Ranvir's Portfolio

[ranvir]

Glenmark Life Sciences -

Q2 FY 25 results and concall highlights -

Revenues - 507 vs 595 cr, down 14 pc
Gross margins @ 55.6 vs 54.1 pc ( an encouraging sign )
EBITDA - 143 vs 172 cr, down 17 pc ( margins @ 28 vs 29 pc )
PAT - 95 vs 119 cr, down 20 pc

Cash on books @ 446 cr

Temporary closure of Ankleshwar facility has led to delayed execution of orders impacting company’s revenues across geographies

Segmental revenues -

Generic APIs - 473 vs 542 cr, down 12 pc

CDMO - 24 vs 25 cr, down 5 pc. Signed a multi year definitive arrangement with an innovator company for supply of API. One more project is expected to commercialise wef Q3. Multiple ongoing discussions with various companies for award of manufacturing contracts

Geography wise sales mix -

Regulated markets - 87 pc vs 80 pc YoY
Emerging markets - 13 pc vs 20 pc YoY

Therapy wise sales -

Cardiovascular - 44 pc
Central nervous system - 14 pc
Pain management - 3 pc
Diabetes - 3 pc
Others - 36 pc

Manufacturing facilities -

Ankleshwar - 950 KL
Dahej - 400 KL
Mohol - 50 kl
Kurkumbh - 25 KL

Capex plan -

Started phase - 1 construction at Solapur for 200 KL facility ( Greenfield expansion ). Likely to be operational in FY 26

Brownfield expansions - Likely year of commercialisation -

Ankleshwar - 60 KL - FY 26
Dahej - 160 KL - FY 26

Future growth drivers - Onco High Potency APIs, CDMO ramp up, expansion into complex APIs and Iron compounds, pursuing 2nd source opportunities for top generic players, geographical expansion

Have added 4 high potency APIs to their portfolio. With this, their HP-APIs portfolio now stands at 21 molecules

Committed to high single digits revenue growth for full FY with steady margins. Looking at much better H2 performance

R&D expenses @ 3 pc of sales

Argentina business is seeing weakness due macro-economic conditions there. Plus there has been some production loss in Q2 where the Ankleshwar plant was not avlb for around 25 days. Hence the company has moderated its topline growth expectations from mid teens to high single digits

FY 26 should be a high growth year specially because of the two CDMO projects ( mentioned above ) going live. These two CDMO molecules should generate revenues of about 100 cr / yr. Plus the base business is doing well

Company is running at 90 pc capacity utilisation. May have to forego some lower margins business because of that

Capex tgt for full FY 25 @ 300-350 cr. Have already spent around 85 cr in H1

Chinese players are becoming very aggressive in the generic API mkts. However, the company is not impacted in a big way as > 80 pc of their sales come from regulated mkts

Disc: added recently, inclined to add more due steep fall in stock price, biased, not SEBI registered, not a buy/sell recommendation

[stable_compounder]

Hey Ranvir,

Appreciate the detailed concall notes and analysis. Any view on how much stocks to hold in portfolio? You are tracking and potentially invested in quite a lot of stocks, whats your view on concentration vs diversification?

[ranvir]

IMO - there are arguments for and against diversification which are well known

I personally feel that 15-20 stocks should constitute 80 pc of the portfolio. And that is what I try to do as well

For the rest 20 pc - I generally buy another 20 stocks ( say 1 pc each ) - as it helps me keep reading + learning about newer companies, sectors. Here - I am quick to add / sell, do a little bit of opportunistic trading as well

That’s what I do - broadly

I think, there is no one way to skin a cat. My way is certainly not perfect - obviously

[imurlovish]

Everyone has a different approach, and mine may resonate with yours.

In one of my demat accounts, I follow a strategy-based trading approach, holding a maximum of 3% in each of 33 stocks.

In another account, I focus on quick-profit strategies.

In a third account, I hold one or two SME stocks to explore that market firsthand. Additionally, I invest in 4-5 micro-cap stocks, with each position representing only 1% or less of my overall portfolio, aimed at the long term.

Just to note, I’m not a pure investor; my focus is on short- to long-term trading.

[stable_compounder]

Thanks for sharing your styles. I have been thinking about this in a more structural manner -

The overarching goal is to grow your investments with an acceptable risk and volatility. With this goal in mind, too much diversification have resulted in dilution of returns. So it might be worth to assess our strategies in those aspects, and try to measure them.

A simpler analogy is to see our portfolio is like as a fund with an XIRR, Volatility, max draw downs etc.

