Company Overview:
- Sanjivani Paranteral Limited is a WHO GMP certified pharmaceutical manufacturing company with over 25 years of experience.
- Specializes in the manufacturing of injectables and oral solids, focusing on life-saving drugs.
- Exports products to over 25 countries, with headquarters in Mumbai and manufacturing facilities in Navi Mumbai, Dehradun, and Prague.
- Major therapeutic areas include CNS, CVS, antibiotics, gastroenterological, anti-diabetics, and anti-allergic.
Financial Highlights (Q1 FY ‘25):
- Revenue grew 31% year-on-year to ₹164.4 million.
- EBITDA margins decreased to 14.7% from 16.5% in Q1 FY ‘24.
- Net profit increased by 11% to ₹17.1 million; PAT margins fell to 10.4% from 12.3% in Q1 FY ‘24.
- Revenue contributions: Injections grew 4.6%, oral segment grew 116.6%, and nutraceuticals grew 61.3% year-on-year.
- Revenue mix: 12.8% domestic and 87.2% exports.
Operational Updates:
- Joint venture with Hindustan Antibiotics Limited (HAL) is on track for operational launch by October 2024.
- Received FDA license for HAL operations; stability batches to start in September.
- Prague joint venture is partially operational, with one small order executed in Europe; full operational capacity expected by end of August or September.
Challenges and Headwinds:
- Global logistical issues, particularly related to Red Sea shipping routes, impacting order flow and execution.
- Increased freight costs affecting EBITDA margins, with costs rising four to five times normal rates.
- Current operational challenges include teething issues with machinery in Prague and high air shipment costs affecting order flow.
Margin Guidance (Risks?):
- EBITDA margins impacted by higher freight costs and shift in product mix towards low-margin oral solids due to tender business.
- Future guidance on gross margins remains uncertain due to fluctuating logistics and product mix.
Segment Performance:
- Slight decline of 3% in injectables due to market conditions; significant growth in oral solids driven by tender conversion.
- Future focus remains on maintaining a product mix similar to previous quarters, with an emphasis on injectables and nutraceuticals.
Growth Strategy:
- Base business expected to grow at 20-25% over the next couple of years without significant CAPEX.
- Ongoing maintenance CAPEX of ₹10-12 crores planned for regulatory upgrades, spread over time.
- Exploring partnerships for therapeutic diversification, particularly in oncology and hormones, although progress is slow.
Market Outlook:
- Anticipated growth in the nutraceutical sector; however, concerns over competition and regulation are present.
- The company aims to maintain a revenue split of 70% exports and 30% domestic, with HAL expected to shift this towards a more balanced 50:50 ratio in the future.
Future Developments:
- Potential for import substitute products in the IV segment, with development timelines of 9-12 months post-HAL operational launch.
- Discussions ongoing for geographic expansion, particularly in Africa and Central America, but specifics are not yet confirmed.
Conclusion:
- In the Q1 FY2025 concall, the management expresses optimism about future growth driven by strategic partnerships, geographic expansion, and product portfolio enhancement and improved product mix (more focus on injectables and nutraceuticals which happens to be a higher margin product) despite current logistical challenges and margin pressures.
Additional Points:
Recent entry of marquee investors like Ashish Kacholia among others in the previous quarter (Q4 '24)
Disc: invested
| Subscribe To Our Free Newsletter |
