2 Pharma Stocks To Buy From ICICI Securities

Ajanta Pharma

Ajanta Pharma's today's share price is Rs. 2085 per share on November 3, till 2.00 PM IST. ICICI Securities has given a target price of Rs. 2500 per share with a target period of 12 months for the stock.

The company is a focused player in branded, which constitutes ~70% of overall sales. Till FY21 their overall exports: domestic formulations ratio was at 70:30. Ajanta Pharma' in Q2FY22 reports a strong number, which was ahead of estimates on their sales front. Their sales were up 23.6% YoY to Rs. 884.8 crore. Ajanta's PAT grew 15.1% YoY to Rs. 195.9 crore.

According to ICICI Securities, "Ajanta's share price has grown by ~1.4x over the past 5 years (from ~ Rs. 1502 in June 2016 to ~ Rs. 2126 levels in October 2021). We retain our BUY rating on the stock with a focused approach. We value Ajanta at Rs. 2500 i.e. 30x P/E on FY23E EPS."

Additionally, the brokerage firm said, Ajanta's "Q2 results were driven by growth across segments amid some dip in gross margin performance. The management expects to maintain domestic growth momentum in FY22 leveraging on the already launched products. On the EBITDA margins front, the management expects to maintain the current rate in FY22. Overall, calculated focus, steady gross margins, and lighter balance sheet are some key differentiators for Ajanta, going ahead."

Sun Pharmaceutical Industries (SUNPHA)

Sun Pharmaceutical Industries (SUNPHA) is having a share price of Rs. 786.55 on November 3, till 2.10 PM IST. ICICI Securities has identified it as a stock to buy. ICICI Securities has given a target price of Rs. 965 with a Target Period of 12 months for this company's stock.

ICICI informs, "Sun Pharma is world's fourth-largest specialty generic company with sales of US$3.8 billion and boasts of 43 manufacturing sites addressing segments, like specialty products, branded generics, complex generics, pure generics and APIs." Sun Pharma has a market share of 8.2%, and the company is ranked No. 1 in domestic formulations while enjoying a leadership position in 11 specialties based on prescription.

In Q2FY22 Sun Pharma reports strong Q2FY22 results, their sales were up 12.5% YoY to Rs. 9625.9 crore and EBITDA was at Rs. 2629.9 crore, which was up 19.9% YoY with margins at 27.3%. Additionally, their consequent adjusted PAT stood at Rs. 2047 crore that increased by 12.9% YoY.

According to ICICI Securities, "Sun Pharma's share price has increased by ~1.06x over the past 5 years (from ~ Rs. 763 in June 2016 to ~Rs. 815 levels in October 2021). We change our rating from HOLD to BUY due to more consistency on the specialty front and linear growth trajectory India formulations. Higher contribution from specialty and the strong domestic franchise is likely to change the product mix towards more remunerative businesses by FY23."

Disclaimer

The above stocks were from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.