Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The company reported a total income of INR 2,163 crore for FY24, showing resilience despite a slight decline from INR 2,243 crore in FY23.
- EBITDA for FY24 stood at INR 262 crore, an improvement from INR 252 crore in FY23, with EBITDA margins improving by 90 basis points to 12.1%.
- Exports grew by 7% to INR 679 crore in FY24 compared to INR 634 crore in FY23, indicating strong international market performance.
- The company has achieved significant capacity utilization increases in key products like Paracetamol and Metformin, running at 95% capacity.
- IOL Chemicals and Pharmaceuticals Ltd (BOM:524164, Financial) has received approvals in the European market and other regulatory markets, which are expected to boost exports and revenue.
Negative Points
- Total income for Q4 FY24 was INR 511 crore, down from INR 596 crore in the corresponding quarter of FY23.
- EBITDA for Q4 FY24 declined to INR 58 crore from INR 104 crore in Q4 FY23, with EBITDA margins dropping by 620 basis points to 11.3%.
- Net profit for Q4 FY24 was INR 28 crore, a significant decrease from INR 65 crore in Q4 FY23.
- The specialty chemical segment showed subdued performance in Q4 FY24 due to inventory overhang and poor spreads, with EBIT margins at a mere 0.48%.
- The company faced increased other expenses due to higher selling and distribution costs and elevated insurance costs stemming from the Red Sea crisis.
Q & A Highlights
Q: Can you provide an update on ibuprofen prices and trends in terms of demand, supply, and capacity in both international and domestic markets?
A: Ibuprofen prices have remained stable over the last two quarters. Demand is at an optimum level, and our capacity utilization is around 85% to 90%. Globally, demand is also stable.
Q: What is the volume growth in the non-ibuprofen segment for the full year?
A: Volume growth in the non-ibuprofen segment has increased by 10% to 15% for most products, including Paracetamol, Metformin, and Clopidogrel.
Q: What was the export mix in the non-ibuprofen segment compared to FY23?
A: Exports for Metformin increased by around 60% from last year, and Paracetamol exports increased by 10%. We have received approvals in the European market and other regulatory markets.
Q: Can you explain the major decline in EBIT margin in the specialty and API segments year-on-year?
A: The decline was due to a mismatch in input pricing and final prices of chemicals, especially Ethyl Acetate. Volatility in raw material prices from Chinese suppliers impacted margins. However, prices have stabilized recently, and we expect positive performance in the upcoming quarters.
Q: What is the guidance for EBITDA and gross margin for FY25?
A: We expect EBITDA margins to be between 12% to 15% for FY25. The sustainable gross margin is anticipated to be around 20% to 25%.
Q: What is the current export and domestic mix for non-ibuprofen products for this quarter?
A: The current mix is around 80% domestic and 20% export for non-ibuprofen products. We expect this to increase to more than 30% to 40% in the current financial year.
Q: What is the outlook for the ibuprofen business?
A: The global growth rate for ibuprofen is around 3% to 4% per annum. We are running at 85% capacity utilization and expect to maintain this level, with potential increases to 92% or 93%.
Q: How do you plan to use the operating cash flow generated over the next few years?
A: We plan to use the cash flow for CapEx, including land acquisition for future expansion. This will support setting up new plants and increasing revenue. The INR3,000 crore revenue target by 2028 is based on existing products and facilities.
Q: What is the guidance for revenue and profitability for FY25?
A: We expect a 10% to 12% growth in revenue and EBITDA margins between 12% to 15%. The PAT is anticipated to be around 7% to 8%.
Q: What is the expected increase in exports from non-ibuprofen products in FY25?
A: We expect exports to contribute around 25% to 30% of the non-ibuprofen segment, up from the current 17% to 18%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
