Release Date: February 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vaishali Pharma Ltd (NSE:VAISHALI, Financial) reported a strong financial performance in Q3 FY24 with total income rising to INR28.37 crores and an EBITDA margin of 12.05%.
- The company has a diversified product portfolio including APIs, formulations, surgical products, veterinary supplements, herbal items, nutraceuticals, and oncology products.
- Vaishali Pharma Ltd (NSE:VAISHALI) has a global presence with strategic partnerships in the Democratic Republic of Congo, Kenya, and Russia.
- The company introduced a new brand, Healthy, and launched innovative products like Healthy Biotin and Multivitamin Gummies.
- Vaishali Pharma Ltd (NSE:VAISHALI) aims to achieve INR500 crores in revenue with an EBITDA margin of 25% within the next five years.
Negative Points
- The company's margins have been historically volatile due to the varying performance of different business segments like APIs and formulations.
- Vaishali Pharma Ltd (NSE:VAISHALI) does not own its manufacturing units and relies on third-party manufacturing at 22 different sites, which may pose risks related to quality control and supply chain management.
- The company faces challenges in securing large international orders due to lengthy paperwork and regulatory requirements.
- The EBITDA margin for the nine months of FY24 was 16%, indicating room for improvement compared to the quarterly margin of 12%.
- Vaishali Pharma Ltd (NSE:VAISHALI) has a working capital cycle of 90 days, which may impact liquidity and operational efficiency.
Q & A Highlights
Q: Historically, the margins of our business have been volatile. What can we assume to be the sustainable margins going forward?
A: The margins are volatile due to the diverse nature of our business, which includes APIs, formulations, veterinary, and surgical products. Currently, the revenue split is 40% from formulations and surgical products and 60% from APIs. We aim to balance this to 50-50, which should stabilize margins.
Q: As we expand in the formulations business, should the margins further expand?
A: Yes, as we grow our formulations business, the margins should expand.
Q: Do we sell branded generics?
A: Yes, we sell both branded generics under our own brand and our customers' brands, depending on the country.
Q: What is the strength of our R&D team and how much do we spend on R&D each year?
A: We have a total strength of 35 employees, with six dedicated to registration and dossier purposes, overseen by a Chief Technical Officer.
Q: What margin do we generally get on the API business and the formulation business?
A: API margins are 2-4% domestically and 5-7% for exports. Formulation margins range from 15-45%.
Q: What is the international and domestic revenue contribution, and how do you see your international business growing?
A: Currently, 40-45% of our revenue comes from exports and 50-55% from domestic sales. We plan to focus more on formulations and expand our international business.
Q: What is the margin outlook for the next three to five years?
A: We aim to achieve INR500 crores in revenue with an EBITDA margin of 25% within the next five years.
Q: Are we looking to expand our capacity?
A: We currently manufacture at 22 different sites. We plan to acquire our own factory in the next two to three years.
Q: What is the status of the INR600 crores order?
A: The paperwork is ongoing, and we hope to finalize it soon. This order will significantly impact our financials.
Q: What are our marketing efforts and any further plans?
A: We attend various global exhibitions and send promotional materials to clients. We also plan to launch more products like the Healthy biotin and multivitamin gummies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
