Punjab came with very subdued results (-18% sales decline, -44% EPS decline). However, these nos were much better than most other technical manufacturers and they have only witnessed 8-9% price decline vs most generic cos facing 40-70% price decline. This has meant that they actually improved gross margins this quarter.
They seem to have invested quite a bit in new product development and are confident of scaling up 7-8 new molecules + intermediates in the next few quarters. Concall notes below.
FY24Q3
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Export demand is subdued (high channel inventories, adverse weather, customers building inventory closer to season). Expect revival by Q3 of FY25 (so about a year)
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Gross margin improvement is due to process re-engineering leading to better raw material efficiency + product mix. Make higher margins in specialty intermediates for pharma
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Of the 3 planned launches this quarter, have got registration for 1 product in EU (different from Australian product; prosulfocarb) and started supplying commercial quantities. Other 2 registrations are expected in 2024 and commercial supplies should begin in Q3/Q4FY25. Total business from these 3 products are 100-150 cr. once all registrations are done
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Intermediates: Supplies have started for 1 pharma intermediate (currently for EU market, high value, should get US registrations in 1-2 years). 2 other samples have been approved and commercial quantities will start in Q3FY25. These 3 intermediates (2 pharma + 1 agchem) will contribute 150 cr. in 1-2 years
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So 100-150 from agchem + 150 from intermediate ~ 300 cr. from products being commercialized now
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Have got into a long-term agreement with agchem customer for 1 agro product which will be launched in beginning of 2025
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In 9MFY24, have not seen major volume decline. So probably 8-9% price decline (which is quite good compared to generic technical that have seen 40-70% decline)
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FY25: Existing products should see 10-15% volume growth as volume have reduced in FY24 due to high channel inventory + there will be new product contribution in range of 200-250 cr.
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Expect 10-15% growth in near term which will then ramp up to 25-30% in 3-5 years
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In current portfolio, 2 products are patented by Japanese innovator, 4-5 other products are generic but in a couple of them, Punjab has 80-90% of market share
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Will start working on a new production block in Derabassi in April/May 2024
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Hydrogenation added to capability
Disclosure: Invested (position size here, no transactions in last-30 days)