[ranvir]

**Eris Lifesciences - **

Q2 FY 25 results and concall highlights -

Revenues - 741 vs 505 cr, up 46 pc

Gross Profit - 555 vs 411 cr, up 35 pc. GMs @ 75 vs 81 pc due significant changes in product mix

EBITDA - 265 vs 181 cr, up 46 pc ( margins @ 35.7 vs 35.8 pc )

PAT - 97 vs 122 cr ( due accelerated depreciation, amortisation and finance costs - because of a series of acquisitions made by the company in last 12 months )

Net Debt @ 2500 cr, ahead of schedule ( had guided for net debt of 2600 cr by 31 Mar 25 )

Guiding for a consolidated revenue of 3000 cr for FY 25 with EBITDA margins of 35 pc

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 Derma business - paid Rs 366 cr

Swiss Parenterals - sterile Injectables business - paid Rs 870 cr for 70 pc stake

Biocon Biologics India formulations business ( has significant presence in Onco and Anti-Diabetic therapies ) - paid Rs 1240 cr

Total cost of all acquisitions put together - 3740 cr

Total revenues of the acquired assets at the time of acquisition - 1070 cr

Launched Liraglutide ( GLP-1 ) brand - ERLY in Sep 24

Despite the drop in gross margins, the EBITDA margins of the consolidated business remain strong at 35 pc due successful business integration and cost + scale benefits thereof. Also, the company’s new manufacturing facility at Ahmedabad is ramping up with Q2 capacity utilisation @ 65 pc vs 55 pc in Q1. Additionally, company’s in-house production of Derma products has gone up to 30 pc vs NIL in previous FY. This number ( ie - percentage of in-house derma business ) is improving MoM. All these things are helping improve the Gross margins of base business and EBITDA margins of the consolidated business

Pre-Biocon acquisition, company’s anti-diabetes franchise was limited to OHAs ( oral hypoglycaemic agents ) with a topline of Rs 600 cr, 900 MRs and a yield per MR @ Rs 5.4 lakh/month. Post the acquisition and integration, the Anti-Diabetes franchise has OHAs + Injectables with a topline of 1000 cr +, 1200 MRs with a yield per MR @ 7.1 lakh/month - clearly company is benefitting from significant scale business in their Anti-Diabetes business

The OHA and Injectables teams are complementing each other at the field level - which is a great news for the company

Company has added six senior level officials to the Swiss Parenterals business - in the business development and regulatory compliance roles for business expansion in the African, Asia-Pacific and Latin American mkts

Likely to commence - Oral solid Dosage exports business. Expecting regulatory approvals from EU-GMO and ANVISA ( Brazilian regulator ) for the Ahmedabad site. Once approved, exports may commence in mid FY 26

In the process of commencing - CMO business wrt Injectables for the EU mkts. Target customers would be EU focussed big generics players. Looking to get into stable 3-5 yr manufacturing contracts with them

Company acquired 30 pc stake in Levim Lifetech for 54 cr in Q2 FY 25. Levim has developed and commercialised 3 products - Liraglutide ( GLP-1 ), Streptokinase ( used to treat blood clots in Heart, Lungs, blood vessels ) and Pregaspargase ( Onco drug used to treat a type of blood cancer ). Successful development of Liraglutide by Levim builds confidence for a future GLP play. They are likely to commission a large scale manufacturing facility in Mid-2025. Levim’s R&D pipeline is expected to expand significantly going forward

Company’s brand ERLY is based on the active ingredients manufactured at the Levim’s manufacturing facility

Capex for FY 25 should be at 150 cr ( aprox ) + 54 cr investment in Levim’s business

Breakdown of Q2 revenues -

Base business - 501 cr
Biocon’s business - 131 cr
Swiss Parenteral’s business - 82 cr

H2 should see a flurry of launches in the base business. Base business is expected to grow by 10 pc in FY 25

GLP-1 drugs should end up being a big opportunity in India. At present, company is going to play it via Liraglutide. Post FY 26, they ll introduce Semaglutide

As Levim is able to develop more products, ERIS is likely to increase their stake in that business

Expect the Insulins business ( acquired from Biocon ) to grow in high teens in next 2-3 yrs. Only concern here is the supply shortages of Insulins - not only in India but across the world

Swiss Parenterals should do a 330 cr kind of Topline for FY 25. This business is also likely to keep growing at a good pace going forward. CMO to Europe ( once it starts ) - should be an added kicker for future growth

Disc: holding, biased, added more recently, biased, not SEBI registered, not a buy/sell recommendation

[ranvir]

