Ajanta Pharma trades firm in a subdued market as board mulls share buyback

In the past six months, Ajanta Pharma has underperformed the market by gaining 8.9 per cent against 26 per cent rally in S&P BSE Healthcare index

Shares of Ajanta Pharma rose 4 per cent to Rs 1,646 on the BSE on Thursday in an otherwise subdued market after the company announced share buyback plan. Intra-day, the stock had rallied 6 per cent to Rs 1,683 in early morning trade. In comparison, the S&P BSE Sensex was down 0.24 per cent at 39,826 points, at 11:27 am.

Earlier, on October 23, 2020, Ajanta Pharma had informed that the board meeting of the Company scheduled to be held on November 03, 2020 to consider, the unaudited consolidated financial results for the quarter and half year ended September 30, 2020 and interim dividend.

“The company has now informed BSE that at the aforesaid board meeting, the board of directors will also consider a proposal for buy-back of the equity shares of the company,” Ajanta Pharma said in regulatory filing on Wednesday after market hours.

As on September 2020, the promoters held 70.51 per cent stake in Ajanta Pharma. Institutional investors led by mutual funds (9.93 per cent) and foreign portfolio investors (7.71 per cent) have collectively held 19.15 per cent, while individual shareholders have 8.57 per cent holding in the company, the shareholding pattern data shows.

In the past six months, the stock has underperformed the market by gaining 8.9 per cent. In comparison, the S&P BSE Healthcare index rallied 26 per cent, while the benchmark the S&P BSE Sensex gained 21.7 per cent during the same period.

Earlier, in March 2019, Ajanta Pharma had bought back 769,230 equity shares of the company at Rs 1,300 per share via tender offer.

In the July-September quarter (Q2FY21), Edelweiss Securities expect Ajanta Pharma’s revenue to grow 5 per cent year-on-year (YoY), led by the US. India will likely remain subdued at 5 per cent decline. The brokerage firm expect EBITDA margin to increase 190bps YoY to 29.5 per cent with some cost savings continuing in Q2.