Ranvir’s Portfolio

Alkem Labs –

Q1 FY 25 Concall and results highlights –

Revenues – 3031 vs 2967 cr
Gross margins @ 64 vs 59 pc ( huge expansion )
EBITDA – 608 vs 389 cr, up 56 pc ( margin @ 20 vs 13 pc !!! )
PAT – 545 vs 286 cr, up 90 pc

R&D expenses @ 125 cr, 4 pc of sales

Cash on books @ 3845 cr

Alkem’s rank in major therapeutic segments in IPM –

Anti Infectives – 01
Vit/Minerals – 02
Pain Analgesics – 03
GI – 03

Among the chronic therapies, Alkem is ranked 7th in Neuro, 15th in Anti-Diabetic and Respiratory, 20th in Derma and 26 th in Cardiac segments

Breakup of revenues –

India sales – 2022 cr, up 6 pc ( 67 pc of total sales )

International sales – 967 cr, down 4 pc
Out of this, US sales @ 641 cr, down 8 pc
RoW sales @ 326 cr, up 2 pc

Massive improvement in Gross and EBITDA margins on the back on sharper focus on profitability, favourable RM cost environment and cost control initiatives

Will continue to invest aggressively towards future growth opportunities ( basically ENZENE’s Biosimilars plant in the US which is likely to turn profitable only in FY 27. Company is spending 400-450 cr towards this facility ). These are likely to entail operational costs. Hence sticking to full yr’s EBITDA margin guidance of 18 pc for FY 25. However, if the API prices continue to remain soft and decline further, company may report higher margins

Domestic growth in Q1 is driven by volume growth of 1.5 pc, new products at 2.5 pc and price hikes of about 2 pc

US generics business is seeing price erosion in single digits

Guiding for an R&D costs at around 4.5-5 pc of sales for FY 25

Looking at single digit growth from US mkt in FY 25. Will be launching 3-4 products and filing for 8-10 new products for US in FY 25

Expecting the growth to pick up in a significant way in the European + EMs. These mkts are showing encouraging signs and company is hopeful of growing briskly and more profitably ( vs US ) here. These Mkts are a big focus area for the company. Q1 was weak because of some supply chain issues which now stand resolved. Guiding for a mid teens kind of growth from non-US International business for next 2-3 yrs. Blended margins in these international mkts are > US and < India

Trade generics contribute to around 20 pc of company’s India business

Tax rate guidance for FY 25 @ 11-13 pc

Share of Chronic therapies in company’s India business @ 19 pc. 81 pc is acute business

Medical devices, OTC products – are two business areas where the company is working hard. Will share updates with shareholders when they finally launch products in these spaces

Cash on books to be used for acquisitions / mergers etc to add value to the business

ENZENE Biosciences ( a subsidiary ), already has 07 biosimilars in the IPM. Aim to launch 05 more over the medium term. Their US facility ( under development ) will be utilised for contract manufacturing

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation