Summarising last 06 concalls

1. Financial Performance: Faced revenue challenges due to industry-wide slowdown, with fluctuating performance over the past six quarters. However, there are signs of recovery, with the latest quarter (Q1 FY25) showing 3.6% YoY growth in standalone revenue.
2. Profitability Pressure: EBITDA and PAT margins have been declining due to industry slowdown, product mix changes, and increased costs associated with new facilities and acquisitions.
3. Industry Dynamics: The life sciences industry has been experiencing a slowdown since FY23, with destocking impacts and segment-specific challenges. However, there are signs of gradual recovery, particularly in the domestic market.
4. Strategic Initiatives: Focusing on capacity expansion (Panchla facility), new product lines (cell culture, PET/PETG bottles), and international expansion (Nerbe acquisition for European market). These initiatives are expected to drive future growth.
5. Market Position: Despite industry challenges, company believes it is maintaining or gaining market share, particularly in the domestic market where it claims a 25% share for manufactured products.
6. Challenges and Opportunities: While facing headwinds from industry slowdown and logistics issues, sees opportunities in the global shift towards single-use products and the China Plus One strategy benefiting Indian manufacturers.
7. Capital Management: The company has a significant capex program (₹600 crores total planned) and is managing increasing debt levels, with plans to repay through cash accruals over 3-5 years.

Concall Q3 F23

• Revenue in Q3 FY23 was INR 61.3 crores, down 13% YoY

• EBITDA was INR 27 crores with 43.5% margin

• PAT was INR 16 crores with 26.3% margin

• Revenue declined 13% YoY in Q3 FY23

• EBITDA margin contracted to 43.5% in Q3 FY23 vs 46.7% in Q3 FY22

• PAT margin was 26.3% in Q3 FY23

• Exports revenue: INR 21 crores (34% of total)

• Domestic revenue: INR 41 crores (66% of total)

• Capacity utilization not specifically mentioned but implied to be lower than previous year

• Company believes it has increased market share despite industry slowdown

• Expects to be in a good position to capitalize when industry rebounds

• Inventory of INR 112 crores

• Receivables of INR 50 crores

• Industry facing slowdown across segments like diagnostics, academia, research

• Export markets impacted by global economic conditions

• New facilities (Panchla and Amta) to start operations in Q2 FY24

• No short-term revenue guidance provided due to market uncertainty

• Company participating in international exhibitions to build brand

• Expansion into new product lines through Panchla facility

• Participating in international exhibitions to build export business

• Focus on building branded sales in export markets

• Overall industry slowdown post-COVID

• Diagnostics segment undergoing transformation with new entrants

• Research budgets constrained globally

• Slowdown in diagnostic, pharma, research segments

• Global economic uncertainty impacting export demand

• High inventory levels with distributors

• Expected rebound in research spending

• Government focus on boosting medical device industry

• Panchla facility to start operations around May 2023

• Amta facility expected to be ready by July-August 2023

• New product lines like PET bottles to be launched

• Global economic slowdown impacting demand

• Currency issues in some export markets

• China+1 strategy providing opportunities

• Building brand through international exhibitions

• No specific guidance provided due to market uncertainty

• Expect industry rebound in next few quarters

• No specific order book or revenue guidance provided

• Cautiously optimistic on medium to long-term industry outlook

• INR 500 crore capex plan underway for new facilities and product lines

• Phased investment in equipment for new facilities

• Expansion into new product categories

• Growing export business

• Prolonged industry slowdown

• Underutilization of new capacities

• Favorable government stance on research and medical devices industry

• Cautious spending across customer segments

• Inventory destocking by distributors and end customers

Major Takeaways:

1. Industry facing temporary slowdown but company confident of long-term prospects
2. New facilities and product lines to drive next phase of growth
3. Focus on building export business through branding and exhibitions
4. No short-term guidance due to market uncertainty
5. Company believes it is outperforming industry and gaining market share

