21 Ajanta Pharma
Ajanta focuses mainly on cardiac, dermatological and ophthalmic therapies. Domestic branded formulations constituted 33% of consolidated turnover in FY15. The company’s forte has been its focus on new drug-delivery systems. New product launches and first-of-its-kind generics have helped Ajanta post a CAGR of 29% over the past five years against industry growth of just half as much. Despite registering its highest-ever gross margin in Q2FY16, the management pared growth rates for FY16 from 25% to 18-20% following a slowdown in its key derma brand Melacare. Given its unique product portfolio in the domestic market, most analysts expect Ajanta Pharma to continue to outperform.
20 Page Industries
With the distinguished lineage of Jockey, Page Industries has a strong moat and an early-mover advantage in the premium innerwear space. Page’s market share in the men’s segment stands at 21%, while in the women’s innerwear segment, it is 12%. From just 18 exclusive brand outlets (EBOs) at the time of its public issue in 2006, today, Page boasts of 223 EBOs. Page is looking to ramp up its capacity from 195 million pieces to 230 million pieces. The management believes that about 20-25% revenue growth for the business can be sustained over the next year or two, led by 15-17% volume growth, 3-5% price increase and roughly 5% mix/up-trading benefit. Analysts expect the company’s revenue and earnings to grow by 30% and 37%, respectively, over the next five years.
19 Atul Auto
This three-wheeler manufacturer has a presence in the sub-one-tonne segment, targeting both passenger and domestic vehicles. It has an 8% market share in the three-wheeler space and is among the top five 3-wheeler makers. The company also has 200 exclusive dealers and 120 sub-dealers pan-India. Its initial growth was led by geographical expansion, tying up with financiers, the superior mileage of its vehicles and a higher warranty period offered to customers compared with peers. Atul has been debt-free since FY11 with strong free cash flows and a healthy balance sheet. The next leg of growth will come from strengthening its distribution network and product innovation. The company has recently launched petrol and CNG engine models to tap the markets in Africa and Asia. Once the company clocks sales of 70,000 units, operating leverage will kick in, leading to earnings CAGR of 35% over FY16-FY18.
18 PTL Industries
88% of PTL’s revenue comes from its healthcare business: Artemis Medicare Services is its step-down subsidiary and runs a super-specialty 300-bed hospital in Gurgaon. The rest of its income, amounting to Rs.40 crore of rental income per annum, comes from its associate company, Apollo Tyres. Under the agreement, a factory has been leased out to Apollo for eight years from 2014. While the rental income has been a fixed feature on PTL’s P&L statement, the healthcare business has grown at a steady 24% CAGR over the past five years. According to the company’s FY15 annual report, the continuing lack of adequate healthcare infrastructure and limited access to quality healthcare delivery services should give private players a chance to play a larger role. The growth of medical tourism remains another catalyst for the hospital business. A CII-Grant Thornton report suggests that medical tourism in India is set to become an $8-billion industry by 2020 from a $3-billion industry at present.
17 Justdial
After a big-bang IPO a couple of years ago, top-rated search services provider Justdial seems to be in a spot of bother. A drop in the number of paid listings as well as a wage hike and investment in its Search Plus service were responsible for its slowest revenue growth ever during the September 2015 quarter. The company announced a buyback of its shares and spent up to Rs.165 crore, mopping up shares from investors, in an attempt to prop up the share. However, a big blow came from Sequoia Capital, one of its earliest investors, which sold 1.57% of its stake for Rs.100 crore; the VC fund used to hold a 13.15% stake in the company. Goldman Sachs downgraded the stock and set a target price of Rs.750, and expects the core search revenue growth to decelerate over FY15-FY18 to 19% owing to rising competition and inadequate investments.
Note: Financial year as stated. Market-related data as on December 14, 2015; M-cap, PAT, sales, assets, cash and dividend in Rs.cr; CMP in ₹; PE and D/E in x; return and CAGR in %. Source: Ace Equity
