Advanced Enzymes –
Company background –
Company is a leading manufacturer of Probiotics and Enzymes. Company makes over 400 products derived to of 68 indigenous enzymes. These are substitutes of chemicals and find applications in diversified industries like – healthcare, agrochemicals, animal and human food etc
Enzymes – are proteinaceous molecules which serve as bio-catalysts. They not only replace traditional chemical agents but also bolster efficiency and efficacy of a wide array of products. Find wide applications in – baking, food processing, dairy processing, leather processing, biofuels, biomass processing, biocatalysis etc
Probiotics – are living microorganisms that confer significant health benefits to both humans and animals. They also find application in treating disease in areas like – inflammatory bowel disease, urogenital infections etc
Company exports its products to 45+ countries, has 700 + global customers. It’s India’s second largest company in its line of business. Company’s total fermentation capacity @ 500 mtr cube, has 07 R&D units ( 02 in US ), 09 manufacturing plants ( 07 in India, 02 in US )
Domestic : Export revenues @ 47:53
Company stared its manufacturing operations in 1994 with just 07 enzymes. Today, it makes 68 different enzymes
Biggest entry barrier to this industry is real time R&D with requirements of continuous technical upgrades and efficiency improvements – both are long gestation traits
Q3 FY 24 results –
Revenues – 161 vs 142 cr ( up 13 pc )
EBITDA – 54 vs 41 cr (up 30 pc, margins @ 33 vs 29 pc)
PAT – 42 vs 28 cr ( up 52 pc )
Geographical performance for 9M FY 24 –
India sales ( @ 50 pc of total ) – up 29 pc
Americas ( @ 33 pc of total ) – up 3 pc
Europe ( @ 6 pc of total ) – up 4 pc
Asia ( @ 7 pc of the total ) – down 8 pc
RoW ( @ 4 pc of total ) – up 114 pc
Segmental performance for 9M FY 24 –
Human nutrition – 68 pc of sales – up 18 pc
Animal nutrition – 11 pc of sales – down 2 pc
Industrial Bioprocessing – 15 pc of sales – up 17 pc
Specialised manufacturing – 06 pc of sales – up 30 pc
Q3 concall highlights –
R&D expenses @ 6-7 pc of sales
Top 10 clients contribute to 27 pc of sales
Top 10 products contribute to 50 pc of sales
Similar trends are expected to continue in near future
Largest product contributes to 22 pc of topline
Human nutrition – international business seeing good pickup courtesy growth in US. Expecting the growth momentum to continue in future as well
Probiotics doing well in Domestic mkts due increased consumer awareness
Company has got approval for 02 approvals in Europe for food grade Enzymes. Commercialisation of these products is generally a time consuming process
EBITDA margins have been inching up in last 3 Qtrs. Company expects similar improvements to continue for some more Qtrs
Avg US sales have gone up to 60-65 cr/Qtr. This is an encouraging sign. Expecting the US business to keep performing well ( not withstanding Qty lumpiness )
Industrial BioProcessing – is a huge growth area. It takes time to penetrate into new business but is an excellent long term opportunity
The inventory issues that were affecting the company previously are mostly behind them
Management is keeping healthy cash balances ( > 350 cr ) on the balance sheet – are open to inorganic acquisitions
Company’s key focus continues to remain R&D as this is the only way to high and sustainable growth
New normal for EBITDA margin band for the company should be between 30-33 pc. Company is reasonably confident of clocking 15 pc plus kind of growth for the foreseeable future
Disc: planning to take up a tracking position as the company is present in products that are basically futuristic in nature and most of their product segments should keep expanding for a long time to come, not SEBI registered, biased
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