Concall Q4 F23

• Revenue in Q4 FY23 was INR 82 crores, down 3% YoY but up 34% QoQ

• Full year FY23 revenue was INR 283 crores, down 6% from INR 301 crores in FY22

• Q4 FY23 EBITDA margin improved to 47.8% from 43.5% in Q3 FY23

• Full year FY23 EBITDA margin was 45.8%

• Q4 revenue grew 34% QoQ but declined 3% YoY

• Full year revenue declined 6% YoY

• Q4 EBITDA margin improved to 47.8% from 43.5% in Q3

• Full year EBITDA margin was 45.8%, down from 50.8% in FY22

• Exports contributed 30% and domestic 70% of Q4 revenue

• For full year, exports were 33% and domestic 67% of revenue

• Consumables were 56% and reusables 39% of revenue

• Company believes it is growing slightly faster than the industry and gaining market share

• Focused on expanding exports, especially in Europe, US and key Asian markets

• Inventory levels have increased due to imported raw materials, new product launches, and maintaining stock for 1700+ SKUs

• New Panchla facility expected to start production by end of Q2 FY24

• Full ramp-up of Panchla facility expected by Q4 FY24

• Panchla facility has potential to generate INR 500 crores revenue at full capacity

• Company exploring inorganic acquisition opportunities in international markets

• No specific revenue guidance provided for FY24 and FY25

• Expanding exports through OEM relationships and branded presence

• Exploring inorganic acquisition opportunities in international markets

• Launching new product lines like PET/PETG bottles and cell culture products

• Recovery seen in pharma, biotech and CRO segments

• Diagnostic segment still under pressure

• Academia/research facing funding constraints

• Headwinds: Slowdown in diagnostics, funding constraints in academia/research

• Tailwinds: Growth in pharma, biotech, CRO segments

• New Panchla facility to start production by end of Q2 FY24

• Launching PET/PETG bottles and cell culture products

• Serological pipettes showing strong growth from low base

• Focusing on OEM relationships in developed markets

• Building branded presence in developing markets

• Exploring inorganic opportunities to boost international sales

• No specific revenue guidance provided

• Company positioning itself for growth through capacity expansion, new products and potential acquisitions

• No specific order book or revenue guidance provided

• Optimistic on medium-term growth prospects of life sciences industry

• Capex of INR 500-550 crores for Panchla facility expansion

• Exploring inorganic acquisition opportunities

• Expanding exports, especially in Europe, US and Asia

• New product launches like PET/PETG bottles and cell culture

• Potential inorganic acquisitions

• Slowdown in diagnostics segment

• Funding constraints in academia/research

Key take aways

• Revenue recovery seen in Q4 with 34% QoQ growth
• New Panchla facility to start production by Q2 FY24 end
• Focus on expanding exports and new product launches
• Exploring inorganic acquisition opportunities
• Optimistic on medium-term industry growth prospects despite near-term challenges

Concall Q1 F24

• Revenue from operations for Q1 FY24 was INR 53 crores, down 9% YoY

• Adjusted EBITDA was INR 24.1 crores with 38.5% margin

• PAT was INR 9.6 crores with 15.3% margin

• Revenue declined 9% YoY in Q1 FY24

• Adjusted EBITDA margin was 38.5%, down from previous quarters

• Reported EBITDA margin was 34%

• Domestic revenue: INR 45 crores (73% of total)

• Export revenue: INR 17 crores (27% of total)

• Company believes it is gaining market share despite industry contraction

• Expects to increase revenues compared to last year, but cautious on industry trends

