Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 20% from Q1 FY24 to Q1 FY25, reaching 385 crores.
- EBITDA margin improved by 20%, from 87 crores to 104 crores.
- PAT margin rose by 18%, from 62.7 crores to 74 crores.
- Capacity expansion is on track, with plans to increase from 1.5 billion units to 1.7-1.8 billion units by year-end.
- Renal business saw a significant growth of over 40% in Q1 FY25.
Negative Points
- Domestic business growth was only 6-7%, impacted by the end of government orders for vaccination program syringes.
- PLI scheme has not been favorable for the med-tech industry, with only 85 crores allocated in the current budget.
- China plant is underperforming due to high cost structure and may be shut down in the next 18-24 months.
- Logistical challenges such as container shortages and increased sea freight costs are impacting short-term business.
- CapEx requirements are substantial, with plans to spend around 600 crores per year for the next three years.
Q & A Highlights
Q: Can you elaborate on the impact of losing one-time government orders on the domestic business?
A: The one-time government orders were for a special vaccination program, which has now ended. This resulted in a drop in domestic business, but we expect to recover through increased trade sales and new product launches. (Himanshu Baid, Managing Director)
Q: What is the current status and future outlook for the U.S. business?
A: We have established partnerships with GPOs in the U.S., which will help us penetrate the market. We expect a ramp-up period of about three years to see significant growth. (Himanshu Baid, Managing Director)
Q: Can you provide details on the Vision 2030 strategy and its targets?
A: Vision 2030 focuses on achieving 20%-25% growth in the Indian market by addressing gaps between imports and local manufacturing. We aim to leverage new verticals like renal and cardiology to drive this growth. (Naresh Vijayvergiya, CFO)
Q: What are the plans for capacity expansion and its expected impact?
A: We are expanding capacity from 1.2 billion to 1.8 billion units per year by the end of this year. New plants will focus on high-margin segments like cardiology and critical care, potentially increasing capacity by another 40%-50%. (Himanshu Baid, Managing Director)
Q: How is the dialysis business performing, and what are the future projections?
A: The dialysis business grew by over 40% in Q1. We aim to achieve INR 140-150 crores in revenue this year, representing a 50% growth over the previous year. (Himanshu Baid, Managing Director)
Q: What is the current debt and inventory status of the company?
A: Long-term debt is around INR 7.5 crores, expected to be cleared by October. We maintain two months of raw material inventory and one month of finished goods inventory for domestic business. (Himanshu Baid, Managing Director)
Q: What are the plans for the China plant, and what impact will it have on revenue and profitability?
A: The China plant, contributing less than $2 million in revenue, may be shut down due to high costs and lease expiration. This will have a minimal impact on overall revenue but could positively affect profitability. (Himanshu Baid, Managing Director)
Q: What is the frequency and feasibility of price hikes in the medical device sector?
A: Prices are generally stable due to high gross margins. However, we may seek price hikes if there are significant changes in raw material costs or supply chain dynamics. (Himanshu Baid, Managing Director)
Q: What are the key drivers for export growth, particularly in Europe?
A: Export growth in Europe is driven by market penetration with a wider range of products and competitive pricing. We offer a 20%-25% price differential compared to large multinational companies. (Himanshu Baid, Managing Director)
Q: What are the potential risks in the export market, and how are they mitigated?
A: Risks include geopolitical issues and supply chain disruptions. We mitigate these by diversifying geographically and across product lines, maintaining high-quality standards, and having multiple manufacturing plants. (Himanshu Baid, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
