Another strong set of results from Ajanta, sales grew at 27%, there was margin compression which led to PAT being flat. Management is confident of getting back to 25-26% EBITDA margins in FY23. Notes from concall below.
FY23Q1 concall
- Sales grew at 27% (looks higher due to lower base of Q1FY22), Gross margin ~ 71% (2% due to one-time inventory write-off + 1% due to raw material and packaging price increase + 1% US price erosion), EBITDA margins ~ 23%, PAT margins ~ 18%. Expect gross margin to recover to 74% and EBITDA margin to 25-26% in FY23
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US:
o 6% YOY growth (gain in market share + 0 new launches), despite severe price erosion. Estimating price erosion to come down to 6-8%
o Filed 1 ANDA and received 1 tentative approval, plans to file 10-12 ANDAs during FY23 (0 new launch)
o Have 20 ANDAs under approval and 4 tentative approvals
o Without new product approvals, expect around 5% growth for FY23
o gChantix – Still under review with FDA
o gVimovo – Approval can happen after facility inspection -
Domestic:
o 22% YOY growth, launched 7 new products (2 is first to market). Most of the new launches will be in cardiology and diabetes
o 7% price increase + 6% volume growth + 3% new product increase
o 3rd fastest growing company in Top-30 cos (IQVIA MAT June 2022)
o Trade generics: 33 cr. vs 27 cr. last year. Growing similar to peers, focusing more towards chronic therapies. Manufacturing is a mix of in-house and outsourced
o Improved overall rank to 28 from 29 (in Q4FY22), gained 1 rank in dermatology and cardiology and 2 ranks in pain management
o Growth due to new product launches, market share gain & price increase
o 3 brands are now in top-500 in IPM
o 12% is under NLEM -
Emerging market (branded generics)
o Africa branded grew by 34%. New product launches + higher field force. 20-25% growth was sustainable, excluding 1-time benefit from lower base. Expect this to sustain at around 15%
o Have larger presence in Franco Africa, 8% has been growth in MR network in Africa
o Asia branded grew by 45% (looks elevated due to slightly lower base of FY22Q1)
o Launched 10 new products -
Africa institution
o Growth of 44% YOY - CAPEX of 43 cr. in quarter (full year planned capex of 200 cr.)
- R&D stood at 6% of sales
- Freight costs increased from 6% to 8% of sales
- Quarterly other expense rate was 266 cr. (increased slightly from 258 cr.)
Disclosure: Invested (position size here, no transaction in last-30 days)