Kotak Mahindra Bank -

Q2 FY 25 concall and results updates -

Deposits - 4.46 lakh cr, up 16 pc YoY

Breakup of deposits -

Current account - 61.8k cr, up 6 pc
Savings account - 1.24 lakh cr, up 2 pc
Term deposits - 2.59 lakh cr, up 26 pc
CASA ratio @ 43.6 pc

Cost of funds @ 5.15 vs 4.78 pc YoY

CASA + Term Deposits < 5 cr constitute 79 pc of deposits

Total customers on 30 Sep @ 5.2 cr vs 4.6 cr YoY

Assets ( loans ) - 4.5 lakh cr, up 18 pc YoY

Breakup of assets -

Home loans + LAP - 1.16 lakh cr, up 18 pc
Business banking - 40k cr, up 21 pc
Personal loans + Consumer durable loans - 20.8k cr, up 17 pc
Credit cards - 14.4k cr, up 15 pc
CV + CE loans - 39k cr, up 26 pc
Agri Loans - 26.9k cr, flat YoY
Tractor finance - 16.1k cr, up 13 pc
Retail Microfinance - 9.7k cr, up 21 pc ( however, it was down QoQ )
Commercial loans - 91.9k cr, up 14 pc
Corporate loans - 92.8k cr, up 13 pc
SME - 32.1k cr, up 31 pc
Others -10k cr, up 33 pc
Credit substitutes - 30.9k cr, up 32 pc

Gross NPAs - 1.49 vs 1.72 pc ( @ 6033 vs 6087 cr )
NNPAs - 0.43 vs 0.37 pc ( @ 1724 vs 1275 cr )
Total provisions @ 6266 vs 6721 cr

Slippages in Q2 @ 1875 cr vs 1314 cr YoY
Upgrades and recoveries @ 681 vs 942 cr
Write Offs @ 638 vs 194 cr

P&L for the bank ( standalone ) -

NII - 7020 cr, up 11 pc
Other Income - 2684 cr, up 16 pc
Net total income - 9704 cr, up 13 pc
Operating expenses - 4605 cr, up 15 pc
Operating profits - 5099 cr, up 11 pc
Provisions - 660 cr, up 80 pc
PAT - 3344 cr, up 5 pc

Kotak AMC -

AUM @ 4.73 vs 3.36 lakh cr
PAT @ 197 cr, up 58 pc
Monthy SIPs ( in Sep 24 ) @ 1764 cr, up 23 pc YoY

Kotak life Insurance -

PAT @ 360 cr, up 106 pc

Kotak Prime -

PAT @ 269 cr, up 29 pc

Kotak Securities -

PAT @ 444 cr, up 37 pc

International Subsidiaries -

PAT @ 76 cr, up 84 pc

Kotak Investments -

PAT @ 141 cr, up 12 pc

Kotak capital company -

PAT @ 90 cr, up 233 pc

Consolidated profits @ 5044 cr, up 13 pc YoY

Bank expects to keep exercising caution on MFI loans. Expect this trend to continue for another 2-3 Qtrs before getting back to growth path again

Credit card business has been impacted by the Ban imposed by RBI on issuance of fresh cards

Consol ROE @ 13.88
Consol ROA @ 2.53

Share of profits of subsidiaries stands @ 33 pc

Embargo on issuance of fresh credit cards + bank going slow on the MFI business resulted in NIM compression in Q1

With the ongoing festive season + pickup in Govt spending in H2, bank expects pickup in the economy in H2. This should be positive for their CV+CE + tractor finance - lending business

Mid-Corporates and SME segments continue to grow strongly. Large corporate segment is seeing irrational pricing

Kotak AMC’s mkt share now stands @ 7.1 pc with an AUM of 4.7 lakh cr. Their retail AUM stands @ 60 pc

Bank believes that the trend of higher slippages should play out over next 2 Qtrs after which it should again start to fall. They have taken a lot of actions on the credit card and micro finance side to ensure that this happens

Mid-Corporates and SME segments continue to grow strongly. Large corporate segment is seeing irrational pricing

On 18 Oct, the Bank announced acquisition of personal loan book ( of 4100 cr ) of standard chartered bank. These are all standard loans of affluent customers. It also gives them access to 95k new affluent customers ( avg personal loan per customer works out to be around 4.3 lakh )

Currently, Bank’s unsecured book stands @ 11 pc of loans. They intend to take it to mid teens levels. This will help them achieve better margins and accelerate their growth

Bank is hopeful of greater recoveries in Q3, Q4 ( from the secured book ) which should help them reduce their net slippages in H2

