Q3 FY23 concall notes:
On Q2 rolled over orders
Those orders were small in qty, were served in 1st mth of qtr. Some Europe orders were impacted. We still grew by 7-8%. No details given on impacted European orders
On Guidance
50cr rev guidance for entire fy23 (in line with earlier projections)
min. 25%-30% growth expected next yr
sustainability of ebitda margin (40%)? – will be maintained in future. Will continue to add value added products
On US Market
- When will it fire? – attended exhibition in US, signed an agreement with a US based company worth $1.7M order (~14 cr) to supply products for next 5 years – have started execution – have got advanced payment for 1 order – expecting multiple orders spaced out in 4-5 years from this co
- Other companies are also there; we are selective at the moment – in advance stage of finalizing agreement with 2 other companies – we cannot quantify today – but once it is finalized we will inform you – there are lot of companies – they need long term agreement so that they are assured of supply. We are looking for min $1M contracts with these companies
On Succession planning
Next generation will soon be involved in the business – not involved presently
On Other markets
- Started the process for registering our products in Canada; tough market
- 40% growth yoy (9 mths) in domestic market, it’s a growing market
- Other Asian countries to whom we supply – bangladesh, philippines, indonesia, sri lanka, malaysia, vietnam
- Named few European countries too including Russia and Netherlands
On New facility (for sanitizers, mouthwashes etc…)
- New facility for new products, 16ksqft fy24 – how much topline will it contribute? – facility will be ready by end of this FY, but will be usable in next FY because lot of regulatory compliances need to be fulfilled. Upon fulfilling compliances, we expect to do 10-15% capacity utilization in 1st year & generate 3-5cr; marketing these new products will take time
- What is the max revenue you can generate from this new facility – it will take time in selling those products; it’s a new line – in 3-4 years we will get there with 50% utilization (50cr target to marketing team); 75-100 cr. we can generate , but capacity can be enhanced, and also product mix (high value added) change can generate higher revenue, tough to quantify at this moment. 75 cr is a conservative estimate at 100% utilization
On Differentiation/Comp adv. & Entry barriers
- Differentiating factor → pricing due to low cost, quality at par with MNCs
- What about competition from domestic players in future since margins are juicy? – quality, R&D – no facility out there that can compete except MNCs – even if it comes, we can beat with quality and pricing
- Entry to barriers – inhouse formulations – learning curve/experience/expertise – it takes time to establish – now we are doing innovation with R&D dept
On products not being popular with top tier dentists
how are you trying to win over top tier dentists to use prevest products over 3M, sirona dentsply etc…? – free samples, trying to win them. Secondly, its not that none of the top tier dentist use our products
- Dr. Sai, director with prevest, also a dentist & professor says that – dentist have a perception that intl. brands are better than Indian brands, they hv been trained on European brands. That is why we are giving our products to dental institutes to fix the problem at the core – it takes time to change the perception, can take 5-6 years
On products, market etc…
- Top 20 products contributing to 80% of revenue; rest of the products are just complimenting these top products
- 140 distributors – 90 dealers for intl market, 60 for domestic mkt
- Materials market – domestic mkt is ~1000cr; Intl market data not available, but much bigger than domestic mkt
My read is that topline numbers are the key monitorable here. Mgmt. is super bullish on 25-30% growth as always. In sync with earlier guidance for FY23. But, last 4-5 qtrs. have been flattish and hence next 2-3 should be imp from that perspective.
Disc- Invested
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