Another excellent quarter from Fredun pharma.
Balance sheet has also getting better with receivables going down and capital infusion(post the quarter end).
Management is walking the talk.
Regards,
Raj
Disc: Invested
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there is a similar company in this space - sequent. not sure if they both will be competitors ?
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Sequent scientific is towards cattle and poultry healthcare.
Fredun Pharma addresses pet care also together with cattle and poultry.
In addition, with the recent acquisition of One Pet Care, they have now entered Pet Grooming business. This makes the proposition even more interesting.
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Waiting for the outcome from its investors concall .
Management gave a healthy long term growth plan in the last investors call.
Refer the screenshot from last investor’s meet.
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Q2FY26 Conference Call Highlights
General:
- We have over 1,000+ products under registration and 697 products already approved globally.
- Our manufacturing base in Palghar supported by 37 contract manufacturing units across the country. We have a cluster of three plants. We have a separate block for Ayurvedic, FSSI, cosmetics, allopathic formulation, nutraceuticals and veterinary and pet care.
- We have commenced expansion of our state-of-the-art manufacturing facility at Palghar to enhance the capacity. Within next two years we should be one of the largest plants at a single location in the country.
- We also hold India’s only patent for bone graft.
- We witnessed the healthy momentum across all our new age verticals with a strong contribution from nutraceutical, pet wellness and healthcare.
- Operating cash flow also turned positive.
- Through the acquisition of one pet stop private limited, a tech enabled pet grooming and wellness platform serving over 4,000 recurring pet parents. We entered the organized pet care service market. The platform offering at home grooming service and a digital interface complement our Freosi brand enabling us to integrate products and services to reach a broader consumer base.
- We also acquired Wagr.ai a pioneering pet tech platform that introduced GPS tracking health monitoring and veterinary consultation service in India with over 1.40,000 pet parent patented technology a strong veterinary network Wagr.ai announced our vision of building connected technology-led pet wellness ecosystem.
- As a part of our strategy to expand the animal healthcare vertical, we launched Snaky Jain, India’s first pure Jain functional food for pets under the Friosy brand. Developed through in-house R&D, Snaky Gen is 100% vegetarian functional pet snack enriched with calcium and essential nutrients to promote bone strength, digestion, and immunity.
- The Indian pet care industry is witnessing strong growth, and it’s projected to reach US$6 billion US by 2030 driven by rising adoption, urbanization and growing awareness of preventive healthcare.
- We are in discussions to get the interest rate reduced.
Financial Performance
- Q2 FY26 was another strong quarter. Total income stood at 145.29 cr growing by 35% year on year while EBIDTA grew by 60% to 22.34 cr with margin improving to 15.37 net profit grew by 128% to 9.73 cr.
New Age Businesses:
Pet Care:
- Pet Care was started just 5 years ago
- Our long vision is that by 2032 no pet in India should be born or die without using Freosi product,
- On export: We have launched in Sri Lanka. We are getting our products registered in Philippines and GCC countries. We are present directly or indirectly in 52 countries. Once we have built our base in India, we will tap our channels in these countries.
- Jain products:
- We did get a phenomenal response. We did not even anticipate this kind of orders. 12 tons of the product is already sold through pre-orders.
- Now, we had to go back on our drawing board and revisit our manufacturing and procurement with the kind of order book that we have for Snacky Jain.
- By November end it should be in stores across certain geographies and within the next 6 months possibly in most parts of the country.
- The product is being rolled out across six major cities through veterinary clinics, online platforms, and retail partners.
- There’s a community which cares for the animals, and they love feeding dogs and there is they would end up giving some product like a parle G or other biscuit or something which is not so nutritious for an animal because of the lack of avenues.
- We are launching more variants of the Jain product in next 6 months. There will be certain products for Jain which will be for geriatric dogs. There’ll be certain Jain for young dogs.
Mobility:
- Fredun mobility has the same kind of products as Bisco and Tinoyr.
- We started through MMRDA and then we went on to a couple of states. It’s doing phenomenally well. We have exceeded our sales expectations for most of our SKUs in mobility.
- For us it is the same distribution channel the GX line which sells pharmaceutical products because it goes side by side as a complimentary product for them. For a new company it becomes difficult as they have to set up the entire distribution channel which is not needed in our case.
- We anticipate a 25 to 30% growth year on year on the numbers and there will be a sharp increase once we add more geographies in the latter half of next year.
