Punjab came out with decent set of numbers, Q4 sales grew by 23% and PAT by 90% (YOY). FY22 was a good year with sales growing by 37.6% and PAT by 69%.
In terms of production volumes, both Derabassi and Lalru had low production in Q4 (maybe a function of product mix or raw material shortage).
| FY22Q1 | FY22Q2 | FY22Q3 | FY22Q4 | |
|---|---|---|---|---|
| Derabassi production (MT) | 7’022.00 | 6’236.00 | 6’521.00 | 4’018.00 |
| Lalru production (MT) | 342.00 | 412.00 | 491.00 | 100.00 |
Management is confident of reaching 1500 cr. sales in next 2-years, lets see execution. Concall notes are below.
- Net working capital days should stabilize at 50-55 days
- FY23 growth drivers: Got registration for 2 more products which will be launched in FY23. Certain launched products got registered in additional geographies, so there will be growth in existing products as well
- FY24: 2 more products will be added in FY24 (expect to have registrations by Q3YF23). Will start advance intermediate supplies to pharma cos Laurus/Divis/Mylan
- The 3-4 new molecules are generic products where Punjab is an additional supplier (site transfer from existing suppliers)
- Agrochemicals: 65% (~600 cr.), performance chemicals (intermediates + fine chemicals): 35% (270-280 cr.)
- Top 2 product contribution (metconazole + metamitron) has reduced to 20%
- Advance Intermediates: Delayed by 3-4 months as they had certain supply chain dependence on China which is being resolved. Will have sales coming in from early FY24
- EBITDA margins should increase by 2-3% (from current 15-16% levels) in next 2-years
- CRAMS model works on EBITDA/kg, so margins can look lower if raw material prices increase a lot. Looking at absolute EBITDA is more important. Look for 22-25% IRR on new contracts
- Current business mix is ~60% CRAMS (550-600 cr. in FY22). This can grow to 1500-2000 cr. in next 3-years
- Volume growth was ~18% in FY22
- Capex: In ongoing 150cr., ~30cr. was finished with remainder being ~120cr. Currently discussing more capex which will be announced in Q1/Q2. When doing capex, look for 2.5-4x fixed asset turns
- Cost problems can persist in Q1/Q2 of FY23 because of higher energy prices
- Metconazole sales should double in FY23 over FY22 as customers got their re-registration in EU
- Most of sales comes from technical to formulators (B2B relationships). Also make some bulk formulations to formulators (again B2B). Don’t do their own B2C marketing
- Capacity is not a big constraint in fulfilling current growth trajectory
- Target regions for next leg of growth: Latin America, South Asia, European Union
- Registration for certain agrochemicals is taking a bit of time.
- Patented products are also mentioned as Technology transfer products
Disclosure: Invested (position size here, bought shares in last-30 days)