Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from operations increased to INR657 crore in Q1 FY25 from INR640 crore in Q1 FY24.
- EBITDA saw a significant rise to INR72 crore in Q1 FY25 from INR46 crore in Q1 FY24.
- PAT improved to INR49 crore in Q1 FY25 from INR29 crore in Q1 FY24.
- Premium products contributed 60% to the total B2C sales, indicating a successful focus on premiumization.
- Volume growth of 15% was achieved in Q1 FY25, showcasing strong demand and operational efficiency.
Negative Points
- B2B sales faced challenges with achieving value growth despite maintaining volume.
- International market conditions remain challenging due to geopolitical issues and currency devaluation.
- High inventory levels at the end of Q1, touching around INR700 crore, though expected to reduce.
- Dependence on regulatory approvals for new plant operations, causing delays in production commencement.
- Generic products continue to contribute lower margins, around 12% to 15%, compared to premium products.
Q & A Highlights
Q: How much of the raw material for formulation is sourced from your own technical facilities?
A: Most of our premium products are made from our own in-house technicals. All the new launches are either from our own technicals or through our Japanese partner, particularly Nissan.
Q: Do you make patented technicals?
A: Currently, we are not making patented technicals but are making a lot of patented formulations. Some processes of technicals have patents with about seven to eight years of life remaining. New product discoveries are being done in our JV with OAT Agrio.
Q: What contributed to the significant increase in EBITDA by 57%?
A: The increase is due to our focus on premium products, which we call Focused Maharatnas and Maharatnas. These products contributed more than 35% to our bottom line, and in Q1, the contribution was over 40%.
Q: Can you provide the margin difference between Maharatna products and other products?
A: Premium products contribute roughly 35%-plus, and in Q1, they contributed over 40%. Other products generally contribute around 12% to 15% gross margin.
Q: What is the expected growth contribution from newly added distributors?
A: We have increased our volume by 15% in Q1, leading to a value growth of about 3%. We expect to perform better in Q2 due to favorable market conditions and increased demand.
Q: Why has the number of Focused Maharatna products decreased from 13 to 11?
A: There has been no decrease. Focused Maharatnas are 11 products, and Maharatnas are other premium products with good contributions. The focus remains on premium products.
Q: Is the improvement in gross margin also coming from the generics space?
A: Yes, there is some improvement from the generic space. Last fiscal, certain generics gave negative contributions, but this year, all products are contributing positively.
Q: What is the revenue potential of the new Dahej plant?
A: The new Dahej plant has a revenue potential of INR250 crore to INR300 crore in the first year, depending on the extent of internal consumption for backward integration.
Q: Can you provide guidance on volume growth for FY25?
A: We expect a 15% to 20% volume growth, driven by premium products. We are also targeting a value growth of roughly 10%.
Q: What is the outlook for the herbicide sector in Q2?
A: The herbicide sector looks promising, with good demand for maize, paddy, and non-selective herbicides. However, Q2 will see major growth in insecticides and fungicides.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