- We have also launched last month Mobilitics which is a division targeted to our physiotherapist. Because a lot of the products which are specialty products in the mobility range are used by the physiotherapists as well.
- We have one of the youngest populations in the world. So, there is a stickability of certain brands which will last for a prolonged period of time especially in mobility where people would require some of the other products as time goes by in their lives.
Nutraceutical:
- We are the only companies to have double blinded clinical trials for nutraceutical products.
- We are giving complimentary products to the allopathic formulations. For example, someone is having cholesterol or diabetes. Most probably once someone has diabetes, they have diabetes for the rest of their lives. So, they are on some kind of medication in terms of allopathic formulations, and we have specially curated products which go complimentary along with those lifestyle products. So, the nutraceutical becomes chronic. It is research based hence the doctor stand by it.
- We have added a few more geographies last year and we are adding more. The way we are growing the nutraceutical is going city by city and going in those hubs and metros and targeting the consumers there.
Cosmeceuticals:
- cosmeceuticals are divided into two ranges. One is Beauty Fred which is a mass market cosmetic, and one is Dermaceutics under Bird & Beauty.
- The mass market cosmetics of good quality are not available at a reasonable price. We have launched several innovative products in the cosmetic range. For example, our sunscreen SPF100 is not there in India, and we have launched the first time an SPF100 in a single use sachet form. So, such small changes, such small innovations make us have instantly clicked in the market. for example, our wet wipes.
- We have we are the cheapest wet wipe in the country in terms of the cost to the distributors and the PTS. We are selling about 350 - 400,000 pieces only in the MMRDA and the Maharashtra region almost every month.
- Our reach for beauty Fred will increase in the next 24 to 36 months.
- We want to reach the tier 2 tier 3 markets before we go to the tier 1 markets with our mass market cosmetics.
Wagr:- Recent acquisition
- Wagr is an addition to our core business, and it is not our core business. In India right now there is no neutral space for pet care. HUFT and just dogs and a couple of other companies are selling most of their products and pushing every time a good product sells they brand the products themselves and push it.
- There are so many there are so many manufacturers who are good quality products but have no avenue to sell them. We will be India’s first neutral space where a good quality product can also come, and it will be completely neutral. There will be no one even Freosi products will not be pushed before other products on the platform.
- Another reason for wagr is right now there is no way to verify it. There is a vast void in terms of clarity and knowledge in terms of first-time pet parents. They have no idea where to go. The breeders, the dog groomers, the dog trainers, the dog walkers are completely disorganized and there is no way to authenticate who is good, who is not. India people say it’s a growing pet market. So, in a growing pet market there will be more first-time pet parents than repeat pet parents. So they would want to definitely have these other services also. So we want to have a central platform a lifestyle kind of product for pet parents where right from the manufacturers who have good quality products but no avenue to sell them. Amazon charges 25-30% markup 40% markup on products sometimes don’t even get listing and there are so many good small manufacturers who give excellent products but no avenues to sell them. We want to be a platform where they can on board.
- We are not an e-commerce company, but we have the e-commerce platform and the science tech platform. So, we can actually verify the product scientifically before they get uploaded on the website so that the pet parents are sure that a company who is in this industry for almost three decades have vetted the product before it is sold. Right now, there are so many products sold on other e-commerce platforms without any checks. We would not be taking guarantees of the products, but we would be 100% sure as this product is good for the pet only then we would onboard it on our platform.
- Some patents like live tracking and diagnostics just like how humans wear smart watches. We would have devices which pet parent can buy and have live tracking of their pet can happen.
- Wagr leadership team is already in place. They are staring their own team. We are expecting to launch it by Mid-Jan/Feb 2026.
- Investments:
- We have not paid a single penny for the acquisition. The existing stakeholders have taken a small stake in the new company, and we have taken majority stake of almost 80%. I reasoned with the investors of those founders that the money that we are going to spend for the next 3 years four years should be spent for the website and not for paying the acquisition cost. So, our acquisition cost is zero.
- We are investing about 4 to 5 crores in the next 18 to 24 months for getting basic things aligned and then we intend to invest another 5 to 7 crores later on.
- In 5-7 years Wagr’s revenue could be a few million dollars a month.
Contract Manufacturing:
- When we cannot manufacture due to licencing or MOQ issue then only this route is taken.
- Currently around 5-7% is being manufactured which will move to 15-20% in coming years.
- We have added 37 locations across India in last 24 months.
- Margins can be better in this case because of better economies of scale.
