Company reported very good revival in margins, sales growth was largely driven by inorganic acquisition with sales growing by 17%, EBITDA by 32% but EPS being flat. Tax rates have started hitting them as Guwahati tax shelter is over now, Gujarat ramp up can again bring down tax rates. More interestingly, Eris is launching a lot of products in FY24 again. They are also spending R&D and transitioning from a largely marketing focused co. Concall notes below.
FY24Q1
- FY24 organic growth: Expect IPM to grow at 8% and Eris to grow at 12%. Have seen volume decline in Q1 and most growth is coming from price increase and new product launches. Very confident of double digit growth in remainder of year
- R&D: Spending 30 cr. on 10 combination molecules (3 cr./molecule). Transitioning from a pure marketing organization to doing R&D themselves
- 2 FDCs in oral diabetes in clinical trials and will be launched in Q3FY24
- 2 FDCs in cardiology in clinical trials and will be launched in Q4FY24
- These 4 FDCs will be new mother brands
- 6 FDCs are under development (2 diabetes, 2 CNS, 2 Gastro)
- Relaunced Zayo in January 2023 and has achieved monthly run rate of 2 cr. in June 2023
- Linagliptin will be launched at patent expiry (August 2023)
- Insulin sales ramped up to 9 cr. in Q1FY24 with (-2.5 cr.) EBITDA loss (guidance: 50 cr. sales in FY24 and EBITDA breakeven by Q4FY24)
- MJ’s Glargine and Liraglutide completed Phase III trials and is slated for commercial launch in Q4FY24
- Gujarat: capex of 230 cr.+ (vs earlier guidance of 170-180 cr.). Capacity utilization was 14% in June 2023 and will ramp up in FY24.
- Commercialization of Derma block will deliver margin benefits starting Q4FY24
- Oaknet EBITDA margins are now 35%
- Dermatology: First-in-market product like Minoxidil Booster and Hydroheal Nova launched in Q1, pipeline of 8-10 products to be launched in FY24. Entering Pediatric Dermatology in Q2FY24
- Of acquired derma brands from Dr Reddy and Glenmark, have lost 25% of sales in Q1 and hope to get to 100% run rate by Q2FY24
- PCPM: 5.02 lakh
- Net debt reduced by 102 cr. (to 672 cr.)
- Quarterly depreciation will be ~41 cr.
Disclosure: Invested (position size here, no transactions in last-30 days)