Shilpa Medicare Limited – Q4 & FY24 Earnings Call Key Takeaways

Financial Performance (Consolidated, INR Cr)

• Q4 FY24:
  • Revenue: 294.2 (11% YoY growth, 2% QoQ growth)
  • EBITDA: 72.6 (80% YoY growth, 6% QoQ growth)
  • PAT: 24.5
  • EBITDA Margin: 24.6%
  • PAT Margin: 9.2%
• FY24:
  • Revenue: 1,159.8 (9% YoY growth)
  • EBITDA: 252.7 (111% YoY growth)
  • PAT: 32.0
  • EBITDA Margin: 21.7%
  • PAT Margin: 3%

Operational Performance

• API:
  • Capacity expansion of Tranexamic Acid expected by December 2024
  • Three new molecules at validation stage
  • Improvement in volume pickup for UBDCA
  • USDMF and EU filing for GMP approval of UBDCA
  • Development of eight oncology APIs
• Formulations:
  • Successful US launch of Pemetrexed RTU
  • Phase 3 studies for NUD 07 initiated
  • Phase 2 trials for SMLTOP09 completed
  • Launch of Dr. CLOT Spray in Indian market
  • Partnerships for EU and emerging markets
  • Expansion into ODF products in emerging markets
• Biosimilars:
  • Market share growth for Adalimumab in India
  • Partnership for Aflibercept commercialization
  • CDSCO approval for Phase 3 trial of Aflibercept
  • Biologic CDMO projects in progress
• Recombinant Albumin:
  • Large-scale fermentation facility construction underway
  • Completion expected by end of Q1 FY25
  • Phase 1 trials completed
  • Excipient grade DMF filing by Q1 FY25

Future Outlook

• Focus on complex, innovative products across segments
• Expansion into emerging markets
• Leveraging CDMO capabilities
• Recombinant Albumin facility operational in FY25

Concerns

• Pending US FDA inspection outcome for Jadcherla facility
• Ongoing litigation for Lenalidomide product
• No specific revenue or profitability growth guidance

Other Points

• Raised Rs. 500 crores through QIP issuance
• Funds used for deleveraging and growth
• Partial NCD debt repayment in August 2024
• Jadcherla facility GMP certification from AGES, Austria
• Emphasis on improving business mix and operational efficiency for growth and profitability.

Till now everything is getting executed inline with expectations, excited to see how things pan out in next few quarters if so, it can be a strong re-rating story​:money_with_wings:

Regarding that the business economics is quite favorable as the capex cost is 40-50 crores for dhule plant for which they came with an IPO so it will be taken care from it and also on this capex they will get a 80% GST subsidy over 10 year period that will boost it.

Secondly, Once two plants come on board they will have 130-150 crores in topline at optimum capacity utilisation they will be able to generate 18-20 crores in cashflow and gor the working capital requirement of Maharashtra plant they already have set aside 10 crores in FD so that won’t be a issue and from that situation if we see then it won’t be a much of problem to setup plant 3 in MP as they will have sufficient cashflow plus, have money in reserves as well.

And as far as the commodity product is concerned we can understand that the sodium silicate plant is setup at 3/4 crores at Max and for the production of sodium silicate major cost component is power and that they are getting for free due to excess production of pyrolysis oil which they uses to produce it so theya re able to provide it at lower cost while realising similar realisations for it.
And rCB is increasingly used in industry for cost cutting purpose and is mixed in proportion along with the Virgin Carbon black for cost reduction and yes they will get affected due to price fluctuations but what i could understand is that if they are able to meet the input price and realisation price with expansion in capacity that will lead to reasonably good growth.

Plus, for them there only raw material is end of life tyre which they get at Rs. 13-16 per kg and with the increased awareness among tyre company they will also get the benefit of charging offtake comission that is price paid to get tyres recycled as it happens in US and EU and eventually India will follow the pack as far as i could understand it will majorly solve the issue.

Plus, till now End of life tyres were directly burnt into the cement furnace but CPCB has become quite vigilant regarding it so the cement players have started looking for alternative and pyrolysis oil produces more BTU heat per kg consumed as compared to other alternatives so that will further aid them.

PS: Right now they have just one plant and all this is what can happen in future so will have to keep close track of the developments going on and the industry as well…

I may be biased as i am invested but this is not a big or sell call…

I hope I was able to answer…

Glenmark

Investors day in coming week.
More on FY26 and long term vision in Investors Day

Gross Margin : 32%
This Qtr had benefit of India being a little higher But Ryaltris is expected to double. So there is no one off in GM +ve for Gross margins expectations.

Ryaltris China will be a big launch in starting FY26
There are a host of markets where they don’t have Ryaltris. Capex for Ryaltris additional line + Generic Flovent.

Receivables explanation :
Better cash flows in Q3

it seems rather than doing business EKC people are attending Hydrogen conferences where sales are negligible… looking at future and forgetting the present…