• Inventory as of June 30th was INR 112 crores

• Raw material inventory reduced significantly compared to last quarter

• Demand trends weak, especially in consumables segment

• Destocking impact expected to continue in near term

• Acquisition strategy remains in place despite recent unsuccessful attempt

• New product launches (cell culture, PET/PETG bottles) progressing well

• Panchla plant to start commercial production in Q3

• Pursuing inorganic growth opportunities in export markets

• Launching new product lines like cell culture and PET/PETG bottles

• Expanding manufacturing capacity through Panchla and Amta plants

• Overall life sciences industry facing slowdown

• High inventory levels at customers and distributors

• Gradual recovery expected but timing uncertain

• Reduced demand for plastic labware products

• Inventory destocking by customers

• Competitive pressures globally

• Panchla plant to start commercial production in Q3 FY24

• Amta plant expected to be ready by December 2023

• New product lines: Cell culture, PET/PETG bottles, serological pipettes

• Export markets facing more pressure than domestic

• Currency depreciation increasing raw material costs for imports

• Expects to increase revenues compared to last year

• Margins impacted by lower absorption of fixed costs

• Fresh order inflow 4-5% higher YoY

• Cautiously optimistic on full year growth

• Near-term outlook remains sluggish

• Total capex of ~INR 525-530 crores

• Asset turnover ratio target of 0.65-0.7 on gross block

• New product lines (cell culture, PET/PETG)

• Potential acquisitions in export markets

• Continued industry slowdown

• Inventory destocking pressures

• Customers facing inventory overhang issues

• Hesitant to engage new suppliers currently

Major Takeaways:

• Near-term challenges due to industry slowdown and destocking
• Company focusing on new product launches and capacity expansion
• Pursuing inorganic growth opportunities despite recent setback
• Cautiously optimistic on full year growth prospects

Concall Q2 F24

• Q2FY24 revenue was INR 66 crores, up 6% QoQ

• H1FY24 revenue was INR 129 crores vs INR 140 crores in H1FY23

• Q2FY24 EBITDA margin was 38.3%

• H1FY24 PAT was INR 22 crores with 17.4% margin

• 6% QoQ revenue growth in Q2FY24

• EBITDA margin declined to 38.3% in Q2FY24 from over 45% last year

• Margins impacted by lower revenue growth, higher costs for new facility

• Exports 35%, Domestic 65% of Q2FY24 revenue

• Current capacity utilization around 75%

• Can do INR 50-60 crores more revenue with existing setup

• Expects to gain market share as industry recovers

• Opportunity to take share from European players facing high costs

• Inventory of INR 118 crores, including INR 39 crores raw material

• 4-5 months inventory required to run operations

• INR 550 crore capex – 60% for capacity expansion, 40% for new products

• Expects 4-5 years to fully ramp up new capacity

• No revised guidance for FY25, INR 500 crore target looks unlikely

• Looking at international acquisitions to grow overseas business

• Cell culture seen as more complex product with stronger moat

• Setting up subsidiary in Singapore for overseas acquisitions/partnerships

• Actively evaluating international acquisitions to grow exports

• Investing in new product lines like cell culture

• Industry facing destocking, but showing signs of recovery

• Shift from glass to plastic continues, no major threat seen

• Headwinds: Destocking, slower demand post-COVID

• Tailwinds: Recovery expected, opportunity vs European players

• New Panchla facility to start production from December 2023

• Cell culture and expanded capacity for existing products

• Total capex of INR 550 crores, INR 400 crores already incurred

• European manufacturing challenges provide opportunity

• Looking at acquisitions to grow exports

• No specific guidance, but expects growth in coming quarters

• Margins expected to improve as industry recovers and new facility ramps up

• No specific order book guidance provided

• Expects industry recovery and better conditions going forward

• INR 550 crore capex for expansion and new products

• Looking at international acquisitions

• Opportunity to gain share from European players

• Risk of continued industry slowdown

• Price sensitivity has increased post-COVID

Major Takeaways:

• Industry showing signs of recovery from destocking
• New capacity coming online, expect 4-5 years for full ramp up
• Actively pursuing international acquisitions for export growth
• Margins impacted but expected to improve as revenue grows

