Q2-Fy23 Con call- 20 Oct 2022
- Focus on generating Free cash flow.
- Buyback cost 310 cr, including tax
- Fright costs have not reduced considerably in Q2 but will impact positively in Q3 onwards.
- Science/Tech initiate will increase R&D- It will be 40 to 45 cr in each quarter from now on
- Capex spend 94 cr.
- Paracetamol margins are less.
- Due to the good availability of raw materials, Para sells more. Demand was not the problem for Para.
- Successfully converting a lot of API customers to FD.
- Gross margin 2/3 years
- 21 and 22 are an aberration.
- EBITA slowly creep up YOY. The target is 25%
- Going for high-margin business, and we will see higher-margin business. Rely on Granules 2.0 up and running. - Container rates $14,000 to $ 12k $8.5k. Pre covid container rates- $4500
-Fright cost will offset the increase in R&D in coming quarters. - Top 5 customer concentration - around 30-40. The top 20 are not more than 60%.
- 10 % of imports are from the US.
- The whole world depends on China for Metformin Intermediary .
- PAP- Buy from India/China.
- H2 will focus on Working capital, inventory, receivables and payables management.
High Potency API
- FOCUS ON Oncol formulation.
- Enzymes/Fermentation - The pilot looks good; we will launch is soon.
- Bio-Tech investment is 13 cr so far.
- See commercials for the product in the next couple of years.
- In Biologic, we will be an investment.
- Capex could be higher after next year onwards (FY 25 onwards)
Europe
- European product launch will happen in Q3 through our partners.
- European Para launch is happening in Q3. They will be launching our own brands/FD in two countries.
- Next quarter, Metformin will launch in Q4. (OK growth)
MUPS
- Some of the more important ones are yet to be approved. It may be in Q4/Q1.
- Going a little slow.
- Number of MUPS launches - 2 in Q4- increasing market share and one more in Q1 next year.
US
- Continue to see double digits price erosion. This is offset by launching more products and more in other markets.
- 3 already launched, and 2 more to go in US.
- Decent market share in Metformin. Would not like to increase market share at cost.
Earning call recording here
Earning call PDF Transcript here