Posting this here, may help in very long term thinking for IEX

With renewables bound to take up majority of grid share in the world in the coming decade, super grids are not just a necessity but inevitable

We are already seeing very very early signs of this, with Bhutan, Nepal and Bangladesh either sourcing electricity from IEX or in talks to do so.

https://www.youtube.com/embed/DN1mPBQd7fY

Do you have full AGM notes

Notes from Q1FY23 Conf Call
a. 30-40% growth possible in FY23
b. Energy prices hike in Europe may help company to sell more products to Indian and export market
c. HALS plant to start by Dec-22 and as BASF is facing issues and they have increased the prices CSTL may able to take advantage of the same
d. Vinati has only announce for MEHQ addition. Actual production may take time and it will be premature to comment on the same
e. New products are contributing 15% of revenue
f. New products will have lower margin and as they scale it will add to the bottom line
g. They were able to ship the products to China during the Apr-May lockdown as well using the different routes

Observation- FY23 can easily cross 1000Cr revenue if this runrate continues.

@AJain all specialty chemical companies like Tatva Chintan, Aether, CSTL are trading at high PE. One optionality they have is using their R&D they can come with innovative processes and eat the market share. One has to be cautious but at the same time we cannot ignore them as opportunity size can get bigger with new product launches.

Tatva Chintan after IPO was hovering at 80PE and after one year the PE compressed to 50 after FY22 results as the company posted good results in FY22. Now PE has increased due to bad Q1FY23 but as they enter into new segments like Waste Management using the SDAs it will again expand their opportunity size. The electrolyte segment last year was only contributing 1% and in Q1FY23 it has increased to 8% albeit a lower base but point here is segment revenue is increasing.

CRISIL ratings update:

1. “Cash accrual, expected at Rs.5-6 crores in fiscal 2023 and 2024 should comfortably cover debt obligations of Rs 0.32 crore and Rs 2.02 crore, respectively. Fund-based limit of Rs 9 crore was utilised 52% on average during the 12 months through Mar’22.”
2. Rising raw material costs - biggest threat alongside heavy working capital needs.
3. Estimated FCF yield for FY23 and FY24 - 10%

https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/AuroLaboratoriesLimited_July%2027,%202022_RR_297583.html

Another strong set of results from Ajanta, sales grew at 27%, there was margin compression which led to PAT being flat. Management is confident of getting back to 25-26% EBITDA margins in FY23. Notes from concall below.

FY23Q1 concall

• Sales grew at 27% (looks higher due to lower base of Q1FY22), Gross margin ~ 71% (2% due to one-time inventory write-off + 1% due to raw material and packaging price increase + 1% US price erosion), EBITDA margins ~ 23%, PAT margins ~ 18%. Expect gross margin to recover to 74% and EBITDA margin to 25-26% in FY23
• US:
  o 6% YOY growth (gain in market share + 0 new launches), despite severe price erosion. Estimating price erosion to come down to 6-8%
  o Filed 1 ANDA and received 1 tentative approval, plans to file 10-12 ANDAs during FY23 (0 new launch)
  o Have 20 ANDAs under approval and 4 tentative approvals
  o Without new product approvals, expect around 5% growth for FY23
  o gChantix – Still under review with FDA
  o gVimovo – Approval can happen after facility inspection
• Domestic:
  o 22% YOY growth, launched 7 new products (2 is first to market). Most of the new launches will be in cardiology and diabetes
  o 7% price increase + 6% volume growth + 3% new product increase
  o 3rd fastest growing company in Top-30 cos (IQVIA MAT June 2022)
  o Trade generics: 33 cr. vs 27 cr. last year. Growing similar to peers, focusing more towards chronic therapies. Manufacturing is a mix of in-house and outsourced
  o Improved overall rank to 28 from 29 (in Q4FY22), gained 1 rank in dermatology and cardiology and 2 ranks in pain management
  o Growth due to new product launches, market share gain & price increase
  o 3 brands are now in top-500 in IPM
  o 12% is under NLEM
• Emerging market (branded generics)
  o Africa branded grew by 34%. New product launches + higher field force. 20-25% growth was sustainable, excluding 1-time benefit from lower base. Expect this to sustain at around 15%
  o Have larger presence in Franco Africa, 8% has been growth in MR network in Africa
  o Asia branded grew by 45% (looks elevated due to slightly lower base of FY22Q1)
  o Launched 10 new products
• Africa institution
  o Growth of 44% YOY
• CAPEX of 43 cr. in quarter (full year planned capex of 200 cr.)
• R&D stood at 6% of sales
• Freight costs increased from 6% to 8% of sales
• Quarterly other expense rate was 266 cr. (increased slightly from 258 cr.)

Disclosure: Invested (position size here, no transaction in last-30 days)