Fund raise:
It will be used for new product development, team building, marketing, and distribution.
Team Augmentation:
- We have hired teams for new product development, and we are going to add more people. Hiring is a continuous process.
- We have a 40 member F&D team which is quite large for a company of our size.
- For us each brand works as a separate unit. They have their own supply chain, finance and operations teams.
- We will see the results in next 24-36 months.
Growth Forecast:
- Vintage business will grow for 7 to 9 years in auto cruise control. It is likely to grow 15% because of the registrations and the existing channels in place.
- New age businesses are growing month-on-month. We have a 7-year plan for pet care, 5-6 year plan for neutra and three-year plan for mobility. Let’s see how the things progress.
- We are on track to get 90Cr profit by FY29.
Disc: Invested.
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Fredun published the ultimate beneficiary name of the recently done QIP. List is below:
One interesting name appears in the list though the quantities allotted are insignificant,
Regards,
Raj
Disc: Invested
3 Likes
It’s Paid article. Anyone has subscription please share your insights from the article.
Q2FY26 Conference Call Highlights
Financial Performance
Q3 FY26:
- Total income: Rs. 160.92Cr a strong growth of 57% Y-on-Y
- EBIDTA: 26.34Cr a robust growth of 99% Y-on-Y
- EBIDTA margin: Improved to 16% expended by 384 basis point.
- Net profit: 10.48Cr a growth of 96% Y-on-Y.
- Net profit margin improved to 7%
- EPS: 22.19.
9M FY26:
- Total income: 426Cr a 48% Y-on-Y growth.
- EBIDTA: 65.66Cr up by 74% Y-on-Y.
- EBIDTA margin: 15% an expansion of 237 basis point.
- Net profit: 26.98Cr a strong 96% growth Y-on-Y.
- Net profit margin: 6%
- EPS: 57.13
General:
- Borrowing for working capital needs will go down as the fund raise money has come and we will use a sizeable portion of it for the working capital needs. Also, our internal cash flow will improve in next few quarters.
- After few quarters you will see a sharp jump in margins as cost-efficiencies of new age businesses start kicking in. They are 50-60-70% gross margin businesses.
- No impact of US/EU trade deals as we do not cater to these geographies.
- By FY32 51% of sales will come from new age businesses.
- As of now the Q1 is the weakest and Q4 is always strongest. However it will decline in next 5-6 years due to more contribution coming from new age businesses.
- We are launching products one by one in different states.
- Trade receivables and inventory are at the similar levels that of Sept 2026.
- We never had write off inventory except a few thousands.
New Age Businesses:
- The new brands which we did launch in last 2-3 years are showing good traction.
- New age business contribution in 9MFY26 - Gx business: 60Cr, Pet Care: 42cr, Nutrition: 26Cr. Remaining part of new business are mobility, derma and cosmetics.
Pet Care:
- Our pet biscuit line is doing very well. We have started producing in Q3, so the numbers will start coming from next quarters.
Mobility:
- Brands: BraceOn - mobility, Digion - glucometer, BP meter, Nebon - Nebulizers.
- Fredun Mobility: https://fredunmobility.com/ Adding 30-40 retail outlets every week. We will be adding 4-5 states in the coming year and coverage will increase to 60%.
Others:
Capacity expansion:
- We have 37 partner facilities and are increasing our capacities as well.
- We have 3 plants and we have started the 4th one. We are not going to put a plant for mobility products in near future.
Fund raise:
- We do not envision need of funds in next 12-18 months at this point of time.
Guidance:
- We can comfortably reach around 600Cr in FY26. Our guidance will always be conservatives as we want to outperform the guidance.
- Legacy business has grown 15-20% this year. It will continue growing between 12-18% for next 5-6 years. We have 1300-1400 registrations in pipeline. New brands are growing at 20-25%.
Disc: Invested. No trade in last 90 days
The above summary is my understanding of the conf call of Q3FY26. I might have missed out or misunderstood a portion of it.
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Q4FY26 Conference Call Highights:
Operational Highlights:
Financial Performance:
Q4FY26:
Total income: 213Cr vs 167.41Cr in Q4FY25, a growth of 27.27%
EBIDTA: 29.13Cr a growth of 67.05%
EBIDTA Margin: 13.67% vs 10.41% an improvement by 326 basis points
Net Profit: 11.07Cr a growth of 56.47%
Net profit margin: Improved to 5.19% expanding by 97basis point.
