Ajanta Pharma shares climb 4.5% on USFDA green light to Dahej unit

Shares of Ajanta Pharma jumped 4.5 percent in early trade on June 26 after the company’s manufacturing facility in Dahej, Rajasthan, cleared an inspection by the US Food and Drug Administration (USFDA) with zero observation.

The development sent the stock higher and, at 10.13am, shares of Ajanta Pharma were trading 3.5 percent up at Rs 1,513.55 on the National Stock Exchange (NSE).

The USFDA issues observations when it finds objectionable practices at any facility during its inspection. These observations tend to hinder the timeline for production of drugs that might have been filed from these facilities, causing not only a delay in launches but also in a loss of revenue potential for drug makers.

At a time when intense regulatory scrutiny has been a pressure point for Indian drug makers, with some big manufacturing facilities and major drug launches caught in the loop, the clearing of the US drug regulator’s inspection without any hassles has aided interest in Ajanta Pharma.

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Sentiment for Ajanta Pharma is also going strong on the back of its high exposure to the Indian Pharma Market, a segment within the pharmaceutical space that may deliver double-digit growth in FY24.

The same optimism for the pharma company was reflected in the fact that foreign institutional investors have increased their stake in it from 8.23 percent at the end of Q2 to 10 percent at the end of Q4.

Domestic institutional investors toed the line and jacked up their holding to 15.52 percent as of March-end from 12.68 percent at the end of the second quarter.

The stock has also gained significantly in 2023, flushing out double-digit returns of over 24 percent year-to-date and outperforming the Nifty Pharma index’s near 6 percent rise during the same period.

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