Pharma || Hospitals || Diagnostics : Industry perspective

Windlas Biotech -

Company overview, Q4 and FY 24 results and concall highlights -

Its a contract maker of generic formulations for Domestic branded companies, GoI ( Jan Aushadhi Kendras ) and also export generic formulations

Vertical wise revenue split -

Generic Formulations CMO Domestic - 77 pc of sales. Last 5 yrs sales CAGR @ 14 pc
Trade generics + Govt Supplies - 19 pc of sales. Last 5 yrs sales CAGR @ 42 pc
Exports - 4 pc of sales. Last 5 yrs sales CAGR @ 45 pc

Therapy wise revenue split -

Acute therapies - 34 pc of sales
Chronic therapies - 66 pc of sales

Product wise revenue split -

Complex generics - 64 pc
Conventional generics - 36 pc

Focus therapy areas - Respiratory, Anti-Diabetic, GI

No of manufacturing facilities @ 4. All 4 located in and around Dehradun. Dosage forms manufactured - oral solids, chewable, liquid bottles, sachet / powdered products, Injectables. Injectables facility commenced operations in Mar 24

Q4 outcomes -

Sales - 171 vs 141 cr, up 22 pc
EBITDA - 22 vs 16 cr, up 34 pc ( margins @ 13 vs 12 pc )
PAT - 17 vs 11 cr, up 48 pc

FY 24 outcomes -

Sales - 631 vs 513 cr, up 23 pc
EBITDA - 78 vs 60 cr, up 30 pc ( margins @ 12 vs 12 pc )
PAT - 58 vs 43 cr, up 37 pc
CFO > 100 cr for FY 24
Cash on books @ 206 cr as on 31 Mar 24

GoI planning to triple the number of Jan Aushadhi stores to 25k inside next 2 yrs. should act as major catalyst to the Trade generics segment

Company’s CMO - domestic vertical grew by 20 pc in FY 24 - that’s 3X of IPM

As company’s capacity utilisation grows (and specially for injectables segment which is a high margin segment) - company’s EBITDA margins should expand going forward

Guiding for 1000 cr topline in FY 26
Capex guidance for FY 25 @ 20 cr for expansion of Dehradun plant - 2. For FY 26, it should be around 30-35 cr

The Capex spend for the Injectable facility was @ 75 cr

Company’s trade generics segment generates greater EBITDA margins vs CMO for branded companies as the company gets to retain the distribution margins in addition to the manufacturing Margins

Govt’s focus on better quality of generic medicines and crackdown on non-compliant players is a structural tail wind for the company

At peak capacity utilisation, the Injectables facility can do an asset turns of 1.2 times ( so that amounts to 90 odd cr of annual revenues. However, the EBTDA margins here are > 15-16 pc )

Company’s expansion plans for medium - long term will be a mix of organic + inorganic - given the healthy cash flow generation by them

Company’s employee costs are in the 13-14 pc band vs Innova Captab’s 7-8 pc band. Company believes that employee cost is an investment

Company believes that complying with all GMP / Schedule M regulations is not easy for smaller non-compliant players. It does cost significant money and a complete change in operating mindset

Disc: holding, biased, not SEBI registered

4 Likes

Any suggestion on how to play the theme of the trending obesity/weight loss drug?

@Siddharth_Goliya Play the proxies?
I searched for “weight loss” on screener. Only one concal had information about it. You could study this company.

“I’m happy to announce that we have onboarded our current
customer for one of our auto injectors and have also started development of a new auto injector
with automatic needle insertion. This is being developed particularly for the molecule
tirzepatide. Tirzepatide is Eli Lilly’s new weight loss drug and has an NCE-1 filing deadline of
May 2025”

2 Likes

Search “GLP 1” instead

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Shaily Engineering Plastics. They manufacture injections through which such drugs are administered. I am not sure whether they have started supplying injections for weight loss drugs.

1 Like

FMCG is passe- Indian economy has a new definition of defensive stocks !

I found this Blog very intersting !

Once upon a time FMCG stock used to be counted as defensive stock. Defensive stocks not only should defend our portfolio from down sides during a bear market but also should give a reasonable return over a period of time.

If we analyse the stock performance of last few years, FMCG stocks has taken us no where.
Pharma stocks once thought to be defensive. But Our pharma industry is China dependent for API and KSM. Also Pharma Industry as a whole is bogged down frequently by USFDA issues- Hopefully the PLI schemes of the Govt would create the eco-system gradually in days to come to really challenge China and become the pharmacy of the world.

IT industry once thought to be Defensive, but it is now seen that the IT industry is undergoing technological challenges/ transformation due to AI.