Bulk of the slippages are happening in the Credit Card + MFI business. And that’s the nature of business

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

[ranvir]

Dodla Dairy -

Q2 FY 25 results and concall highlights -

Revenues - 997 vs 767 cr, up 30 pc
Gross Profit - 254 vs 205 cr, up 23 pc ( gross margins @ 25.5 vs 26.5 pc )
EBITDA - 96 vs 70 cr, up 37 pc ( margins @ 9.6 vs 9.1 pc )
PAT - 63 vs 43 cr, up 45 pc ( margins @ 6.4 vs 5.7 pc )

VAP sales @ 377 vs 195 cr, up 93 pc ( massive improvement )

Higher VAP sales are due to higher sales of Bulk Butter and SMP in Q2. Both Bulk Butter and SMP are low margin products. Bulk Butter + SMP sales at aprox 160 cr for Q2

Avg milk procurement @ 17.2 vs 17.0 Lakh Lit / Day
Avg milk sales @ 11.6 vs 10.9 Lakh Lit / Day
Curd sales @ 323 vs 309 Tones / Day

Company’s infrastructure -

Domestic -

14 processing plants
Processing capacity @ 20 lakh lit/Day
616 Dodla retail parlours
1750 + Milk and Milk product distributors

International ( operating in Kenya + Uganda ) -

2 processing plants
Processing capacity @ 4 lakh lit/Day
30 Dodla retail parlours
300 + Milk and Milk product distributors

International business now contributes to 10 pc of sales. Margins in Intl business are higher, dairy farming is easier due abundance of grazing lands

Orgafeed - Their animal feed business. Has 02 manufacturing facilities in AP. Selling directly to farmers through company’s procurement network against the value of milk supplied to them by the farmers

In Q2, Orgafeed reported 32 vs 20 cr of sales, EBITDA of 4.4 vs 1.4 cr

Have acquired 35 acres land in Maharashtra. Aim is to increase procurement from Maharashtra and set up an integrated plant on the acquired land

Normally liquid milk gives 7-8% EBITDA margin while value added products give 12-13% margin. In value added products, ghee and butter have less margin (around 5-6%) while butter milk, curd, lassi have 15% margins

Avg procurement price @ Rs 34.9 / Lit vs 39.1 / Lit in Q2 LY

Avg selling price @ Rs 68.2 / Lit vs 57.6 / Lit in Q2 LY ( avg of all products sold ). Increased selling price / lit is attributed to greater sales of Butter and SMP in Q2

In Africa, the procurement prices were higher in Q2 on a YoY basis - because of delayed rains. However, with the onset of rains, procurement prices have started to fall in Q3

Company may resort to some cuts in selling price and drive better volume growth - aim to to achieve better absolute profitability vs better margins

Milk procurement prices continue to remain stable

Increased cash build up on balance sheet to be used for acquisitions, expansion in Maharashtra, increase in dividend payouts

Most of the capex in Maharashtra will happen in FY 26

Drop in Gross Margins in Q2 is because of higher sales of SMP + Bulk Butter, higher procurement prices in Africa

Company intends to maintain VAP sales @ 38-39 pc of total sales. Also, see the steady margins to remain in the 8.5 -10.5 pc band

At present, the company procures 2 lakh lit of milk from Maharashtra per day. They intend to commence production from their Maharashtra facility wef Q1 FY 27 ( post completion of Greenfield capex )

Company aims to keep expanding its volume and sales value by 10 and 15 pc respectively for next 1-2 yrs

Company currently is carrying an inventory of aprox 240 cr of Bulk Butter + SMP put together ( this was aprox 380 cr on 31 Mar )

Company will continue with its strategy of building its inventory in the flush seasons ( like in Q3 ) and liquidating it ahead of festive seasons ( like in Q2 ). Basically there will be inventory build up in H2 every year and liquidation of the same in H1

Total project cost for the Greenfield capex in Maharashtra should be around 200-250 cr

Company is seeing descent uptick in the sales of Paneer, Curd and Ghee. There was a slowdown in IceCream sales in Q2 because of delayed rains in South India

If one removes the Bulk Butter + SMP sales from VAP sales, VAP sales stood at around 210 cr vs 190 cr in Q2 LY

Disc: holding from lower levels, biased, not SEBI registered, not a buy/sell recommendation

[ranvir]

Supriya Lifesciences -

Q2 FY 25 results and concall highlights -

Revenues - 166 vs 140 cr, up 19 pc
EBITDA - 65 vs 32 cr, up 104 pc ( margins @ 39 vs 23 pc !!! )
PAT - 46 vs 24 cr, up 93 pc ( margins @ 28 vs 17 pc !!! )

