Neuland labs imp points Q4 FY23 con call:
Commenting on the performance Mr. Sucheth Davuluri, Vice-Chairman and Chief Executive Officer of the Company said, “We crossed several significant milestones in FY23 with business driven by ongoing growth in the high margin Specialty and CMS business. The performance of this fiscal reflects the various initiatives we have taken in line with our strategy over the last few years, playing out now. We believe that this puts us in a strong position as we look to consolidate the healthy momentum going forward.
We are happy to state that our focus on R&D and project management saw us achieve our highest ever profitability margins in FY23. We executed a number of CMS projects during the year resulting in the business recording significant growth and contributing close to half the Q4 revenues. We expect this momentum to continue in future as well on account of new customers increasingly accepting Neuland as an established CDMO.
Specialty business
Specialty business growth driven by Apixaban, Paliperidone along with Ezetimibe, and Donepezil
Revenue contributions
CMS revenues driven by commercial molecules some of which have transitioned recently. Significant contribution from development revenue also
Segment development
In Prime segment Mirtazapine, Ciprofloxacin and Labetalol were the key molecules
Portfolio Strategy
Filed 3 USDMFs – Tafamidis, Voxoletor and Voxelotor Co-crystal
Total Income for FY23 at Rs. 1,200.9 Crore (+26.0% YoY) led by growth in Specialty and CMS segment
• EBITDA for FY23 at Rs. 281.1 Crore (+94.8% YoY)
• EBITDA Margin for FY23 at 23.4% (increased by 830 bps YoY) due to better business mix
• PAT for FY23 at Rs. 163.1 Crore (+156.7% YoY) due to slower increase in depreciation compared to increase in EBITDA
• Debt/Equity stood at 0.12x due to retirement of Rs. 113.6 crore borrowings (net) in FY23
• Net Debt stood at Rs. 63.0 crore as at FY23 end compared to Rs. 212.0 crore as at FY22 end
• Steady shift from low margin Prime to high margin Specialty and CMS segments
• CMS business caters to Innovator customers on an exclusive basis, developing and manufacturing APIs/Intermediates in line with rigorous
customer expectations hence is highly concentrated in terms of customers
• Specialty segment works on complex products and technologies, hence has a focused approach towards select customers
CMS projects as at Q4FY23 :
- At present, they have 15 molecules in development phase and 21 in commercial phase ( not counting 51 molecules combined in Phase-1,2,3 and pre-clinical stages ).
- Business will remain lumpy & nonlinear, clear shift however is towards CMS (specialty business)- 45% contribution
- Positioning of Neuland has improved for clients as we have been able to transit from clinical to development- speaks about our capability
- Utilization in unit 3 will improve & we should be able to deliver on current momentum gained
- Performance in Q4 does not indicate one off & is in direction of vision
- Customer needs is center focus of our business
- Paliperidone- innovator is fighting for patent to not be classified as generic, however as supplier to clients of innovator we don’t see any slowing in demand, innovator will try his best to protect patent
- 1st two plants at 80-90% utilization & 3rd at 64% utilization, similar is expected coming year, next couple of years growth can from using capacity here & additionally de-bottle necking
- Surge in Q4 is due to advancement of clinical + commercialization of couple of molecules in cms space
- 2 molecules are likely to be commercialized next year, which can be blockbuster. Have strong pipeline for growth in terms of molecules
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