Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The rights issue was oversubscribed, indicating strong shareholder support.
- Significant reduction in debt by INR160 crores, with a target to bring it under INR500 crores by year-end.
- Improved cash flow generation through inventory reduction and free cash generation.
- Revenue guidance for the full year is strong, expected to be in the range of INR1,400 crores to INR1,500 crores.
- EBITDA margins have improved, with a quarterly revenue growth of 21% and reported EBITDA growth of 76%.
Negative Points
- Gross margins are slightly depressed due to inventory reduction strategies.
- The company is undergoing retrofitting of facilities, which may impact short-term operations.
- There is a significant amount of debt still remaining, even after reduction efforts.
- The company is facing low utilization and network capacity issues.
- Pricing pressures in the market have led to reduced prices for some products.
Q & A Highlights
Q: Can you provide details on the current status of the debt facility?
A: Currently, it's a multipurpose facility and will remain so. We are retrofitting it for large volume production and high-protein APM capabilities. (Poorvank Purohit, CEO)
Q: What is the expected CapEx for the retrofitting?
A: We don't have exact numbers yet but will update in the next call. We won't need to borrow additional funds to achieve this. (Poorvank Purohit, CEO)
Q: Will the retrofit impact current sales?
A: No, it will not impact current sales. The modifications will not require reinspection from regulatory authorities. (Poorvank Purohit, CEO)
Q: Can you elaborate on the gross margins and their sustainability?
A: We had a 37-38% gross margin in FY20, which we have brought up to 48%. We expect to maintain this 48% margin in H2. (Poorvank Purohit, CEO)
Q: How is the inventory situation affecting prices and margins?
A: We believe the inventory buildup issue is behind us. We have exited non-strategic inventory at lower margins, impacting overall gross margin temporarily. (Poorvank Purohit, CEO)
Q: What is the revenue contribution from CRAMS contracts?
A: Currently, CRAMS contributes 5-8% of revenue. We expect this to grow to about 10% next year. (Poorvank Purohit, CEO)
Q: What is the outlook for EBITDA margins beyond FY25?
A: We aim to achieve 20-22% EBITDA margins this year, which is close to our historical high. We will provide further guidance after achieving this target. (Poorvank Purohit, CEO)
Q: How does the U.S. Biosecurity Act impact your business?
A: The Biosecurity Act is not very relevant to our business as it focuses on biologics, which is not a major area for us. (Poorvank Purohit, CEO)
Q: What is the market feedback on your recent API launches?
A: Our recent API launches have been well-received. These products have certain advantages, including patents and customer relationships, which make them sustainable. (Arun Kumar, CFO)
Q: What is the capacity of your retrofitted facility?
A: The facility has a capacity of 3,000 tons, which can go up to 9,000 tons per month. This should suffice for our needs. (Poorvank Purohit, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
