Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aurobindo Pharma Ltd (BOM:524804, Financial) reported a year-on-year growth of 10% in Q1 FY25, amounting to INR7,567 crores.
- The company's EBITDA margin remained stable at 21.4%, supported by stable raw material prices and incremental plant utilization.
- Net profit for the quarter increased by 61% year-on-year to INR919 crores.
- The Europe market demonstrated strong performance with revenue of EUR221 million and is on track to achieve EUR880 million plus for FY25.
- The company completed its first-ever buyback of INR750 crores, providing a tax-efficient return to shareholders.
Negative Points
- Higher operating expenses from newly commercialized plants and nonrecurring expenses, including remediation, reduced EBITDA and PBT by more than INR100 crores.
- The US market recorded revenues of USD426 million, marginally impacted by seasonality.
- The injectable and specialty business in the US faced supply constraints due to remediation actions, impacting revenue.
- The company incurred remediation costs of $9 million in Q1 FY25, which is expected to reduce to $2 million in Q2.
- The Pen-G plant faced teething problems, delaying significant revenue contributions until the next quarter.
Q & A Highlights
Q: On the EBITDA margin guidance of 21% to 22%, considering the one-offs and seasonality, is there any possibility of raising the EBITDA margin guidance?
A: We will revisit the EBITDA guidance in the earnings call of November, that is the second quarter. We will be looking into that. (Yugandhar Puvvala, CEO of Eugia pharma Specialities Limited)
Q: Can you provide an update on the biologic biosimilar business?
A: We are making steady progress with our clinical trials and filings. We have achieved important milestones, such as completing patient recruitment for our Denosumab trial. We expect to file this product with both the European Medicines Agency and the FDA in the second quarter of next year. (Satakarni Makkapati, CEO of Aurobindo Biosimilars, Vaccines and Peptide businesses)
Q: How have the Revlimid sales moved from quarter four to quarter one?
A: The run rate continues to be similar to when we launched the product. We expect to continue in a similar way, with pricing remaining constant. (Santhanam Subramanian, CFO)
Q: Could you give us some color on the US business and the impact of the recent facility issues?
A: We thought last year Q4 we had taken the hit, but it continued in Q1 as well. We are cautiously optimistic that from Q2 of FY25 onwards, our regular injectable business should move up. (Yugandhar Puvvala, CEO of Eugia pharma Specialities Limited)
Q: Can you provide an outlook on Europe and China revenue potential considering both China plant and Vizag plant being operational in FY25?
A: For China, we plan to start small volumes in November-December and ramp up in the January-March quarter of next year. For Vizag, we expect revenues to start from FY26 onwards. (Santhanam Subramanian, CFO)
Q: How is the underlying profitability of the European business now tracking?
A: The margins have already moved to mid-10s level and are expected to be sustained if not improved. (Santhanam Subramanian, CFO)
Q: What is the impact of remediation-related costs on the financials?
A: In Q1, we spent around $9 million on remediation costs. We expect Q2 to be around $2 million. (Santhanam Subramanian, CFO)
Q: How is the price erosion in the injectables segment?
A: The price erosion is in low single digits. (Santhanam Subramanian, CFO)
Q: What is the outlook for the effective tax rate for FY25?
A: Overall, we expect the tax rate to be around 27% to 28%. (Santhanam Subramanian, CFO)
Q: What is the status of the proposed spinoff or IPO listing for Eugia?
A: The Board has decided to evaluate various options. We will revisit it now that the inspections are over. (Yugandhar Puvvala, CEO of Eugia pharma Specialities Limited)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
