Ajanta Pharma Buyback: Rs 285 Crore at 24% Premium, Share Price Increases

Tanushree Jaiswal 3rd May 2024 - 04:19 pm

Ajanta Pharma recently announced a significant buyback plan where they are set to repurchase up to 1,028,881 fully paid-up shares, priced at ₹2 each. This represents about 0.82% of the total shares available. They've set the repurchase price at a hefty ₹2,770 per share. Over the last fiscal year, Ajanta Pharma gave out dividends worth ₹642 crore to its shareholders, which resulted in a dividend yield of 2.28% based on the stock's closing price on March 31, 2024.

The company plans to carry out this buyback through a tender offer, marking May 30, 2024, as the record date. However, a detailed timeline for the buyback hasn't been laid out yet.

From their headquarters in Mumbai, Ajanta Pharma shared some good news about their quarterly earnings too. They reported a consolidated net profit of ₹202.72 crore for the quarter ending in March, which is a strong 66% jump from the ₹122.25 crore reported in the same period the previous year.

Their quarterly revenue also saw a healthy 20% increase, reaching ₹1,054.08 crore, up from ₹881.84 crore year-over-year. Throughout the fiscal year, they managed to achieve a cash flow of ₹812 crore, maintaining an effective cash conversion ratio of 69%.

"Given this strong financial position, the board of directors has approved the distribution of ₹351 crore to shareholders in the form of a buyback, including tax. This buyback will involve purchase of 10,28,881 equity shares at a price of ₹2,770 per equity share, constituting 0.82% of the total paid-up equity share capital," Ajanta Pharma said.

Commenting on the financial performance and the buyback decision, Ajanta Pharma reiterated, "This reaffirms our commitment to delivering value to our shareholders and underscores our confidence in the company's future prospects."

This marks the fourth consecutive year that Ajanta Pharma has carried out a buyback initiative, signaling a strong ongoing commitment to boosting shareholder value. Previous buybacks occurred in November 2020, January 2022, and another last year, with ₹315 crore allocated to repurchase shares at ₹1,425 each, totaling 22.1 lakh equity shares.

Founded in 1973, Ajanta Pharma has carved out a niche for itself in branded generics across various therapeutic areas like cardiology, ophthalmology, and more. Their focus on innovation and a diversified portfolio have helped them maintain a strong market presence and drive sustainable growth.

Looking ahead, Ajanta Pharma is well-prepared to capture new opportunities in the ever-evolving pharmaceutical industry, leveraging its robust R&D capabilities and extensive distribution network to continue generating long-term value for stakeholders.

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Tanushree Jaiswal

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