Concall Q3 F24

• Revenue for Q3 FY24 was Rs. 62 crores, up 1% year-on-year

• EBITDA for Q3 FY24 was Rs. 23 crores, down 14% year-on-year

• PAT for Q3 FY24 was Rs. 10 crores with 16% margin

• Domestic revenue grew 14% year-on-year in Q3

• Export revenue declined year-on-year due to subdued global demand

• Gross margins declined due to changes in product mix

• EBITDA margin for Q3 FY24 was 37%

• About 2/3rd of revenue comes from single-use/consumable products

• 1/3rd comes from reusable products

• Export sales contributed 29% and domestic 71% for 9 months FY24

• Current infrastructure allows business up to Rs. 320-350 crores

• Market share in diagnostics segment returning to pre-COVID levels

• Expect to maintain/grow market share in domestic market

• Focusing on expanding market share in international markets, especially Europe

• Cash flow from operations was Rs. 83 crores for 9 months FY24

• Inventory days have increased due to new product launches

• Acquired Nerbe, a Hamburg-based distributor, to expand presence in Europe

• Focusing on expanding ODM business in North America and Europe

• Launching new cell culture products and expanding capacity

• Gradual recovery seen in plastic labware markets

• Shift towards single-use/consumable products globally

• China Plus One strategy benefiting Indian manufacturers

• Gradual recovery in global plastic labware demand

• China Plus One strategy benefiting Indian manufacturers

• Subdued demand in key global markets

• Red Sea crisis impacting exports and freight costs

• Inventory overstocking in some product categories like PCR

• Panchla facility nearing completion, initial production to start in Q4 FY24

• Commercial production of cell culture products expected in Q3 FY25

• Launching 7-8 new product categories next year across segments

• Red Sea crisis increasing freight costs and lead times

• Subdued demand in key global markets

• Expect gradual improvement in coming quarters

• EBITDA margins not expected to go below current levels

• Domestic order book stronger than previous year but below FY22 levels

• No specific revenue guidance provided

• Expect gradual improvement in coming quarters

• Total capex plan of Rs. 550-575 crores, of which Rs. 450 crores already incurred

• Remaining Rs. 100-125 crores to be spent over next 12 months

• Current net debt of Rs. 230 crores, expected to peak at Rs. 270-280 crores

• Plan to repay debt through cash accruals over 3-5 years

• Expanding presence in European market through Nerbe acquisition

• Growing single-use/consumable product segment

• Launching new cell culture products

• Continued subdued demand in global markets

• Freight cost increases due to geopolitical issues

• Intense competition in domestic market

Major Takeaways:

• Company focusing on expanding international presence, especially in Europe
• Launching new products and expanding capacity to drive future growth
• Gradual recovery expected in global markets but challenges remain
• Domestic market performing well with 14% year-on-year growth
• Company maintaining healthy cash flows despite challenging environment

Concall Q4 F24

• Highest quarterly standalone revenue of ₹87 crores in Q4 FY24, up 6% YoY and 40% QoQ

• FY24 standalone revenue at ₹277 crores, down 2% YoY

• Standalone EBITDA for FY24 at ₹103 crores

• Consolidated revenue (including Nerbe) at ₹296 crores for FY24

• Q4 FY24 standalone EBITDA margin at 39.1%

• Adjusted FY24 standalone EBITDA margin at 40% (excluding one-off expenses)

• Consolidated margins impacted by inclusion of lower-margin Nerbe business

• Export sales contributed 30% and domestic sales 70% in FY24 standalone

• Current capacity utilization at approximately 75-80%

• 25% market share in India for products manufactured

• Expects gradual improvement in pharma, CRO, research and diagnostic sectors

• One-time inventory provision of ₹3.7 crores in Q4 FY24

• Acquisition of Nerbe to expand presence in European market

• Focus on leveraging synergies between Tarsons and Nerbe

• Early signs of recovery in life sciences industry in second half of FY24

• Inventory levels reducing across industry

• Tailwinds: Increasing investments in R&D, growing demand from emerging economies

• Headwinds: Geopolitical tensions, supply chain disruptions

• Panchla facility to focus on cell culture products and expand existing product capacities

• Amta plant to include radiation facility and centralized warehouse

• China Plus One strategy benefiting Indian manufacturers

• Logistics and supply chain disruptions impacting international business

• No specific revenue guidance provided

• Aims to maintain early 40% EBITDA margins on standalone basis with sustainable growth

• Total planned capex of ₹600 crores, of which ₹475 crores already incurred

Major Takeaways:

• Focus on recovering from industry-wide slowdown
• Leveraging Nerbe acquisition for European market expansion
• Continued investment in capacity expansion and new product lines like cell culture

