Aarti Pharmalabs –
Q1 FY 25 results and Concall highlights –
Revenues – 555 vs 458 cr
EBITDA – 96 vs 85 cr, up 14 pc ( margins @ 17 vs 19 pc )
PAT – 55 vs 47 cr, up 18 pc
Revenue breakup in Q1 –
Xanthene derivatives – 54 pc ( seeing strong demand and sales in this segment despite the Chinese competition )
API + Intermediates – 44 pc ( 55 pc of this came from regulated mkts and the rest from RoW / unregulated mkts )
CDMO / CMO – 2 pc ( in Q4, it was 19 pc. This business generally picks up in Q3,Q4 ). Currently the company has 27 commercial projects and 26 projects are in various stages of development. Confident of growing this business by 25-30 pc in FY 25
Expect to complete the Xanthene brownfield capex by Q1 FY 26
Atali expansion ( for manufacturing of APIs + Intermediates + CDMO ) is expected to be completed by end of Q4 FY 25
Expansion of intermediates manufacturing facility at Vapi is expected to be completed by Q2 FY 25
Solar power plant that the company is in the process of setting up is likely to be commissioned by Q3. This will cater to 1/3rd of company’s needs and help reduce manufacturing costs
Company is seeing greater traction / enquiries for their CMO / CDMO work and are also seeing a shift away from China
Company’s Gross Margin profile generally fluctuates between 50-52 pc
Company’s CMO/CDMO projects are currently small. Expect project sizes to become bigger as the business scales up over medium term. All of company CMO / CDMO projects relate to patented molecules ( early stage and late stage intermediates )
LY the company did 175 cr of CMO/CDMO business. Expect to take it to > 220 cr this FY
Company agreed that the bio-secure act passed in US will act as an added tailwind for the company’s business
Lower GMs in Q1 is due to lower CMO/CDMO sales in Q1. As CMO/CDMO business picks up, gross margins should improve
Company is seeing greater traction / enquiries for their CMO / CDMO work and are also seeing a shift away from China
Company’s Gross Margin profile generally fluctuates between 50-52 pc
Company’s CMO/CDMO projects are currently small. Expect project sizes to become bigger as the business scales up over medium term. All of company CMO / CDMO projects relate to patented molecules ( early stage and late stage intermediates )
LY the company did 175 cr of CMO/CDMO business. Expect to take it to > 220 cr this FY
Company agreed that the bio-secure act passed in US will act as an added tailwind for the company’s business
Lower GMs in Q1 is due to lower CMO/CDMO sales in Q1. As CMO/CDMO business picks up, gross margins should improve
My Hunch – company may outperform its guidance on CMO/CDMO business and hence on overall company level margins. CMO/CDMO business is seeing a lot of tail winds for the Indian players
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation
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