AJANTPHARM - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.1

📊 Fundamental Analysis Summary

Ajanta Pharma (AJANTPHARM) is a high-quality pharmaceutical company with excellent capital efficiency, near-zero debt, and consistent profitability. While its valuation is on the higher side, the business fundamentals and sector stability make it a solid long-term candidate for growth-oriented investors.

Metric Value Interpretation

Market Cap ₹35,210 Cr Large cap — stable and resilient

Stock P/E 37.9 Slightly overvalued vs. industry PE of 34.0

PEG Ratio 4.35 Significantly overvalued relative to growth — caution

ROE / ROCE 24.9% / 32.4% Excellent capital efficiency — strong long-term indicator

Dividend Yield 1.28% Decent — adds income stability

Debt-to-Equity 0.01 Virtually debt-free — low financial risk

EPS ₹74.4 Strong earnings — supports valuation

Book Value ₹303 Price-to-book ~9.3× — premium valuation

PAT Growth (QoQ) +3.89% Stable — consistent performance

RSI / MACD 63.4 / 51.7 RSI mildly overbought; MACD bullish — strong momentum

FII/DII Holding Change 0.00% / +0.02% Neutral institutional sentiment

52W Price Range ₹2,022 – ₹3,486 Mid-range — room for upside

📉 Valuation & Entry Price Zone

PEG ratio above 4 suggests significant overvaluation. While fundamentals are strong, a better entry point improves risk-reward.

Ideal Entry Zone: ₹2,500 – ₹2,650

This range aligns with DMA levels and offers a safer accumulation zone.

Accumulate gradually during market dips or sector rotations.

🧭 If You Already Hold the Stock

Holding Strategy

Time Horizon: 3–5 years — ideal for compounding via earnings and dividends

Exit Strategy: Consider partial exit if price exceeds ₹3,300–₹3,400 without corresponding EPS or PEG improvement

Monitor: PEG ratio, PAT trend, and ROCE sustainability

Key Triggers to Watch

PAT consistently above ₹270 Cr per quarter

PEG ratio falling below 2.5

ROCE maintained above 30%

🧠 Final Thoughts

Ajanta Pharma is a fundamentally strong company with excellent profitability and minimal debt. While valuation is rich, its consistent performance and sector resilience make it a worthy long-term pick. Best suited for investors seeking quality with moderate growth expectations.

Would you like a comparison with peers like Alkem Labs or IPCA Labs to evaluate alternatives with better valuation metrics?

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