Concall Q1 F25

• Q1 FY25 standalone revenue was INR 64.9 crores, up 3.6% YoY

• Consolidated revenue was INR 84.8 crores, including INR 20 crores from Nerbe acquisition

• Standalone adjusted EBITDA was INR 20 crores with 30.9% margin

• Consolidated adjusted EBITDA margin was 25.7%

• Standalone PAT was INR 6.5 crores with 10% margin

• Consolidated PAT was INR 4 crores with 4.7% margin

• Standalone revenue grew 3.6% YoY despite industry slowdown

• Margins impacted by product mix changes, employee expenses, and Nerbe acquisition

• Standalone adjusted EBITDA margin of 30.9%, down from previous quarters

• Domestic revenue INR 42 crores vs INR 45 crores last year

• Export revenue INR 22 crores vs INR 17 crores last year

• Nerbe revenue INR 20 crores in Q1 FY25

• Current capacity utilization not specified, but significant capacity available

• Company maintained market share better than industry average

• Seeing signs of recovery in domestic and overseas markets

• Aiming to increase market share through new products and Panchla facility

• Domestic diagnostics industry recovering but back to pre-COVID levels

• Panchla facility commissioning delayed due to machinery damage, expected in H2 FY25

• Nerbe acquisition to provide platform for European expansion

• Gross margin decline due to competitive market and product mix changes

• Global tender participation expected to yield results in coming quarters

• Acquired Nerbe Plus in Germany to expand European presence

• Participating in global tenders and RFQs to grow international business

• New product introductions planned through Panchla facility

• Recovery signs in domestic and overseas plastic labware markets

• Shift towards more value-added and new product categories

• Focus on expanding global presence, especially in Europe

• Overall industry slowdown in past 18 months

• Competitive market pressures

• Lower demand for high-margin products like PCR and liquid handling

• Panchla facility (greenfield) to commence operations in H2 FY25

• INR 300 crores invested in Panchla for manufacturing and growth

• 70% of Panchla capacity for new products, 30% for existing product expansion

• Logistics issues, container availability, and higher shipping costs

• Longer waiting times for vessel availability

• Increasing order inquiries from international markets

• Expect growth as new capacities come online and market recovers

• Order book increasing compared to last year

• Optimistic about future revenue and profitability growth as demand recovers

• Total capex program of INR 550-600 crores

• INR 525 crores already spent, remaining to be incurred in next 6-12 months

• Focus on optimizing new capacity utilization, especially Panchla facility

• Continued industry slowdown

• Competitive pressures impacting margins

• Delays in new facility ramp-up

Major Takeaways:

1. Company showing resilience despite industry slowdown
2. Strategic focus on international expansion, especially Europe
3. New Panchla facility to drive growth through capacity and new products
4. Margins under pressure but expected to improve with scale and recovery
5. Optimistic outlook on market recovery and future growth prospects

Important lessons learned over the past two decades of investing by Pankaj Tibrewal, Founder & CIO of IKIGAI Asset Manager.

Some positive development after a long while;

Linc Limited and Mitsubishi Pencil Company announce a strategic joint venture in India to introduce advanced Japanese technology for high-quality, affordable writing instruments tailored for the Indian market. Mitsubishi will hold a 51% stake, leveraging Linc’s strong sales and distribution expertise. The JV aims to revolutionize the writing instruments industry in India and globally.

Key Highlights are:

• Mitsubishi Pencil Company will bring advanced Japanese technology, driving product
  quality and innovation.
• Linc Limited, with over 30 years of exclusively distributing Mitsubishi’s ‘Uni’ and ‘Uniball’
  pens, will leverage its strong sales and distribution expertise across India.
• The JV will combine Japanese technological innovation with local production efficiencies to
  offer high-quality, affordable writing instruments.
• The JV will also serve as a platform for exporting products to international markets served
  by both Mitsubishi and Linc.
• Mitsubishi Pencil Company will hold a 51% stake in the JV, while Linc Limited will hold 49%.

Also LINC has formed Joint venture for manufacturing of Writing Instruments in Turkiye and its distribution and sale in Turkiye and nearby countries.

It shows company is focusing on export market where margins are usually higher than domestic market.