Concall Summary Date: 28 May 2024 NATCO PHARMA LIMITED

FINANCIAL HIGHLIGHTS

• The company observed a YoY growth across formulations on account of its continued due diligence & efficiency.

• The cash balance and investments as on 31st March 2024 stood at ~₹2,000 crore. Also, the debt was ~₹116 crore during the same period.

BUSINESS HIGHLIGHTS

• Revenue from API (Active Pharmaceutical Ingredient) stood at ~₹50 crore during the quarter as compared to ~₹73 crore in Q4 FY23. The revenue for the year grew by ~19% to ₹249 crore.

• Crop health sciences (CHS) revenue amounted to ~₹-0.4 crore during the quarter as compared to
  ~₹27 crore in Q4 FY23. Due to poor crop season, the stock returns were more than expected at ₹25 crore. In FY24, the revenue stood at ₹108.3 crore v/s ₹41 crore in FY23.

• The provision of assets of the CHS division amounted to ₹30 crore, and this was done due to the non-utilization of certain assets used for the manufacturing of Agro Intermediates.

• During the quarter, the domestic formulation business reported a revenue of ~₹52 crore v/s ~₹92 crore in Q4 FY23. A charge amounting to ₹35 crore during the quarter related to the return of stock from super-stockists due to a change in the distribution model. For the full year, the charge amounted to ~₹90 crore which is reflected in revenue and profitability numbers.

• In Q4 FY24, the formulations exports (including profit share and foreign subsidiary) stood at ~₹955 crore as compared to ~₹709 crore in the same quarter previous year. The growth was driven by robust traction from Canada and Brazil with direct exports of $40 million and $25-$26 million respectively. The revenue for the full year for exports was ₹3,237 crore as compared to ₹2,063.2 crore in the previous year.

• During the quarter, Revlimid contribution to revenue was healthy and the company expects this trajectory to move forward in a steady manner going ahead, which would positively contribute to the company’s growth.

UPDATES

• During the year, it invested $2 million in Cellogen Therapeutics Private Limited, primarily involved in R&D spends involving cell and gene therapy solutions.

FUTURE OUTLOOK

• They expect revenue growth to be ~15%-20% in FY25 with EBITDA as well as PAT growing by ~20% given no price erosion headwinds impact operations.

• The management is expecting some approvals from Brazil and Canada in the next few years. They would further expand into newer markets like Egypt and Saudi Arabia.

• They envisage agro business to achieve ~₹120-₹150 crore of revenue in FY25. By the next 3 years, they anticipate this segment to triple in revenues (~₹300 crore).

• The capex outlay on an annual basis would be ~₹300-₹350 crore majorly for maintenance and capacity expansion.

• They would focus on acquisitions to boost growth majorly in the export & emerging markets.