Aarti Pharmalabs – ( extremely bullish commentary wrt medium to long term ) –
Q4 and FY 24 results and concall highlights –
Manufacturing footprint –
Atali – New Unit under construction for CDMO, making Intermediates
Dombivali – Unit -1 – APIs, Intermediates, CDMO
VAPI – Unit -2 – APIs, Intermediates, CDMO
Tarapur – Unit -3 – Xanthine Unit
Unit -4 – APIs, CDMO
Unit -5 – Xanthine Unit
Unit – 6 – Xanthine intermediates and allied products
Segment wise revenues breakup in Q4 –
Xanthine, its derivates and allied products – 44 pc vs 50 pc YoY
API and Intermediates – 37 vs 43 pc YoY
CDMO / CMO – 19 vs 6 pc ( that’s a huge jump )
Aarti Pharma labs is the largest manufacturer of Xanthine, Caffeine ( a Xanthine derivative ) in India. Aarti Pharma’s global mkt share in Xanthine and derivatives is > 15 pc
Other Xanthine derivates are used as mild stimulants and bronchodilators ( for management of Asthma and Influenza )
Aarti Pharmalabs is a key beneficiary of China +1 wrt all its business segments
Most of the APIs that the company makes have a good degree of backward integration giving them good control over the entire value chain
Domestic : International sales breakup for FY 24 @ 56:44. Out of the total international sales, aprox 80 pc are to the regulated Mkts ( a great indicator of organisations’s compliance and quality culture )
In their CDMO business, they are currently working on 16 innovator molecules in various stages of development
Aim to grow topline by an avg of 10-15 pc for next 3 yrs
FY 24 outcomes –
Revenues – 1852 vs 1945 cr
EBITDA – 386 vs 342 cr
PAT – 216 vs 193
Net Debt / Equity @ 0.14 vs 0.13 pc
RoCE – 18 pc
RoE – 14 pc
Q4 outcomes –
Revenues – 505 vs 448 cr
EBITDA – 117 vs 80, up 47 pc ( margins @ 23 vs 17 pc )
PAT – 65 vs 42 cr, up 53 pc
Company’s API business has a greater focus towards regulated mkts. Their key therapeutic areas include – Anti-Hypertensive, Ant-Diabetic and Oncology drugs
Company is going to undertake brownfield expansion for capacity addition of the Xanthene and derivatives. Aim to take the total capacity up to 750 MT/ Month by end of FY 25. Current capacity is around 425 MT/ Month – so that’s a substantial jump
Guiding for a 10-12 pc EBITDA growth in FY 25. Management admitted that its a conservative guidance since the company did have exceptionally good q4
CMO / CDMO is likely to remain a high growth area for the company for next 2-3 yrs.Should grow @ > 30-35 CAGR for next 2-3 yrs. CMO/CDMO business is margin accretive for the company
Current capacity utilisation of the Xanthene plants @ 90 pc, hence the brownfield expansion
Company believes that the Xanthene prices have bottomed out. Should only go higher from here
FY 25 is going to be a Capex heavy year. Company may end up spending to the tune of 600 cr for the brownfield Capex for Xanthene + plus the ongoing projects projects @ Atali ( that’s a lot of Capacity addition )
Most of the company’s CMO business is concentrated on supply of KSMs ( key starting products ) / RSMs ( regulated starting materials )
Breakup of capex for FY 25 –
Aprox 300 cr for ongoing expansion @ Atali
80-90 cr for Solar power projects ( for future savings on the energy costs. Post this, 1/3rd of company’s power requirements shall be met internally )
Rest for brownfield expansion for Xanthene and other small capexes at various locations
Company is confident of achieving ideal capacity utilisation on the expanded Xanthene capacities inside 2-3 yrs !!! ( this should result in a lot of growth )
Tax rate for FY 24 for the company was 28 pc. Should be around of 25 pc for FY 25
Disc: holding, biased, not SEBI registered, not a buy / sell recommendation
| Subscribe To Our Free Newsletter |
