Decent set of numbers Reported by Lincoln Pharma.
My interpretations based on Q1 results and management interview to CNBC TV-18:
- The percent of exports in revenue is growing. From 11% of total sales in FY13, it grew to 56% of total sales in FY20 to about 78% in Q1-FY21.
- Cost of materials consumed has gone from 21 cr to 27 cr YoY which is a jump of about 29%. Since sales have only gone up 7%, does this depict a reduction in pricing power for the company?
- Changes In Inventories of Finished Goods, Stock-In trade and WIP has gone up from 1cr to 7cr. Not sure how to interpret this, but this potentially represents products for domestic sales which could not be sold due to suppressed demand due to covid-19.
- Total Revenue up 7%, Net profit and EPS up 23% YoY. Profits outpaced revenue growth mostly due to reduction in costs. For example, employee costs went down from 15cr to 13cr.
- Company has received EU GMP certification from Germany FDA and plans to start selling in EU sometime in this financial year.
- CNBC TV-18 anchors were upset with the management for guiding for 15-20% growth in Q1 and only achieving 7% growth. Mr patel tried to clarify that their anticipation of covid-impact was not accurate until now.
- Has guided for 25-50% revenue growth for rest of FY. My 2 cents are, small businesses face highest amount of uncertainty. Sometimes management might feel pressured to provide guidance. I would not take such guidance seriously.
- Vitamin C+Zinc tablets referenced above only expected contribute 10cr to topline. Total opportunity size in India is 150 cr.
All in all, would be exciting to see how the rest of the FY pans out for them and whether they can start adding serious top line growth based on exports to EU.
Disc: invested. Full portfolio here.