Gujarat Themis Biosyn Ltd – Bulk Drugs growth momentum

Gujarat Themis Biosyn: Q2 FY24 Concall Notes:

Recent developments:

• Production levels maintained at optimal capacities.
• Higher growth in production and sale of Rifa S than Rifa-O.
• The CAPEX plan is progressing as planned. ( All phases around total 200 Cr.)
• R&D facility & API block to be commissioned by Dec 2023. Commercial production in next 6-8 months~ August 2024
• Construction of additional fermentation capacity underway, completion by 2025
• Not taking PLI incentive (from center), but taking Gujarat state biotech incentive.
• Moving from single product to diversified products
• Forward integrating into Rifapentine API.

Future outlook:

• Strong demand for products.
• Capacity utilization is expected to remain high.
• Anticipation of increased sales with the commissioning of new facilities.
• Focus on Rifapentine as a potential growth driver.

Financial performance:

• Q2 FY24 revenues at Rs. 39.65 crores.
• EBITDA at Rs. 16.82 crores.
• PAT at Rs. 12.54 crores.
• Half-yearly revenues at Rs. 89.24 crores.
• EBITDA at Rs. 40.33 crores.
• PAT at Rs. 30.27 crores.
• in the previous quarter, we had sales from unsold built-up inventory from the quarter before that, which has led to higher sales. Since the impact of built-up inventory normalized this quarter, therefore, turnover appears lower than before
• Expecting around 160-170 Cr FY24 revenues

New products:

• Development of Rifapentine and other about 12 APIs in progress. But the main is rifapentine.
• Rifapentine also has the potential for treatment of latent tuberculosis
• Definitely expect the margins for Rifapentine to be better than where we are right now
• Potential for a significant increase in revenues from the API block.

Industry environment:

• WHO guidelines recommend Rifapentine as the first-line treatment for tuberculosis.
• Potential shift from Rifampicin to Rifapentine.
• Tender opportunities in India and globally.

Customer relationships:

• Strong relationships with key customers Lupin and Optimus.
• Commitment to maintaining win-win partnerships.

CAPEX and capacity:

• CAPEX plans for R&D facility, API block, and additional fermentation capacity.
• Potential increase in CAPEX beyond initial estimates. (not significant increase)
• Capacity to produce 7-8 MT of Rifapentine per month. The current Market price of rifapentine is 450$/kg.(37,480 Rs/kg)
• Both R&D and multipurpose API block (total 78 Cr) should be commissioned by December 2023 and in the next 6-8 months, batch trials etc and then the product can be sold. Around August 2024
• The last leg of the CAPEX plan, construction of additional fermentation capacity, is underway and is expected to be ready by 2025

Working capital cycle:

• Decrease in the inventory cycle.
• Expectation of selling what is produced (strong demand)
• Favorable working capital cycle.

Cost and expense factors:

• Increase in utility costs due to power tariffs. ( should be getting benefits under state incentive)
• Fluctuation in R&D expenses.
• Increase in employee expenses due to hiring and preparations for new infrastructure.
• Higher gross margins, but EBITDA took a hit due to R&D and hiring.

Export markets:

• Focus on global markets with new facilities compliant with global regulatory norms.