FY26:
Total income: 639.12Cr, a growth of 40.8%
EBIDTA: 94.79Cr a growth of 72.05%
EBIDTA Margin: 14.83% an improvement by 276 basis points
Net Profit: 33.21Cr a growth of 59.59%
Vintage business: Our vintage business is growing at 15-20%. Exports are around 110-120 crores, tolling is 24 crores, institutional sales are 120-130 crores, and domestic third-party branding is 45-50 crores.
For new-age business: Pet care did 42-43 crores, mobility did 29-30 crores, nutraceuticals did 26 crores, mass-market cosmetics did 20-22 crores, and dermaceuticals did around 12 crores. New-age businesses are growing at a 40-50% CAGR. Gross margins in the new business are higher, around 45-55%, with some products like diagnostics at 80-90%.
We are transitioning from a contract manufacturer to a mass-market consumer product company while retaining our pharma roots.
New Business Lines:
Hormonal and anti-aging lines:
This year we focus on hormones and anti-aging. We are launching two sets: one is a hormonal line and the other is an anti-aging line.
Harmonal line: There are hormones which are used for medicinal purposes. We are using the doctor channel because we want only good hormones in the market. There is a huge demand as the population gains awareness and requires targeted therapies such as testosterone replacement therapies. Even in terms of pregnancy and estrogen for both men and women, hormones as a sector are not very focused. The market is quite fragmented here as there are not many good hormone products available.
We have created a list of products where we will be one of the first or second in the country to have them. We have a ground-level team currently focusing on the MMRDA region and certain metros. We will also be the first to have medicated hormone products sold online through our website and doctor channel.
Anti-aging: The number of clinics is growing rapidly. CDSO recently announced that only certified doctors can prescribe these therapies, which works to our advantage. We are one of the first manufacturers for NAD and NAD plus and have exclusive import rights for the API. With an end-to-end supply chain and decent margins, we can use our dermaceutical and specialized anti-aging products to create a basket for dermatologists and doctors. It is a high-margin, fragmented, and unorganized market with no strong competition, making it a “brownfield” for us to build our brand quickly.
Fitness Industry: We are also adding specialized therapeutic products for the fitness industry, such as specialized pre-workouts and protein powders, because we are already doing an entire protein range under Fredun Energy. These targeted therapies will help the fitness industry and give doctors alternative long-term treatments.
Mobility Division:
Mobility has been a very positive division. Last year we did almost 30 crores in mobility products. Mobility has four brands: Grayson, DG on Neborn, and we are launching Mobilix by July. These products like knee braces, orthopaedics, and digital products like BP machines and glucometers go to chemist shops. We use the same distribution channel we have for Fredun Pharmaceuticals to add on mobility products, giving us an upper hand in distribution and logistics compared to competitors.
We foresee reaching a 100 crore run rate within two to two and a half calendar years, and a 250 to 300 crore enterprise within 5 to 7 years. It is profitable and does not burn resources as we are a completely offline pure distribution brand. We have strong distribution in Maharashtra and are expanding into Goa, Chhattisgarh, and Karnataka. Our Mobilix brand targets physiotherapists specifically, who are first-hand influencers for these products. Our pre-booking is already completely booked for the July launch. The division is growing at almost a 55% to 60% CAGR.
Pet business:
We are the only company manufacturing allopathic formulations, herbals, grooming, functional foods, and diagnostics all under the same roof. Our long-term goal is that by 2032-2033, no pet in India can be born or die without using a Freossi product or service. We create products for all parts of a pet’s life. We are launching 42 variants of functional food biscuits for all kinds of breeds.
In grooming, we have displaced market leaders because of our manufacturing background in human dermaceuticals and cosmetics. Within the next 9 to 12 months, we will come out with formulations that will be the first in India for pets. Our online platform, Wagr, is in the launch phase with a soft launch in mid-June and a full launch in the first week of July. It is a holistic pet care portal, not just e-commerce. We also launched India’s first bulletin on radiology and vet imaging to educate doctors on diagnostics. We are pioneers; for example, we recently performed a CT scan for a cobra.
Pet care business model: Most of our products are prescribed. We didn’t start with online platforms; we started with first-line influencers like breeders, groomers, dog walkers, and trainers. We went to Tier 1 through Tier 4 cities to train them on product benefits. This created a bond before we launched the products. Doctors then realized we were strong in science. We have India’s top nutritionists and vet radiologists on our team. We are not spending money to buy inorganic growth; we are a pet care company, not just a pet food company.
