Release Date: February 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dishman Carbogen Amcis Ltd (BOM:540701, Financial) reported a consolidated revenue of INR651 crore for Q3 FY24, a 2% increase from the same quarter last year.
- The company achieved a 9.3% revenue growth on a nine-month basis, reaching INR1,961 crore compared to INR1,794 crore in the previous year.
- Carbogen Amcis CRAMS segment showed a 9.4% growth in Q3 FY24, with revenue increasing to INR506 crore from INR462 crore in Q3 FY23.
- The company has a strong pipeline of projects and quotations, with production planning full until the end of the summer.
- Dishman Carbogen Amcis Ltd (BOM:540701) received regulatory clearances from Japanese PMDA and EDQM, which is expected to boost the India CRAMS business significantly.
Negative Points
- The company faced challenges in profitability due to high exchange rates and the late start of the drug product business in France.
- There was a significant notional ForEx impact of INR76 crore in Q3 FY24, driven by the US dollar-Swiss franc currency pair movement.
- The cholesterol and vitamin D analogues business saw a dip in revenue to INR61 crore in Q3 FY24 from INR82.5 crore in Q3 FY23.
- The India Quats and Generics business experienced a slowdown due to a downturn in the chemical sector.
- Employee costs increased significantly, partly due to currency translation effects, impacting overall profitability.
Q & A Highlights
Q: What is the revenue target for the French facilities considering the delays?
A: For this quarter, we are aiming between EUR7 million and EUR8 million in revenues from the French facilities. (Pascal Villemagne, CEO)
Q: The cost of materials consumed has gone up significantly. What is the reason for this, and will it continue?
A: The cost of goods sold remains at roughly 20%. The significant increase is due to the rise in wool grease prices, which we expect to normalize in the coming quarter. (Harshil Dalal, Global CFO)
Q: What makes you confident about achieving significant growth in EBITDA and sales next financial year?
A: Key triggers include the full-year production from the French facility, the ADC molecule agreement with a Japanese innovator, and regulatory clearances for the Indian site, allowing us to secure more business from Europe. (Harshil Dalal, Global CFO)
Q: How is the situation with high inflation rates and energy costs in Europe?
A: Energy prices are coming down, and we expect interest rates to decrease over the next two to three quarters, improving the inflation scenario. We are also working on passing increased costs to customers. (Harshil Dalal, Global CFO)
Q: What is the lag time between raw material price increases and passing them on to customers?
A: It varies between two to four quarters, depending on the customer and contract length. (Harshil Dalal, Global CFO)
Q: What has led to subpar performance on capital allocation, and what are the Board's expectations for return on capital and equity?
A: The large amount of goodwill from the 2017 merger impacts ROCE. Discounting this, our target is to move towards 20%-25% in the medium term and 30% in the long term. (Harshil Dalal, Global CFO)
Q: What kind of revenue growth are you looking for from FY25, FY26, and how does it look segmentally?
A: We aim for a CAGR of close to 15% on a consolidated basis. India will be a key growth driver, with the Swiss entity growing at 9%-10% and the Dutch entity at 10%-12%. The French facility will grow exponentially over the next three to five years. (Harshil Dalal, Global CFO)
Q: What is the loss incurred at EBITDA and PBT levels for the French facility?
A: For the nine months, the revenue was EUR3.9 million, and the EBITDA loss was EUR5.6 million. For the quarter, the revenue was EUR2.3 million, and the EBITDA loss was EUR1.4 million. (Harshil Dalal, Global CFO)
Q: How has the enquiry been at Bavla after receiving clearance from EDQM and the Japanese regulatory agency?
A: We have seen great enthusiasm and are ready to sign new contracts for two projects. Many customers are approaching us with interesting projects. (Paolo Armanino, COO)
Q: What is the gross debt, interest cost, and the split of the debt in terms of FX?
A: The gross debt is INR2,105 crores, and the net debt is INR1,558 crores. The average interest cost is close to 5%. (Harshil Dalal, Global CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