Region wise sales breakup -

Asia - 32 pc
Europe - 38 pc
LATAM - 19 pc
North America - 5 pc
Others - 6 pc

Therapy wise sales breakup -

Analgesic + Anesthetics - 55 pc
Anti-Histamines - 9 pc
Vitamins - 12 pc
Anti-Asthmatics - 9 pc
Anti-Allergic - 5 pc
Anti-Hypertensive - 2 pc

Company is currently exporting to 128 countries worldwide

Company has a Niche Portfolio of 32 APIs

Company is the largest exporter of - Chlorpeniramine Maleate ( anti-allergic), Ketamine Hydrochloride ( anaesthetic ) and Salbutamol Sulphate ( anti- asthmatic ) from India

Total reactor capacity @ 600 KL/Day. Company has 04 manufacturing blocks ( Blocks - A,B,C,D ) - segregated therapy wise. Block E is under construction

15 of company’s products have a high degree of backward integration ( ie backward integrated right upto the KSM stage ) and derive 75 pc of company’s revenues. Company is in the process of integrating 3 more products

Company expects its new Ambernath facility to commence commercial production - sometime in Q3. This will greatly enhance company’s manufacturing capacity to aprox 1020 KL ( including the 340 KL expansion underway at Lote Parshuram ie new Block E ). This facility ( @ Ambernath ) will cater 80 KL of APIs manufacturing and to CMO of formulations. They r setting up large lines for bottling, tablets, capsules and Injectables at Ambernath

Company has been awarded a 10 yr CMO by a European player - DSM Fermenich. Supplies should start in H2. Have another 2-3 opportunities which are in final stages of discussion. Expecting positive outcomes on these before end of Q2

Aim to cross 1000 cr revenues mark in FY 27 ( company believes this is a conservative estimate )

Expecting H2 to be better than H1 in terms to topline. Absolute EBITDA and PAT should also be higher in H2

Expect to reach full capacity utilisation on the expanded capacity of 1020 KL by end of FY 27

Disc: holding, biased, not SEBI registered

[ranvir]

Kamat Hotels -

Q2 results and concall highlights -

Revenues - 85 vs 64 cr, up 33 pc
EBITDA - 22.5 vs 18.7 cr, up 20 pc ( margins @ 27 vs 29 pc )
PAT - 8.3 vs 0.03 cr ( due to sharp fall in interest costs - due repayment of loans )

Current portfolio of Hotels ( all hotels are leased except 02 which are owned and 01 on management contract ) -

Under Orchid brand -
Pune - 410 rooms
Mumbai - 372 rooms ( Owned )
Shimla - 96 rooms
Manali - 47 rooms
Goa - 48 rooms ( Owned )
Lonavala - 36 rooms ( management contract )
Jamnagar - 45 rooms
Toyam ( Pune ) - 21 rooms

Under IRA brand -

Mumbai - 195 rooms
Bhuvneshwar - 111 rooms
Nahsik - 31 rooms
Sambhaji Nagar - 33 rooms
Ayodhya - 49 rooms

Lotus Resort Murund - 40 rooms
Fort Jadhavgarh Pune - 58 rooms
Madhodhani Palace Puri - 33 rooms

At present - capex ( addition of rooms / facilities ) and renovation work is on at Orchid - Pune and Goa

Upcoming properties -

Under Orchid brand @ Chandigarh, Dehradun, Gwalior and Puri

Under IRA brand @ Bhavnagar, Hyderabad and Noida

Most of these properties are likely to open up in calendar year 2025

Aim to keep upgrading / renovating 2 properties each year

Current debt on books @ 120 cr with RoI of 10.5 pc

Expecting to maintain EBITDA margins in H2 - at levels similar to Q2 - due increased manpower and energy costs

Expecting to clock revenues of around 350 cr for FY 25 with full FY 25 EBITDA > 90 cr

37 pc of company’s business comes from repeat customers ( which is a very healthy number ). As the company expands its number of properties, this percentage should increase going forward

IRA Noida is opening on 07 Nov 24

Company expects their finance cost to be between 6-7 cr for Q2 - this should be a key positive and bump up the PAT in Q2

Revenue target for FY 26 stands at 400 cr

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

[ranvir]

Ajanta Pharma -

Q2 concall and results highlights -

Revenues - 1186 vs 1028 cr
Gross margins @ 78 vs 75 pc
EBITDA - 311 vs 291 cr ( margins @ 26 vs 28 pc due exceptional forex loss to the tune of 25 cr )
PAT - 216 vs 195 cr

