Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shilpa Medicare Ltd (BOM:530549, Financial) reported an 11% year-on-year revenue growth for Q2 FY25, driven by strong performance in the formulations business.
- The company achieved an EBITDA growth of 46% year-on-year, with margins improving to 26% from 20% in the previous year.
- Shilpa Medicare Ltd (BOM:530549) has successfully reduced its long-term debt significantly, from 560 crores to 260 crores.
- The company has made significant progress in its CDMO business, with multiple projects underway and new client additions.
- Shilpa Medicare Ltd (BOM:530549) is focusing on innovation and complex product development, with several new product filings and approvals in both oncology and non-oncology segments.
Negative Points
- The API business saw a decline in revenue by 13% year-on-year, attributed to issues with major customers receiving FDA warning letters.
- There is a noted weakness in the European business, with expectations for improvement hinging on future approvals.
- The company faces challenges in the oncology API segment due to decreased business from major customers.
- Shilpa Medicare Ltd (BOM:530549) is experiencing a high effective tax rate, which they are working to reduce.
- The company is still in the early stages of development for several projects, which may delay revenue realization from these initiatives.
Q & A Highlights
Q: Can you provide details on the second CDMO project for fill finish, specifically if it involves retrofitting for cartridges to cater to insulin and GLP-1s?
A: The current project is for vials, but our biologic facility is equipped to handle both vial and cartridge filling, which is used in GLP-1s. The exact capacity in terms of pens or cartridges is not immediately available but can be provided later.
Q: What is the outlook for the tax rate, and when can we expect it to stabilize?
A: We are working on correcting discrepancies related to interest income from foreign subsidiaries. We aim for a tax rate of around 35%, potentially achievable by the second half of FY26 or earlier.
Q: Could you elaborate on the weakness in the oncology API business and the expected recovery?
A: The decline is mainly due to a major customer receiving an FDA warning letter last year. We are now seeing a slow quarter-on-quarter uptake, and as this business recovers, we expect growth in both oncology and non-oncology segments.
Q: What is the five-year vision for Shilpa Medicare, and how do you plan to achieve it?
A: Our focus is on becoming a one-stop solution across small molecules, biologics, albumin, and formulations. We aim to monetize these assets, focus on complex products, and establish clear launch strategies to solidify our leadership in the industry.
Q: Can you provide insights into the new CDMO client additions in the API business?
A: We have added three new CDMO projects, which are currently in the development phase. These projects are part of a cycle where we continuously add custom clients, and more details will be available as they progress to advanced stages.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
