Supriya Lifescience Ltd - pure play API

Q2 FY2025 Conference call Highlights:

Opening Remarks:
Revenue increase 19% YoY.
EBIDTA increase 104% YoY.
PAT increase 93% YoY.
CDO/CDMO Ambernath facility started from Q4 FY2024 for finished formulations. 70KL.
Manufacturing block (E block) at Lote Parshuram, which will increase total capacity from 597 KL (76% utilization, optimum) to 1,020 KL by Q3 FY25. It will take 1.5 to 2 years to take reach max. capacity.

Guidance:
Confident of 20% Revenue growth with high margin.
Revenue target of 1000cr. by FY2027 with high margin. Very conservative guidance.
CDO/CDMO to diversify revenue stream.
Margin guidance is 30 to 34% on yearly base due to new products.

Margin :
Backward integration helps in increase in margin. Many products manufactured up to 8 steps backward integrated.
Regulated markets have higher margin.
New products will be added in next quarter, which will have slight dip in margin due to first roll out in semi regulated margin and then to regulated market.

Cancer oral detection kit: filing patent for many countries, expected to start clinical trails. Revenue may come after 3 years.

CDO/CDMO opportunity:
Full effect will be in 2 years. In next 3 years, should contribute to 20% of revenue.
No capex, next wave will be in Patalgana after 2 to 3 years.
Once DSM project complete, bigger opportunity may come.
Margins will be similar. Formulation will have higher margin.

China:
Supriya do not produce any product which is produced in INDIA. They compete with China, as Chinese plants do not have GMP or any certification. Do not negotiate for price as Supriya is GMP, USFDA certified plant.

Others:
52% revenue from regulated market, remaining from semi regulated market and domestic market.

Diversify product portfolio and not dependent on any key raw material. Raw material Available cheaply and widely available.

H2 will be better then H1 on overall basis.

Latin American market is improving and will continue progress as registration continue.

H2 will be better then H1 on overall basis.

Latin American market is improving and will continue progress as registration continue.

D: Invested

15 Likes

Hello experts,

I am new to investing and had gone through Supriya life sciences Annual report and recent quarter report. Overall opportunity looks good to me also, I remember the Q1 con call they answered that OPM guidance for Q2 was given above 30% however, they reported Steller 39% now, they have given conservative guidance of 1000 cr revenue so, they need Sales growth 25% to achieve the top line of 1000cr revenue may be because I heard of Tailwinds in CDMO. what’s your thought on this ?

THE MOST IMP THING! I am not able to find and track that what are the raw material this company uses to manufacture all the product categories because this look like margin expansion has only been when material cost was extremely low. I just fear that this should not turn out to be a value trap when material cost inflates and margin collapse and then PE would look expensive

Need your opinion here

Status - Invested

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Value chain of Pharma starts from basic chemicals, then moves all the way to Intermediates, APIs & Formulations. Supriya’s 74% of the revenue is backward integrated i.e. upto basic chemicals. Such chemicals are of commodity nature that’s how they have Gross Profit margin of 70%. So no risk of RM procurement. In fact this business is driven by demand side & not by supply side.
In fact, similar question was asked by someone in recent concal & management answers in the similar manner, you can refer to that as well.

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From what I understand there are not many, if any that come close to the level of complete backward integration that Supriya claims to have. There is only Divis, off the top of my head. I do remain a little skeptical, but the margins do speak for themselves. Is there any domestic peer that has a similar margin profile or is backward integrated upto 50% of revenue?

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can someone share the reasons due to which the stock has been on a run over the past week or so?

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Steady EPS growth shows goods sign. Company operations to regulated market in a good sign which will help EPS growth

seems Best example for a long term wealth creation because company is doing expansion with internal accruals only no borrowings that is a great sign

also they are try to compete with Chines players. which seems a big opportunities if materials

So all the good reason for the recent run up

Dis- Invested around 280 Range and no plan for exit for next 2 to 3 years

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The latest filing by Supriya

I hope you find it useful

dr.vikas

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One more update from the company

I hope you find it useful.

dr.vikas

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Great Results!
Europe and LAC increasing is adding Revenue and PAT. New Line E commissioned.


Q32025 Investor Presentation.pdf (3.8 MB)

D: Invested

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The management says they do not want to discuss gross margin. Leave aside forward guidance, they do not even discuss past gross margin. But on EBIDTA margin, they are ready to give forward guidance as well. What could be the reason for this logically, that you don’t want to discuss gross margin but okay to discuss EBIDTA margin? Especially given that they have multiple product & product lines, backward integrated model, wide geographical spread etc., it is anyway not easy for anyone to decipher anything.

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This also looks interesting.


dr.vikas

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Interesting indeed, but we need to ask some probing questions before taking anything the management (any management, for that matter) says at face value. As I understand, contrast media is a niche field dominated by a handful of global players. Why is it so, and why haven’t other Indian or Chinese companies ventured into it - is the question I have. Even a giant like Divi’s has only recently entered contrast media, so what makes Supriya so confident that by FY27, contrast media products would be “large contributors to its revenue”? While the company is doing well, they are at peak margins currently and management is a bit aggressive in making predictions, I think.

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Yes. Very much true. We have to monitor - if the Management walks the Talk or not?

dr.vikas

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Don’t you feel so far they have delivered on what they said. I have been invested for around 2 years now and feel they can be reasonably trusted with what they say in the conference calls.

They are on the verge of increased utilization of their recently commissioned assets and I feel numbers will be even better than current ones in next 2 years.

Regards,
Raj
Disc: Invested

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You are very right. Mr Wagh, and his daughters, hold a very good reputation. They are known for straight talking, and i don’t think will misguide.

I actually like his strategy a lot. Admirable.

Had first come across when it was trading just below 300 - but my lethargy cost me dearly!

Nevertheless, holding since a while and it’s one of the important pieces in my puzzle.

Core holding.

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@raj1968 I feel their track record is mixed. But that is not the main point. Just because the management is good and company is doing well does not mean we should not ask questions. I have these genuine questions (one on margin and the other on contrast media), which I hope will give me better insight into the business. Try to answer, questioning the questioner is not the answer.

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@Chandragupta Please reread my post. I just put my point across that the company has consistently delivered in last 2 years(I am aware of the China issue) and they can be a fairly trusted on what they say. I never hinted/mentioned that you shouldn’t question the management.

If you still feel my message was inappropriate just let me know, I will delete my post.

Regards,
Raj

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No issues, it’s okay. Leave it.

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Ratings upgrade for Supriya

Just sharing.

Biased as invested from lower levels

dr.vikas

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