Wagr.in, it is a holistic pet care portal using AI and analytics. It should be active and live within the next 15 to 20 days.
Future projections:
Margin growth will continue at 30-40% on current levels. Targeting a 10-12% PAT margin in next 8 quarters.
We are on track to achieve our 2029 and 2030 targets earlier.
Others:
Inhouse vs Outsourcing: We have around 43 locations. We outsource products we cannot make in our pharma plant, like wheelchairs or specialized injections. However, 80% or more of our products are manufactured in-house. We are adding 12 to 13 packing lines by September and constructing a new wing. We are a cluster of four plants at one location and are setting up facilities for functional foods. It would take 15-20 years for a competitor to match our validation and licensing levels.
Working capital and free cash flow: We have constantly improved inventory levels. We needed higher inventory while launching 2,100 SKUs, but now at 700 crores top-line, our inventory is only 270 crores. Cash flows have improved and are now positive from operations. Debt to equity is 0.8. We are growing faster than anticipated, so working capital will be stretched, but we are mitigating those concerns.
Finance cost: The absolute number might increase but it will decease as % of sales.
Drivers for margin improvement and sustainability: New-age businesses have higher intrinsic margins. Vintage businesses margin has improved from 1% to 6.5% with improvements in scale. We are looking for a 10-12% kind of PAT margin within next few years.
Impact of war in middle east: Prices have increased but we generally keep three to four months of stock, so the initial jolt never bothered us. We were able to cater to clients at the same prices, which increased our sales. We have orders in hand for 6 to 7 months, upwards of 320-330 crores.
Regards,
Raj
Disc: Invest since almost a year. No trading in last 6 months.
I Have summarized it based on my understanding of the call and took some help from notebooklm to generate the base transcript. Please do your due diligence.
7 Likes
Fantastic result by Fredun.
Regrads,
Raj
Disc: Invested since more than a year and sold one third of my holdings in recent runup. Still among my top 3 holding.
Fredun Pharma Q1FY27 Conference Call
Growth:
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Vintage business growing @15-20%
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New age businesses growing @ 35-45%. Some growing even faster due to lower base.
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Our new brands such as pet care, nutrition and mobility brands have also got good acceptance from pharmacies.
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We will grow 25-35% for next 5 years as we have a very small base.
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Q1 historically has been weaker quarter. This time it was a little better. We booked some extra orders buy giving buyers to buy at older prices due to availability of old inventory. Next quarter will be similar to Q1 numbers.
Capex:
- For next 2 years capex will be of the order of 35-45cr per year. 2% is the maintenance capex.
Financials:
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Working capital required for us is 170-175cr on a sales of 850Cr which is reasonable. 50% of working capital is cash on hand. We will need higher working capital when the revenue grows.
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Interest costs are slowly reducing.
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Inventory days are around 145 days which will go down to 120 days in next four quarters.
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Our focus is on product penetration and acceptance for next 3 years, not purely on margins.
Others:
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Every single division has a separate CEO in place.
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Core team is almost same since last 19 years when I came in and hired them.
GX Business:
- GX is currently now in 19 states and have a very small base of about 100-110Cr this year. The product acceptance is good. We can expect 30-35% growth in our GX line as well for next 4 years.
Pet Care:
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Pet care business is currently 40-45Cr, Will grow 40-50% for next 3-4 years.
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We are adding 42 variants in functional foods. Jain variant has picked up very well. We have different food for Tier 1 city and Tier3-Tier4 towns. We are also coming out with cat biscuits. We are creating a functional line for Cat which will come out in next 6-7 months.
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Wagr.ai site is looking great. We took 3-4 months to create a team post acquisition. We are creating a pet parenting platform. It will become a comprehensive platform for pet owners, groomers, dog walkers, vets besides pet parents. We will link our diagnostic also. It will also be for blood collection/donation for pets. It will get better as we are just in beta phase. Next 90 days there will be campaigns coming out.
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Some acquisitions are coming in pet care.
This is my interpretation of the conference call discussion. I might have missed some key points. Please do listen to it for exact details.
Disc: As above.
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“Fredun Pharmaceuticals Acquires 26% Stake in ₹300 Crore-Valued Goodman Vetcare Pvt. Ltd., One of India’s Longest-Standing Dedicated Pet Pharmacies”
This was the announcement. The company Goodman has just 3 stores. Hasn’t Fredun over overpaid on this one ?
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