Breakdown of sales -

Branded generics -

India - 386 vs 335 cr, up 9 pc
Asia - 296 vs 230 cr, up 28 pc
Africa - 213 vs 157 cr, up 35 pc
Total branded sales - 894 vs 743 cr, up 20 pc

Generics -

US generics - 232 vs 237 cr, down 2 pc
Africa generics - 43 vs 37 cr, up 16 pc
Total generic sales - 275 vs 274 cr

R&D expenses @ 5 pc of sales

India business - therapy wise breakdown -

Cardiac - 38 pc
Opthal - 30 pc
Derma - 23 pc
Pain Management - 9 pc

Company has a 3200+ strong MR field force. India sales exposure to NLEM is low @ 12 pc. 65 pc of India sales come from chronic therapies

Company has 12 brands with size > 25 cr
Launched 11 new products in India in H1 out of which 04 were first to market products

Breakup of India sales growth - 1.2 pc volume + 5.3 pc price + 3.1 pc new products

In US, company has 55 ANDA approvals with 46 products in the market. Launched 2 new products in H1 in US

Company has declared an interim dividend @ Rs 28/share

Added 200 MRs in India business in H1

Adjusted for the forex loss in Q2, EBITDA margins would have been 28 pc - same as LY

Capex ( including maint capex ) for FY 25 estimated at 200 cr. Have already spent around 130 cr in H1

Company to launch 4 new products in US in H2. This should result in better growth vs H1. For FY 26 again, number of launches in US should be higher leading to better growth rates

The branded generics business of India + Asia + Africa should grow in mid teens in FY 25. US business should grow at around 5-7 pc. H1 growth in branded generics was 19 pc and for US business was 2 pc. Not guiding for African institutional generic business as its generally unpredictable and lumpy

EBITDA margin guidance for full FY 25 @ 28+/- 1 pc

Growth drivers for medium term, as indicated by the management include - strong product pipeline, venturing into newer markets ( EMs in Asia + Africa ), increasing sales and distribution strength by adding more MRs in India and entry into new therapeutic areas in India, Asia and Africa. Company is also open to inorganic opportunities. Not averse to take on Debt for the same

Company’s MR productivity is at Rs 7.5 lakh/ month

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

[ranvir]

Maruti Suzuki -

FY 25 Q2 results and concall highlights -

Sales - 35589 vs 35535 cr, up 0.2 pc
EBITDA - 3665 vs 3990 cr, down 8 pc
PAT - 3069 vs 3716 cr, down 17 pc ( sharp fall in PAT is due to changes made in the Income Tax rates in the latest union budget and its impact causing additional tax liability for the company to the tune of 837 cr )

Sales volumes @ 5.41 lakh vs 5.52 lakh vehicles ( down 2 pc )

Domestic sales @ 4.63 lakh vehicles, down 4 pc
Export sales @ 0.77 lakh vehicles, up 12 pc

Segment wise sales -

Mini + Compact - 2.08 lakh vehicles, down 13 pc
Mid Size Sedans - 1.97 k vehicles, down 46 pc
UVs - 1.80 lakh vehicles, flat YoY
Vans - 34 k vehicles, flat YoY
LCVs - 8.4 k vehicles, up 14 pc
Sales to Toyota India - 29.8 k vehicles, up 83 pc

Company’s sales network now stands at 3950 outlets ( Nexa + Arena + Commercial outlets ). Nexa outlets now stand at 500

Aprox 33 pc of company sales continue to come from CNG models. Company offers CNG variants across 14 of its models

Have commenced exports of Fronx SUV from India to Japan

Company’s retail sales for the festive season are up 14 pc @ 2.97 lakh vs 2.60 lakh vehicles - a key positive. April - Oct retail sales for the company should be up by 4 pc YoY. Also, the company expects to end oct with a lean inventory of only 30 days

Because of lean inventory situation, year end discounting pressure should be low

For full FY 25 too, company estimates their growth in volumes to be around 4 pc

Rural mkts are doing better than Urban mkts for the company

A lot of states like Punjab, Haryana, Chandigarh, UP, Chattisgarh have now started giving rebates on registration of Hybrid cars. Company expects more states to join the bandwagon going fwd

Company’s upcoming EV will be a completely new platform ( exclusively for the EV ) with a 60 KWH battery. Company aims to launch it with high end specs and high range so as to kill the range anxiety of the customers and drive the EV penetration in India. Company also intends to export this EV worldwide. Company will unveil all specs in the next few weeks

At present - company sells 18 car models. In medium term, company aims to have 28 models in the market. Aprox 6 out of them are likely to be EV models

