The positives i could relate to during my last check were as follows -
new ceo - with good turnaround history at previous company
new r n d head - good history at previous entity
new cfo - from previous arun kumar group company. Ideally would have preferred a new face
new mid level management - as seen on linked in , they are actively hiring guys from api companies esp hikal / etc. would love to see hiring from divis / dr reddy / auro.
It would take a while for company to develop new products. Debt is on higher side considering the scale and capacity company has.
P.s - Have a tracking position. Waiting to buy to some better results. Expecting that in FY 25 onwards.
The company has failed the investors and it seems it still has a long way to go. Aurore also decided to forego the merger offer as the turn around, at that point of time, looked difficult.
And it still looks difficult. Current quarter will also be bad.
It is one product where there is over capacity.
Also, in Aurore Shri Arun kumar holds stake. And Aurore management initially agreed for merger as they knew AK.
On digging deeper, when the merger was in process, they came across the extent of actual rot and issues. That was the basic premise of calling it off. So i draw reference from there. Infact Aurore itself is sitting on Multi Cr losses on account of Molnupiravir inventory (write off?), merger would have made sure that they sink.
For Dec (month) 2023, they have done ~20 Cr, quarter will not be good. They right now do not have people.
Lets hope they turn around some time.
No positions.
The company expects to get back to historical 20-22% EBITDA run rate by the end of the next financial year, with Q3 being a one-off situation(Pondicherry plant fire incident) and a strong Q4 with INR400 crores of revenues anticipated.
The company is aggressively looking at improving gross margins and EBITDA per KL, network optimization, andOPEX reduction to get back to historical levels, aiming for 20% to 22% EBITDA margin by Q4 2025 with the reset strategy in place
The focus is on balance sheet improvement, and a rights issue has been announced to reduce debt, aiming to double EBITDA from Q4 FY '24 to the exit run rate in FY '25
The rights issue approval is up to INR450 crores, primarily intended to reduce bank debt, with the ideal working capital cycle time targeted between 130 to 150 days, and the company plans to use the rights issue proceeds for debt reduction, aiming for a debt-to-EBITDA of under 3, ideally 2.5
The company has diversified its product customer base, especially in ibuprofen post-COVID, to an emerging market play
The company plans to shrink corporate operations between Bangalore and Chennai and close down its Hyderabad operations, with the CFO, Raghavendra Rao, moving on from Solara, and the company in the process of restating the critical role
One-off impact(100CR) details part of disclosures, willing to discuss further; gradual gross margin expansion expected from Q1 of next year.
