It was given a positive tag on the basis of predicted growth aspects of the company in the IT sector. Infosys is an Indian multinational information technology company which is engaged in the business of providing business consulting, information technology and outsourcing services. The company was founded in Pune and is headquartered in Bangalore.
The financial performance of the company indicates that on a consolidated quarterly basis the net sales and other operating income was Rs27,896.00 crore in Q1FY22 as compared to Rs23,665 crore in Q1FY21, which is a rise of 17.88 per cent. The operating profit rose by 22.1 per cent from Rs6,596 crore in Q1FY21 to Rs8,054 crore in Q1FY22. The net profit improved by 21.75 per cent in the quarter at Rs5,201 crore in Q1FY22 as compared to Rs4,272 crore in Q1FY21. On the annual front the net sales and operating income rose by 10.66 per cent from Rs90,791 crore in FY20 to Rs1,00,472 crore in FY21.
The operating profit zoomed by 20.02 per cent in FY21 as compared to FY20. The net profit on an annual basis rose by 16.73 per cent at Rs19,423 crore in FY21 as compared to Rs16,639 crore in FY20. The company’s growth trajectory remains strong owing to its strong deal pipeline. It has witnessed pent-up demand to restart delayed projects along with sustainable improvement in large deals. Momentum can be seen across banking, financial services and insurance (BFSI), retail, manufacturing and life science and utilities verticals despite the lower net new bookings. There is also an uptick in fresher on-boarding towards the satiation of demand and a surge in near-term attrition. Hence, we recommend HOLD.
(Closing price as of July 22, 2021)