Ajanta Pharma ₹32 Dividend FY27 — Record Date, Yield, Sustainability

Ajanta Pharma Limited (NSE: AJANTPHARM | BSE: 532331 | ISIN: INE031B01049) has declared its 1st Interim Dividend for FY 2026–27 of ₹32 per share on a face value of ₹2. In headline terms this is a 1,600% dividend — but that percentage is calculated on the tiny ₹2 face value, not on the market price. On the current price the real cash return works out to about 0.91%.

The one line that matters: The payout is comfortably covered by profit (EPS covers the dividend 2.6 times), yet it lands in a year where the company’s free cash flow fell about 80% — a gap between reported profit and actual cash that the rest of this analysis unpacks.

At its board meeting on 30 July 2026, the Board of Directors of Ajanta Pharma approved the unaudited Q1 FY2027 results (quarter ended 30 June 2026) and declared the 1st interim dividend of ₹32 per share for FY 2026–27, amounting to ₹399.79 crore (the company rounded this to “₹400 crore” in its press note). The declaration was made under Regulations 42 & 43 of the SEBI (LODR) Regulations, 2015.

Auditor / contingency note: The results carry an emphasis-of-matter on the Income Tax search of August 2025 (block period 1 April 2019 to 17 November 2025); the company filed its return on 6 April 2026 and states the financial impact, if any, is currently not ascertainable. The auditor (B S R & Co. LLP) issued an unmodified conclusion. (Source: company filing, note 6.)

To be eligible you needed to hold the shares as of the record date, 5 August 2026. Because Indian markets settle on a T+1 basis, buyers had to purchase on or before the ex-date to appear on the register in time. As this is published after the record date, eligibility is now fixed.

A “1,600% dividend” sounds enormous, but that number is simply ₹32 ÷ ₹2 face value. What actually reaches your pocket is measured against the market price, and there the yield is modest.

Yield reality check — why the yield is low even though the dividend rose

The yield is low for a healthy reason, not a distressed one. The share price has re-rated sharply — up roughly 21% in a year and trading near its 52-week high of ₹3,599 (52-week low ₹2,330). When the price climbs faster than the dividend, the yield compresses. This is not a case of a falling price flattering the yield, nor a one-off special payout inflating it; it is a growing company whose valuation (P/E ~39×) simply outruns its cash payout. If you also count the ₹28 interim paid in November 2025, the trailing-12-month cash return is closer to ~1.7%, but on a like-for-like annual basis ₹32 is the relevant figure.

Full-year trend (Consolidated, ₹ crore)

Revenue: FY24 4,209 → FY25 4,648 → FY26 5,453 (3-year CAGR ~13%). Net profit: FY24 816 → FY25 920 → FY26 1,056 (3-year CAGR ~14%). Return ratios are strong: ROE 27.1%, ROCE 34.5% (FY26). (Source: Screener.in, consolidated.)

This is where ShareBazaar’s reading differs from the wire coverage. Reported profit is an accounting opinion; cash is a fact. On paper FY26 looked excellent — profit up ~15% to ₹1,056 cr. In cash terms it was the company’s weakest year in recent memory.

Why the cash fell — and what it means for this dividend

The culprit is working capital. Consolidated debtor days jumped to 124 in FY26 from 93 in FY25 — receivables grew faster than sales, meaning more profit is stuck in the balance sheet rather than converting to cash. As a direct consequence, FY26 free cash flow of ₹169 cr does not cover the ₹399.79 cr interim dividend (FCF coverage just 0.42×). The gap is being bridged from the company’s cash reserves and a step-up in borrowings (gross debt rose from ₹47 cr to ₹260 cr in FY26).

How this dividend is being funded: primarily from current earnings and accumulated cash reserves, with FY26 free cash flow alone insufficient to cover it. It is not funded by asset sales, but a portion of the funding gap in FY26 coincided with higher borrowings. The comfort comes from the balance sheet, not from last year’s cash generation.

The balance sheet is the real safety net here. With ₹4,502 cr of reserves and near-zero net debt, Ajanta can pay this dividend many times over from its own equity base — which is precisely why the weak FY26 free cash flow is a watch item, not an alarm. The one nuance worth tracking is the rise in borrowings, small in absolute terms but a five-fold jump year-on-year. (Source: Screener.in, consolidated.)

Overall verdict: Moderately Sustainable

Earnings and the balance sheet comfortably support the ₹32 payout, and Ajanta’s payer profile is consistent and rising. The single caution is that the dividend is stepping up in a year when free cash flow shrank — so the payout currently outpaces free cash generation. If FY27 operating cash flow normalises as receivables are collected, the payout is easily affordable; if working capital stays stretched, the company will keep funding growth in the dividend from reserves rather than from fresh cash. That is the key thing to monitor.

Against peers, Ajanta screens as a high-return, mid-payout name: its ROE (27%) and ROCE (35%) are at the top end of the branded-generics pack, while its dividend yield (~0.9%) is broadly in line with Alkem and well above the thin-yielding Ipca. In short, Ajanta returns a moderate share of a very profitable business — the market pays up for the growth, which keeps the yield low.

A flag worth surfacing

Of the ₹399.79 cr paid out, roughly ₹254 cr (about 63.5%) flows to the promoter family — the majority of the cash. Minority shareholders share the remaining ~36.5%. Separately, and importantly, the promoter stake fell by ~2.76 percentage points in the June 2026 quarter (with domestic institutions rising to 21.80%). A promoter reduction alongside a rising dividend is worth watching; it does not by itself signal anything negative, but the reason for the reduction is a legitimate governance question for the desk to probe.

Since the abolition of the Dividend Distribution Tax in April 2020, dividends in India are taxed in the shareholder’s own hands at their applicable income-tax slab rate. There is no separate flat rate — the ₹32 you receive is added to your total income.

Illustrative only, using headline slab + 4% health & education cess; surcharge (where applicable on higher incomes) is capped at 15% on dividend income and is not shown. Not tax advice — consult a qualified professional for your situation.

Ajanta Pharma’s ₹32 first interim dividend for FY2027 is its highest-ever regular interim, backed by a genuinely strong quarter (revenue +25%, profit +31%) and an exceptionally solid balance sheet with ₹4,502 cr of reserves and near-zero net debt. On earnings the payout is comfortably covered (2.6×), and the company’s track record marks it a consistent, rising dividend payer.

The honest summary: this is a high-quality, well-run business making a healthy, affordable payout — but one whose reported profit is currently converting to cash less efficiently than before. The dividend is safe today on the strength of the balance sheet; its long-term growth depends on cash conversion recovering. We present the positives, negatives and monitoring points; the decision is yours.