Release Date: February 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Caplin Point Laboratories Ltd (BOM:524742, Financial) has achieved significant growth in the U.S. market, with Caplin Steriles matching the previous year's full-year sales within the first three quarters of this year.
- The company has a strong pipeline with 14 products under active review by the FDA, expected to be approved within the next 12 months.
- Caplin Point Laboratories Ltd (BOM:524742) has a robust financial position with liquid assets totaling INR 1,550 crores, exceeding their total revenue.
- The company is expanding into larger geographies such as the U.S., Mexico, and Chile, which are expected to drive future growth.
- Caplin Point Laboratories Ltd (BOM:524742) is focusing on an asset-light model for biologics, which will enhance profitability without significant capital investment.
Negative Points
- There are delays in the completion of the general API and oncology API facilities, which could impact future growth plans.
- The transition from FOB to CIF model may lead to logistical challenges and potential margin impacts, although the company is optimistic about managing these efficiently.
- The company's growth in the Latin American market has moderated, with lower double-digit growth compared to previous high growth rates.
- Caplin Point Laboratories Ltd (BOM:524742) faces supply chain issues, particularly with raw material availability, which could affect their ability to meet targets.
- The profitability of Caplin Steriles is fluctuating due to high filing fees and increased R&D expenses, which could impact short-term financial performance.
Q & A Highlights
Q: Do you see any near to medium-term risks due to the legacy crisis or other reasons that could impact growth?
A: The legacy crisis will not have a major impact on us. We maintain sufficient stocks next to the customer in our warehouses and have stocks in transit. We also have consignment shops. Any slight delays or increased costs can be managed by adjusting prices. Our liquid assets are very healthy, amounting to INR1,550 crores, which is more than our total revenue.
Q: Can you provide more details on the biologics importing into India and the clinical trials?
A: We are considering a new facility depending on viability. We plan to import from China, conduct clinical trials, and then export. This approach leverages our experience and cash flow. We have the necessary infrastructure, including a CRO approved by the U.S. FDA, to conduct these trials.
Q: What is the impact of converting from FOB to CIF on margins?
A: Converting to CIF will not impact margins negatively. It optimizes freight costs and ensures faster container mobilization. This approach helps us manage inventory closer to customers and reduces transit times.
Q: Will Caplin Steriles achieve INR300 crore revenue in FY24?
A: We are on track to achieve close to INR300 crores, depending on supply chain factors. We have the capacity and orders, but some dependencies like API availability could affect the final numbers.
Q: Why are there delays in CapEx plans for general APIs and oncology?
A: Delays are due to strategic decisions to focus on niche products and finding suitable land for expansion. We have now acquired land and expect to complete the projects in the next 9-10 months.
Q: What is the current capacity utilization at Caplin Steriles?
A: With the new line, we are in good shape, using over 70% of our capacity for our own products. We have expanded capacity and do not foresee the need for further expansion for the next 4-5 years.
Q: What is the outlook for Caplin Steriles next year?
A: We expect reasonable growth with a strong pipeline of products under FDA review. We are also launching our own label in the U.S. and have tied up with major distributors, which will drive growth.
Q: Can you provide EBITDA numbers for Caplin Steriles this quarter?
A: The EBITDA for Caplin Steriles for the quarter ended December 31, 2023, is INR11.7 crores.
Q: Why has the gross margin declined sequentially?
A: The gross margin decline is due to the normalization of margins after an exceptional quarter. We maintain a sustainable gross margin of 55-57% and EBITDA margins around 25%.
Q: What is the next leg of growth for Caplin Point Laboratories?
A: Growth will come from entering larger geographies like Mexico, Brazil, and Chile. We are also focusing on asset-light models for biologics and expanding our product range. Our strong cash flow and strategic acquisitions will support this growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
