Release Date: May 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue grew by 8% to INR1,517 crores for Q4 FY24.
- EBITDA increased by 29% year-over-year to INR263 crores, representing 17% of sales.
- Net profit for the quarter rose by 17% to INR178 crores.
- The US business showed significant growth with seven new product launches and a 19% increase in quarterly revenue.
- The company declared a higher dividend of INR11 per share, up from INR8 per share in the previous year.
Negative Points
- The India Branded business only grew by 3% in Q4, with challenges in the oral and respiratory segments.
- R&D expenses were trimmed down to INR475 crores from INR722 crores, indicating potential limitations in future innovation.
- The API business experienced pricing pressure, affecting overall margins.
- Gross margins, while strong, showed variability with a slight decline in the US business sequentially.
- The acute therapy segment in the domestic market underperformed due to a high base effect from previous years.
Q & A Highlights
Q: My first question is on gross margin. So very strong margins during the quarter. So if you can explain what has led to this very strong gross margin during the quarter? And how sustainable this would be?
A: The gross margins growth -- thank you for the comments. The gross margins were good. I think a couple of things have led to this. I think one is increasing sales and revenue for the US business. Number two, if you saw our R&D costs are also optimized. Along with that, we have some other cost optimization. So all this led to a higher gross margin. I think that all the businesses were growing. The facilities were occupied. And I think that these kind of margins are sustainable moving forward. - Pranav Amin, Managing Director
Q: And R&D, like after bringing it down to below INR500 crores for this fiscal, how should we look at R&D expense ahead?
A: Yes. So on, from this level onwards, we will continue growing it. I think next quarter, I think an absolute amount, we will grow it. I think I would expect anywhere between INR550 crores to INR600 crores for the next fiscal, depending on how the projects go. - Pranav Amin, Managing Director
Q: And my last question for the US, you said now outlook is better with like plants getting better utilized. So this fiscal, we saw US ranging from in say 50% to 55%, 56% a quarter. So should we improve significant step-up in FY25 and beyond in terms of sales from the US business?
A: Well, we are expecting to launch about 25 products in the US. So my -- I anticipate that we would like to grow the business from here onwards. What percentage depends because it will be a fraction -- it will be a factor of price erosion in the existing portfolio versus how much traction we can get in the new products. But our goal is to grow the business from here on itself. - Pranav Amin, Managing Director
Q: Sir, just from an FY25, FY26 perspective. So R&D was something what you are able to cover in 2024, so when you look forward, I mean, what are the few key priorities when we look forward for growth or in terms of cost optimization, which the management would be targeting for the near future?
A: So it's a good question. So I think what will happen in R&D-wise, historically, we see our -- all our approvals and bulk of our R&D spend was on oral solids. If you see that now, it is gradually more part of it has gone towards injectables, complex injectables, derm, ophthalmic and a little bit of inhalation. So that's what we've -- and oncology, sorry. So we move towards that if you see in the future also going forward, R&D investments, what we've done is we reduce R&D because we cut out some projects, which we thought because the returns have come down in the US market compared to five years back. So we've optimized our portfolio, but share more share of it is going towards these new areas I spoke about. In terms of cost optimization, not just R&D, but across the board, what we're looking at is, as I mentioned, better utilization of our facilities higher batch sizes, better volumes, given the facilities and better occupied. - Pranav Amin, Managing Director
Q: And sir, one more question on the India business. So this quarter, growth was largely not impacted because of the acute therapy, but for the next year to -- I mean, how should we look at your India growth? Would it be in line with the market or slightly ahead of that? And in terms of your field force, are you looking to add further this year?
A: So, I'll just answer the question. I think from a India business point of view, I said that I continue to maintain that if the market continues to perform normally, we should expect outperformance, like I said, in almost all our product, key product therapeutic areas. So that we maintain as long as the market shows some kind of signs of returning to normalcy. So I think they are quite confident on that piece at least. And consistently, I think, outperforming the market in all our therapeutic segments. I think that's something we are quite confident to deliver this year. - Shaunak Amin, Managing Director
Q: Sir, just wanted to understand on gross margins -- .
A: So quarter-on-quarter, it's never a good sign of doing a comparison. A whole year comparison is much better, more balanced. And as I said, I think the gross margin hovers at around 70%-plus, and we are happy about it. - Rajkumar Baheti, CFO
Q: And on pricing pressure in the US, so how do you see this pricing pressure to pan out in next year or probably years to come? And how do you see this shortage within the US market? Is it largely led by people stopped pruning with existing portfolio because of low margin? Or is there something else to read out?
A: Bharat, those questions are very hard to predict because I don't know what's going to happen in terms of the price erosion in the market or the other bit. Because it's -- it really depends on the competitive pressure where people go, how they lead to how much that drop prices, how aggressive a player is in the market. And shortages also depends on a factor if someone's supply chain is working and someone has a regulatory issue. So it's very tough to predict those. But however, we like to stay ready for whatever opportunities we see in the market. - Pranav Amin, Managing Director
Q: And lastly, this quarter, we have seen that acute has been prepared. What has been the reason for that acute therapy the domestic business?
A: Yes. I think if you look at the base of 2021,2022 and 2022, 2023, you can, I think that gives a clue as to why the base has been weak. So it's predominantly driven by that. - Shaunak Amin, Managing Director
Q: So as far as I remember, in the past year, we had a super growth -- sterile growth in Azithral. So that is the main cause of -- for this quarter?
A: Yes, because of the (multiple speakers) I think Azithral as well as the -- like I mentioned in the call in my
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
