Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indoco Remedies Ltd (BOM:532612, Financial) commenced manufacturing in its 100% subsidiary, Warren Remedies Private Limited, in March.
- The company's largest brand, Cyclopam, crossed INR150 crore in revenues, while Oxipod and Cital each crossed the INR100 crore mark.
- The company launched a second division for ophthalmology called Vision, which will allow it to introduce products in the anti-glaucoma therapy market in India.
- The API division registered a year-on-year growth of 79%, reaching INR126 crore.
- The company's API Kilo Lab manufacturing facility and Indoco Analytical Services testing lab successfully cleared the US FDA audit with zero 483 observations.
Negative Points
- Net revenues for Q4 FY24 grew by only 1.7%, indicating slower growth compared to previous quarters.
- EBITDA to net sales for the quarter decreased to 13.2% from 15% in the same quarter last year.
- Profit after tax to net sales for the year decreased to 6.6% from 8.6% the previous year.
- Revenues from the international formulation business witnessed a de-growth of 1% for the quarter.
- The company faced higher other expenses due to increased sales promotion and remediation expenses, impacting gross margins.
Q & A Highlights
Q: What will be the capex and R&D plan for FY25? Any ballpark figures?
A: For R&D, the company plans to continue investing in the range of 5% to 6% of its sales. Regarding capex, including various manufacturing sites, maintenance capex, and a few additions, the company expects to edge within about INR250 crore. (Aditi Panandikar, Managing Director)
Q: What are the sustainable EBITDA margins expected in the next few years by FY27?
A: EBITDA margins are expected to improve. This year was a one-off year due to underperformance in certain therapeutic categories. Strategic initiatives to reduce dependence on acute therapy and improve manufacturing efficiency should help post better EBITDA margins going forward. (Aditi Panandikar, Managing Director)
Q: Why were other expenses high this quarter, and what caused the lower gross margin?
A: Remediation expenses were around INR5 crore. Increased spending on sales promotion, particularly for Sensodent K Care through digital media, also contributed to higher other expenses and lower gross margins. (Aditi Panandikar, Managing Director)
Q: What challenges did the Europe business face during the quarter, and what are the expectations for FY25?
A: Europe's performance improved sequentially but faced disruptions in paracetamol orders to the UK. The company expects to post around 15% to 20% growth in FY25. (Aditi Panandikar, Managing Director)
Q: What is the situation with Combigan and Brinzolamide in the US market?
A: The lines are under refurbishment, expected to be completed by mid-August or late September. The company is under OAI status and is working on correcting it. (Sundeep Bambolkar, Joint Managing Director, Executive Director)
Q: Are there any pricing pressures in export markets?
A: There is competition, but no evident pricing pressure. Prices in the US market are believed to have bottomed out, and things should improve from here. (Sundeep Bambolkar, Joint Managing Director, Executive Director)
Q: Will all out-licensed products in the US shift to the company's front end going forward?
A: Existing relationships will continue as they are, and all new introductions will be through the company's front end. (Sundeep Bambolkar, Joint Managing Director, Executive Director)
Q: Why was the emerging market performance strong this quarter, and will it remain so?
A: The emerging market business model is sustainable, with strong growth in regions like Africa, Southeast Asia, and Latin America. The company expects this growth to continue. (Sundeep Bambolkar, Joint Managing Director, Executive Director)
Q: What was the paracetamol revenue for Q4 and FY24?
A: Paracetamol revenue for Q4 was INR37 crore, down from INR46 crore in the same quarter last year but up from INR30 crore in the immediate preceding quarter. (Aditi Panandikar, Managing Director)
Q: What is the margin guidance for the next 2-3 years?
A: The company aims to bounce back to 17% to 18% EBITDA margins over the next few years, similar to pre-COVID levels. (Aditi Panandikar, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
