Release Date: May 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- J.B. Chemicals & Pharmaceuticals Ltd (BOM:506943, Financial) reported a healthy revenue growth of 13% year-on-year for Q4 FY24, reaching INR862 crores.
- Gross profit margins expanded by 130 basis points in Q4 FY24 to 65.2%, and by 320 basis points for the full year to 66.1%.
- The company is now net cash positive, with a significant reduction in gross debt from INR548 crores to INR357 crores year-on-year.
- The domestic business showed strong performance, growing by 22% in Q4 and 16% for the full year, driven by a robust brand portfolio and higher share of chronic products.
- The CDMO business grew by 9% year-on-year in Q4 and entered the European market, showing promising future growth potential.
Negative Points
- The international business was impacted by strategic choices in the South Africa market, leading to a lower reported growth of 4% in Q4.
- The ophthalmology portfolio, despite integration, is expected to have limited gross margins in the short term, potentially impacting overall profitability.
- Higher other expenses were noted during the quarter due to one-off integration costs and increased freight costs.
- The acute business faced challenges due to a muted season, impacting overall growth.
- The competitive intensity in the heart failure segment has increased, putting pressure on the market share of key brands like Azmarda.
Q & A Highlights
Q: Can you provide more details on the CDMO segment's performance and outlook for the next year?
A: Nikhil Chopra, CEO and Whole Time Director: The CDMO business generated INR432 crores this year and is expected to grow between 12% to 14%. High teens growth is anticipated from Q3 onwards. We have entered the European market with immunity lozenges and expect to commercialize melatonin-based lozenges by Q1 FY25. The US market entry is also planned by year-end, albeit with small initial orders.
Q: What is the CapEx guidance for FY25 and FY26?
A: Kunal Khanna, President, Operations: We have already covered CapEx for the CDMO segment, specifically for lozenges. We have a capacity of 2 billion lozenges annually and are currently running at 1 billion. Future CapEx will primarily be maintenance.
Q: Can you elaborate on the domestic business's prescription growth and the ratio of specialists versus GPs?
A: Kunal Khanna, President, Operations: We have seen significant growth in our focused therapy areas, particularly from cardiologists, nephrologists, and consulting physicians. We do not specifically break down the ratio of specialists versus generalists.
Q: What are the key learnings and challenges from integrating the ophthalmic brands?
A: Kunal Khanna, President, Operations: The transition has been seamless, supported by Novartis. We have seen good uptake due to the integration into J.B. Pharma's DNA. We have increased the MR headcount from 75 to 104 and plan further ramp-up.
Q: What is the outlook for the India business, including the ophthalmic portfolio?
A: Nikhil Chopra, CEO and Whole Time Director: The 12% to 14% growth guidance excludes the ophthalmic portfolio. Including it, overall consolidated growth could be in the high teens.
Q: Are there plans for new acquisitions or in-licensing deals?
A: Nikhil Chopra, CEO and Whole Time Director: We are open to acquisitions and in-licensing opportunities at the right value. Our focus will be on growing our existing portfolio and exploring new therapeutic areas.
Q: What is the expected revenue for the ophthalmic business in FY25?
A: Kunal Khanna, President, Operations: We are targeting a monthly revenue run rate of INR15 crores to INR16 crores for the ophthalmic business.
Q: What is the guidance for EBITDA margin for FY25?
A: Nikhil Chopra, CEO and Whole Time Director: The operating EBITDA margin guidance is 26% to 28%, despite the dilutive impact of the ophthalmic portfolio. This is due to improved product mix, efficiency programs, and better margins in South Africa and Russia.
Q: How will the international business perform in FY25?
A: Nikhil Chopra, CEO and Whole Time Director: Emerging markets and CDMO should grow between 12% to 14%, while the US, Russia, and South Africa should grow at high single digits (8% to 9%). Overall, we expect double-digit growth for the international business.
Q: What is the outlook for the Azmarda brand in FY25?
A: Kunal Khanna, President, Operations: Despite increased competition, our market share has remained steady. We expect good volume growth in the arni segment and are confident about Azmarda's future prospects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