Company is paying 3.4 pc of sales as royalty to Suzuki Ltd ( Japan )

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

[ranvir]

Sun Pharma -

Q2 FY 25 results and concall highlights -

Revenues - 13265 cr, up 10.5 pc
EBITDA - 3939 cr, up 24 pc
PAT - 3040 cr, up 28 pc

Cash on books @ aprox 21000 cr at the consolidated level

Region wise sales -

India sales @ 4265 cr, up 11 pc. Continues to be ranked no 1 in the IPM. Launched 14 new products in India in Q2. Company has 28 brands in top 300 brands in India - highest for any company in India. Also, the company is ranked no1 in 13 different therapeutic segments in India

US sales @ 4290 cr, up 20 pc led by strong growth in speciality products. Launched 2 generic products in US in Q2

EM sales @ 2431 cr, up 3.2 pc

RoW sales @ 1650 cr, down 3.5 pc. Price cuts in Japanese mkts contributed to revenue declines in RoW mkts. Expect this pricing pressure to continue in the next 2 qtrs performance as well

API sales @ 534 cr, up 8 pc

R&D investments @ 793 cr ( at 6 pc of sales ). Out of this 38 pc of money was spent towards speciality products. Company’s R&D pipeline includes 7 speciality molecules in various stages of clinical trials. Guiding for R&D spends @ 7-8 pc of sales for full FY 25

Speciality product sales @ 2373 cr, up 19 pc ( these are high margin products with significant entry barriers )

R&D pipeline -

Liqselvi - Approved in US for Alopecia Areata, awaiting launch

Nidlegy - Filed for approval in Europe for treatment of non-malenoma Skin Cancer

Illumya - for Psoriatic Artritis - undergoing phase 3 trials

MM-II - for pain management in Osteroarthritis - coupled phase 3 trials

Fibromum - for soft tissue sarcomas - undergoing phase 3 trials ( recently in-licensed from Philogen - A European Pharma company )

SCD - 044 - for atopic dermatitis - completed phase 2 trials

GL0034 ( Utreglutide ) for obesity - completed phase 1 trials

The launch of Liqselvi is pending because of an ongoing litigation. Once a favourable judgement is out, the company is ready to launch the product ( ie within a few weeks )

Winlevi - is seeing good QoQ growth in prescriptions in US

Seeing very good traction for Illumetri in China in a short span of time post its launch

Company is very excited about their under trial molecule - Utreglutide

Open to use the cash on Books to acquire speciality assets in the Derma and Derma-Onco space. These are the two long term focus areas for the company. Don’t intend to enter other therapeutic areas as of now

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

[ranvir]

Cipla -

Q2 FY 25 results and concall highlights -

Revenues - 7051 cr, up 9 pc
EBITDA - 1886 cr, up 12 pc ( margins @ 26.7 vs 26.1 pc )
PAT - 1303 cr, up 17 pc

Geography wise performance -

India - 2948 cr, up 5 pc. Chronic sales mix @ 61.5 pc. Launched 2 new products in India in Q2 - Vanoprazan ( for gastro-oesophaegal reflux ) and Cipenmet ( for allergic rhinitis ) - both these are in-licensed products

Continues to do well in key focus therapies - Cardio, Respiratory and Urology - outpacing IPM growth rates. Grew in line with the Industry in the anti-infective space

Company has 21 brands in top 300 brands. 25 of company’s brands have sales > 100 cr

Consumer healthcare brands grew strongly in double digits. Key brands include - Cofsils, Nicotex, Cipladine, Prolyte and Omnigel

US - 1967 cr, up 4 pc. Launched 4 new products in US in Q2. Lareotide franchise and Albuterol reached a mkt share of 35 and 19 pc respectively

South Africa - 639 cr, up 12 pc. Company is ranked no.2 in South African Pharma mkt. Company has 8 brands with sales > 100 Mn ZAR ( aprox 50 cr )

EU + EMs - 797 cr, up 18 pc

API sales - 140 cr, up 7 pc

R&D spends @ 5.5 pc of sales

Cash on books ( minus the debt ) @ 7950 cr

A weak season for anti - infectives and respiratory drugs led to weak growth in India business. This should reverse in Q3

Share of chronic business in India now stands @ 61.5 pc

Facing some supply challenges in the Lanreotide business. Q3 sales may be lower than in Q2 because of the same. Supply challenges expected to resolve by end of Q3

Company’s Goa facility has been awarded VAI status by USFDA post its inspection on 30 Oct. This should accelerate the expected launch of Abraxane ( chemotherapy drug ) in US - a key positive