So , what is defensive now ? This article explains well… it lists 8 stocks which we should keep under our watch list.

PS: I am able to access the full article from my android phone though I have not subscribed to its prime membership.But when I was trying to access the link in valuepickr forum , it is asking for subscription.:slightly_smiling_face:

Please confirm if you are able to open the link and access to the article

Not able to access the article. ET prime membership only

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it is surprising !
i have not subscribed , but I am able to access.
You may please try from another device or from laptop /desk top if possible.

Or copy the link on your mobile browser and try to access.

Could you please share the sector names?

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The article speaks about Health care hospital sector. How in India with 1400 million people we have low penetration in health insurance and a lot of health insurance companies aggressively selling health insurance coverage.

While it is unethical to levy heavy charges for hospitalisation, sooner or later rates need to be standardized.
In spite of the fact that there is a move to standardise hospitalisation charges and the issue has been taken up with Supreme court, there is hardly any fall in stock price.

Health care is something basic necessity in life and there would be perennial demand for medical care. As economy grows , standard of living improves, people will seek health insurance cover and would utilise services from hospitals when they fall ill.
It also talks about IT, it says IT adopts to transformation and large IT companies will be able to adopt to changes very fast…

4 Likes

18% GST on health insurance is another deterrent. Also unlike Term insurance one can’t lock in the premium by availing early on. Moreover reviews of all health insurance companies are generally not so good with claims denied for silly reasons.

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Eris Lifesciences -

Q4 and FY 24 results and concall highlights -

Acquisitions made by the company in last 24 months -

Oaknet Pharma - entry into Derma business - paid Rs 650 cr

Select brands of Glenmark Pharma - paid Rs 340 cr

Derma brands of Dr Reddy’s - paid Rs 275 cr

Biocon’s domestic Nephro and Onco business - paid Rs 366 cr

Swiss Parenterals - sterile Injectables business - paid Rs 640 cr for 51 pc stake

Biocon’s India Injectables business - paid Rs 1242 cr

**Total cost of all acquisitions put together - 3510 cr **

Total revenues of the acquired assets at the time of acquisition - 1240 cr

Q4 outcomes -

Revenues - 547 vs 396 cr, up 38 pc ( domestic revenues @ 480 vs 389 cr )
Gross Profit - 432 vs 402 cr, up 31 pc
EBITDA - 148 vs 118 cr, up 25 pc
PAT - 79 vs 61 cr

FY 24 outcomes -

Revenues - 2009 vs 1685 cr, up 19 pc ( Domestic revenues @ 1902 vs 1606 cr )
Gross Profit - 1629 vs 1332 cr, up 22 pc
EBITDA - 674 vs 536 cr, up 25 pc ( margins @ 34 vs 33 pc )
PAT - 397 vs 374 cr, up 6 pc ( due much higher depreciation, amortisation, finance costs )

There were non-recurring one time expenses of aprox 38 cr in Q4. Adjusted to that, PAT for FY 24 would have been 430 cr

Consolidated Debt on balance sheet @ 3000 cr. Company intends to reduce it to 2600 cr by end of FY 25 out of internal accruals. By the end of FY 26, aim to bring it down to 2000 cr !!!

Aiming for organic revenue growth of 12-14 pc in the domestic formulations business. Aim to maintain EBITDA margins > 35 pc for FY25. Will share complete company level guidance post completion of integration of Swiss Parenterals and Biocon’s domestic business by end of Q1 FY25. Biocon’s domestic business is currently clocking annual sales of 360 cr. Swiss parenterals clocked FY24 revenues of 280 cr with 37 pc EBITDA margins

Eris - Biocon combined will create 5th largest Anti Diabetic franchise in India with Anti Diabetes only revenue base of close to 1000 cr / yr. It will have significant presence across oral and injectable Anti-Diabetic products

Company can work on expanding margins by using Swiss Parenterals manufacturing facilities to manufacture a lot of Biocon’s injectable products

Eris - MJ Biopharm JV ( 70:30 JV formed in 2022 to sell Insulins and GLP-1 products ) is now clocking a monthly sales of 5 cr. It reported an EBITDA loss of 20 cr in FY 23. In Q4 FY 24, EBITDA loss has narrowed down to 1 cr. Should turn EBITDA positive from Q1 FY 25

The Insulin penetration in the domestic mkt is very low. Company sees fairly large growth runway for their Insulin products - both from Biocon’s and MJ Biopharm’s portfolios

Aim to launch 4-5 new brands in India in Q1 in the Critical care space to be manufactured out of Swiss Parenteral’s facilities

Disc: holding, biased, not SEBI registered

3 Likes