Release Date: May 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alkem Laboratories Ltd (BOM:539523, Financial) registered a net profit before tax of more than INR2,000 crore for the first time.
- The international business crossed the revenue of INR4,000 crore in FY24.
- The company generated approximately INR1,400 crores in cash, reinforcing a substantial net cash position of around INR3,550 crores.
- The US business reported double-digit growth of more than 10% for the year.
- The EBITDA margin improved by 150 basis points YoY in Q4 FY24, moving from 12.2% to 13.7%.
Negative Points
- The anti-infective market saw sluggish growth, impacting the company's performance in this segment.
- The net profit after tax for Q4 was impacted by the derecognition of deferred tax of INR120 crores.
- The India business experienced a decline year-on-year in Q4, attributed to high base effects and seasonality.
- The company faced supply chain issues in the US, leading to service level penalties amounting to INR120 crores for the year.
- The CapEx for FY25 is expected to be between INR600 crores to INR700 crores, which includes significant investments in new facilities.
Q & A Highlights
Q: Sir, would you like to provide any broad outlook for FY25 in terms of revenue growth and profitability?
A: Our revenue growth will be in line with market growth, around 10%, driven by both domestic and international markets. Gross margins and EBITDA are expected to remain within the current range.
Q: Will cost efficiency measures continue to positively impact margins?
A: Cost efficiency is an ongoing process. While some improvements are already reflected in gross margins, continuous focus on cost control will further benefit margins. However, investments for future growth may balance out these gains.
Q: What is the expected CapEx for FY25?
A: CapEx for FY25 is projected to be between INR600 crores to INR700 crores.
Q: Can you provide more details on the US plant for Enzene CDMO business?
A: The US plant for Enzene CDMO business will require significant investment, expected to be operational by the end of this financial year. This is a strategic move to capture future growth opportunities.
Q: What are the expectations for the India business, especially in the anti-infective segment?
A: The anti-infective market saw sluggish growth in FY24, impacting us. However, we are bullish on the India market and expect strong volume-led growth in FY25.
Q: How is the trade generic business performing amid increased competition?
A: Our trade generic business continues to grow along with our Rx business. We are leveraging our scale and improving margins in this segment, despite increased competition.
Q: What is the outlook for the biosimilar business?
A: Our biosimilar business is performing well, with significant traction in the domestic market. We have a portfolio of seven products and are optimistic about sustaining this momentum.
Q: How do you see the impact of raw material prices on margins?
A: Raw material prices are currently stable. Any significant changes in key products like PenG could impact margins. However, we expect overall stability in raw material costs.
Q: What are the plans for the chronic segment and its contribution to overall business?
A: The chronic segment currently contributes around 17-18% to our business, and we expect it to cross 20% in the near to mid-term. This segment is crucial for improving overall margins.
Q: What is the status of the Baddi site and its impact on new launches?
A: We have responded to USFDA observations for the Baddi site and are hopeful of addressing all issues. None of the new launches for FY25 are planned from Baddi, so there should be no impact on our launch schedule.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
