Vimta Labs Ltd (VLL)

ConCall Summary – June 2024

MANAGEMENT TEAM

• Ms. Harita Vasireddi – Managing Director
• Mr. Satya Sreenivasa Neerukonda – Executive Director
• Mr. Narahari Naidu – Chief Financial Officer
• Ms. Sujani Vasireddi – Company Secretary

COMPANY VIEWS AND COMMITMENTS

• Emphasis on quality and innovation in the life sciences sector
• Commitment to quality and innovation in the life sciences sector
• Focus on growth drivers and maintaining margins

FINANCIAL HIGHLIGHTS

• Revenue, EBITDA, and PAT figures for Q1 FY ’25
• EBITDA margin improved by 50 basis points YoY
• Profit after tax increased by 0.7% YoY with a PAT margin improvement of 40 basis points
• Cash and cash equivalents stood at INR 324 million with total borrowing of INR 130 million
• Debt-to-equity ratio at 0.04x
• Capex for the quarter was INR 164 million

BUSINESS GROWTH AND EXPANSION

• Stable business growth despite capacity constraints
• Successful FDA remote audit with no observations
• Received grants for upgrading food testing laboratories
• Plans to double capacity with new buildings at the Life Sciences facility in Hyderabad
• Restrategized services portfolio for growth in various sectors

FUTURE PLANS

• Commercialization of the new Life Sciences plant facility by Q2 of the financial year
• Focus on improving efficiencies and productivity for stable margins
• Majority of upcoming capex allocated to pharma and food segments
• Investing in infrastructure for future growth

INDUSTRY OUTLOOK

• Positive outlook on the electronics industry in India
• Confidence in the industry’s vibrancy and potential for growth
• Expectation of revenue growth and proliferation of labs in South and North India

COMMERCIAL PRODUCTION

• Commercial production at the new facility expected to start in Q2 of the current year
• Ramp-up in production planned but exact percentage increase for the next financial year not specified

FOCUS ON OPERATIONS AND EFFICIENCY

• Management is focused on efficient operations and minimizing impacts on the business.
• The company has incurred INR 275 crores in capex for facility expansion and growth.
• The company does not have internal R&D but focuses on developing more efficient methods for customers.

GROWTH EXPECTATIONS

• The company expects growth from food, electronics, and pharma sectors.
• The Indian analytical services market is growing faster than the global industry.

RESEARCH AND DEVELOPMENT

• The company is involved in new molecule research from concept phase to clinical trials.
• The company directly works with companies at the clinical trial stage.

SHIFT IN FOCUS

• The company has shifted focus from supporting the generic industry to also supporting clinical trials in the patient population.
• The company has doubled its capacity in the last 2 years and is adding a new chamber for electronic business.

FINANCIAL OUTLOOK

• Management’s focus is on pushing the top line while aiming to maintain margins.
• Despite being in a human resource-intensive industry with growing input costs, the company has been focusing on profit-making services and maintaining margins.

EXPANSION PLANS

• The company is considering adding the next chamber in a different city, with Pune and Bangalore being good options.
• The new facility is capable of handling NCEs.

CLINICAL TRIALS OPERATIONS

• Clinical trials are multisite trials conducted at third-party hospital setups.
• Revenue recognition for clinical trials is based on performance completion milestones.

MARGIN IMPROVEMENT

• The company expects margins for the new trial to be in line with existing margins and is putting efforts to improve margins going forward.
• The company aims to maintain or improve margins going forward.