Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vimta Labs Ltd (BOM:524394, Financial) reported a strong year-on-year revenue growth of 26.4%, driven primarily by onsite services.
- The company achieved a significant improvement in EBITDA margins, reaching 35.8% compared to the previous range of 23% to 30%.
- Profit after tax more than doubled year-on-year, indicating strong financial performance.
- The divestment of the diagnostics services business to Thyrocare Technology allows Vimta Labs Ltd to focus on core services and optimize resources for sustained growth.
- The company is on track to achieve its near-term revenue target of INR500 crores, with growth expected across all business units, particularly in pharmaceuticals.
Negative Points
- The food testing services segment experienced a slowdown due to internal transitions, impacting operational capacities temporarily.
- Economic uncertainties and inflationary pressures have tempered overall expansion in the TIC and CRO industries.
- The divestment of the diagnostics business requires an adjustment in revenue targets, removing approximately 9% of the previous revenue pie.
- The company faces capacity constraints in some areas, necessitating gradual transitions and expansions to maintain service levels.
- Despite improvements, the NFL lab at JNPT is still 30% to 40% below initial expectations, indicating slower-than-anticipated growth.
Q & A Highlights
Q: Is the high margin of mid-30 percentage points sustainable for Vimta Labs after divesting the diagnostics business?
A: Yes, the margins are sustainable around 35% after excluding the diagnostics business. - Narahai Naidu, CFO
Q: Are you on track to achieve the INR500 crores target in the near term, considering the divestment of the diagnostics business?
A: Yes, we are still on track to achieve the INR500 crores target, although we need to adjust for the 9% contribution from the diagnostics business. - Harita Vasireddi, Managing Director & Executive Director
Q: What is the expected source of incremental revenue growth?
A: Growth will come from all business units, with pharmaceuticals remaining the dominant contributor. Other divisions are also gearing up for strong growth. - Harita Vasireddi, Managing Director & Executive Director
Q: How will operating margins be affected as revenue increases?
A: Margins are sustainable at current levels, but as we add capacity, it may take time to fully utilize it. We will reassess margins once we reach a critical volume of INR450 crores. - Harita Vasireddi, Managing Director & Executive Director and Narahai Naidu, CFO
Q: Can you provide an update on the food testing services and any challenges faced?
A: The food testing services are stabilizing after internal transitions, such as shifting facilities. There is no long-term impact expected on this segment. - Harita Vasireddi, Managing Director & Executive Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
