Release Date: May 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Marksans Pharma Ltd (BOM:524404, Financial) achieved its highest revenue and EBITDA in FY24, with revenue expanding by 18% year on year to INR2,177 crores and EBITDA expanding by 35% year on year to INR459 crores.
- The company received key approvals from US FDA and UK MHRA in pain management, cough and cold, and other therapeutic segments.
- Expansion and scalability of the acquired unit of Teva Pharma are proceeding according to plan, with meaningful revenue contribution expected in FY25.
- The company remains debt-free with a total of INR674 crores of cash as of March 31, 2024.
- The Board has recommended a final dividend of INR0.6 per equity share, which is 60% of INR1 face value, as part of its commitment to enhance shareholder value.
Negative Points
- Q4 performance was flattish with a slight decline in revenue compared to the previous quarter, mainly due to the seasonality of the product mix.
- Freight rates almost doubled in Q4 due to the Red Sea crisis, impacting costs by approximately INR9 crores.
- The company incurred increased expenses due to the hiring of over 200 new people in the acquired manufacturing plant in Teva.
- Profit after tax in Q4 FY24 was INR77.6 crores compared to INR82.7 crores in Q4 FY23, a decline of 6.1% due to increased tax rates.
- The company has strategically increased its inventory levels of finished products and key raw materials in its US warehouse, resulting in an increase in stock reserves by approximately INR7 crores.
Q & A Highlights
Q: What factors contributed to the increase in gross margins for Marksans Pharma?
A: The improvement in gross margins, which stood at 52.3% for the year, was primarily due to a reduction in raw material prices and a favorable product mix. This range is expected to be sustainable between 50% to 52%. - Jitendra Sharma, CFO
Q: What is the current capacity utilization at the new Teva facility, and what are the future plans?
A: Currently, the capacity utilization at the new Teva facility is low, but it has started to improve from April onwards. We expect significant improvements in the coming quarters as we scale up operations. - Jitendra Sharma, CFO
Q: What is the expected timeline for the new Teva facility to break even?
A: We anticipate breaking even at the EBITDA level from this quarter itself. - Jitendra Sharma, CFO
Q: What kind of volume growth is anticipated for the next year with the new plant in place?
A: We expect a 15% volume growth, driven by the increased capacity from the new Teva facility. - Mark Saldanha, Executive Chairman and MD
Q: What percentage of Marksans Pharma's top line comes from ibuprofen, and what is the market share for this product?
A: Approximately 15% of our revenue comes from ibuprofen, with a market share of around 15% globally. - Mark Saldanha, Executive Chairman and MD
Q: What is the outlook for the US market, and what growth is expected in the next couple of years?
A: We are very bullish on the US market and expect to double our revenue in the next one to two years, aiming for $200 million. - Mark Saldanha, Executive Chairman and MD
Q: What is the expected CapEx for FY25, and how much will be allocated to the Teva facility?
A: We plan to invest an additional INR75 crores into the Teva facility, with a total CapEx of around INR145 crores for FY25. - Mark Saldanha, Executive Chairman and MD
Q: What is the expected R&D spend for FY25, and what areas will it focus on?
A: We expect to spend around 2% of sales on R&D, focusing on a diversified portfolio covering various segments and delivery systems. - Mark Saldanha, Executive Chairman and MD
Q: What is the status of the USFDA observations for the Goa facility, and is there any impact on operations?
A: We have responded to all observations and do not foresee any impact on operations. We are awaiting feedback from the FDA. - Mark Saldanha, Executive Chairman and MD
Q: What is the expected contribution from the Teva facility in FY25?
A: We aim to achieve a run rate that will see significant revenue contributions from the Teva facility, although hitting INR600 crores for the full year may be challenging due to ongoing CapEx. - Mark Saldanha, Executive Chairman and MD
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
