Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Advanced Enzyme Technologies Ltd (BOM:540025, Financial) achieved a 6% year-on-year growth in quarterly revenue, reaching INR1,672 million.
- The company has filed multiple dossiers with the European Food Safety Authority and the US FDA, indicating progress in regulatory compliance for new enzyme applications.
- A new independent laboratory, Staria Labs, has been established under the US subsidiary for testing enzymes and probiotic products.
- The company has increased its clean energy capacity by installing an additional 350 kilowatt solar power plant, enhancing its sustainability efforts.
- The animal nutrition segment showed strong growth, contributing 12% to quarterly revenue with a 13% year-on-year increase.
Negative Points
- EBITDA margin decreased to 27% due to changes in product mix and inventory valuation adjustments.
- The human nutrition segment experienced a 3% annual revenue decline, primarily due to lower domestic market performance.
- The largest product, erra peptides, faces competitive pressures, potentially leading to a 2-5% revenue decline in this area.
- New product launches in weight management, sugar management, and protein digestion did not meet expected traction in the US market.
- The company faces challenges in expanding its marketing reach and product registration in international markets, impacting growth potential.
Q & A Highlights
Q: Can you explain the reasons behind the falling gross margin and whether the inventory evaluation was a one-time activity?
A: The change in product mix and the year-end inventory evaluation impacted the gross margin. The inventory evaluation is a regular year-end exercise, not a one-time event. We expect to maintain a gross contribution of around 76-77% going forward. - Beni Rauka, Chief Financial Officer
Q: What are the underlying assumptions for your positive outlook for FY26?
A: Despite global challenges, we anticipate growth due to positive developments in the biocatalyst area and good traction in the US and India. However, the situation is volatile, and factors like US tariffs could impact growth. We expect mid-double-digit growth. - Mukund Kabra, Whole Time Director
Q: How is the competitive intensity for your biggest product, erra peptides, and what is its contribution to total revenues?
A: Erra peptides contributed 19% to total revenues in FY25. We anticipate some pressure and a potential 2-5% revenue decline in this area, but we are developing other products to drive growth. - Mukund Kabra, Whole Time Director
Q: What are the current marketing challenges, and have you found any success in addressing them?
A: The main challenge is expanding marketing efforts, particularly overseas, due to product registration and distribution issues. We have made progress but expect it to take a couple of years to establish a robust distribution network. - Beni Rauka, Chief Financial Officer
Q: Can the specialized manufacturing segment sustain a 30% growth rate, and what factors are driving this growth?
A: While 30% growth may not be sustainable, we expect over 20% growth due to increased capacity and new contracts. The Indian market has been a significant growth driver. - Beni Rauka, Chief Financial Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