Expect to launch Advair in US in H1 FY 26

Continue to maintain EBITDA margin guidance band of 24-26 pc for FY 25

Have added aprox 1500 MRs in India in the last 2.5 yrs

Because of supply constraints in Lanreotide in Q3, US revenues in Q3 are likely to be below $ 220 million vs $ 237 million in Q2

Launch of Symbicort expected to be in FY 27

Seeing low double digit price erosion in the oral solids base business in US

Mkt share in Lanreotide is expected to fall sharply in Q3 ( to around 20 pc levels ) in Q3. Should start to bounce back wef Q4 - once the supply challenges go away

Looking to make acquisition in India to utilise the cash on books. That’s priority No 1. Second priority is acquiring differentiated assets in US with strong entry barriers

Acquisition of Astaberry is helping accelerate the consumer healthcare business in India

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

[ranvir]

Aarti Pharmalabs -

Q2 FY 25 results and concall highlights -

Revenues - 458 vs 439 cr, up 4 pc
EBITDA - 94 vs 88 cr, up 6 pc (margins @ 20.5 vs 20 pc)
PAT - 54 vs 52 cr, up 5 pc

Manufacturing footprint -

Dombivali -

Unit 1 - for APIs, Intermediates, CDMO

Vapi -

Unit -2 - for APIs, Intermediates, CDMO

Tarapur -

Unit -3 - for Xanthine and derivatives
Unit -4 - for APIs, CDMO
Unit -5 - for Xanthine and derivatives
Unit -6 - for Xanthine Intermediates

Atali -

New unit under construction for CDMO, intermediates

Revenue breakup for Q2 -

Xanthine Derivatives and allied products - 45 pc
APIs and Intermediates - 51 pc
CMO/CDMO - 4 pc ( it was 11 pc for full FY 24. This segment generally picks up pace in Q3 and Q4 )

Domestic : International sales @ 47 : 53

Xanthine derivatives business continues to witness stiff competition from China. Currently operating at peak capacity utilisations

Breakup of API sales -

43 pc regulated mkts
47 pc RoW mkts
10 pc Non Regulated mkts

Currently working on 55 CDMO projects with 19 customers. 28 projects are in commercial stages and 27 projects are in various stages of development

Some high value project deliveries are lined up for deliveries in the latter half of this FY ( may even spill over to next FY )

Expect the Atali project to commercialise in Q4

The expansion of Intermediates unit at Vapi unit is complete and is undergoing trial production

Company has successfully commissioned a Solar energy project at Akola. This should help save energy costs in a big way wef Q3

Seeing increased RFPs, enquiries from existing and new customers in the CMO/CDMO space. This should augur well for the company in the long term

The Xanthine spot mkt is very price competitive. However - the long term supply arrangements with big clients are price remunerative. Also, the Pharma applications of Xanthine derivatives mkt is also quite remunerative

Expect meaningful contribution from the new Atali site to flow through by FY 27 - as it takes to ramp up a Greenfield site

Top three therapies for company’s API business include - Anti Hypertensives, Corticosteroids and CNS. Top 3 API customers revenue contribution is around 20 pc for the company ( indicating low customer concentration )

Guiding for 20 pc + kind of growth in CDMO business this FY. Growth for next 2 FY’s should be even higher

Company currently commands 15 pc of world’s Xanthine capacity. Aprox 10 pc of world capacity is in Europe and the rest 75 pc is in China. Post the expansion of Xanthine facility ( sometime in Q3 FY 26 ), company should reach about 17-18 pc of world’s capacity ( @ aprox 9000 MT )

Guiding for a 15 pc kind of EBITDA growth CAGR for next 3 yrs ( company admits its a conservative guidance )

Company has 28 commercial molecules in their CDMO division. However their combined sales in FY 24 was < 200 cr. Actually, company is a relatively new entrant in this space. As time passes and innovators become more comfortable with the company, company is expected to get greater share of revenues for these products plus company is expected to commercialise more CDMO projects. Some of these projects / molecules may even go on to become quite large in future and company may get greater share of their manufacturing. Basically, in the CDMO segment - multiple positive optionalities can play out in future

Company’s segment wise gross margins vary from 35 to 65 pc. Lowest for Xanthine segment, highest for CDMO segment

Once the company comes up with added capacities of Xanthine, they intend to allocate a greater proportion of added capacity for Pharma applications in regulated mkts. That should improve the overall margin profile of the Xanthine derivatives segment

Disc: holding, biased, not SEBI registered, not a buy/sell