Conference call between Alembic Pharma Management and Analysts on Q4FY20 and Full Year Results. Listen in to the full transcript. See all earnings call transcripts here.
Call Participants
Mr. Pranav Amin - Managing Director, Mr. Shaunak Amin - Managing Director, Mr. R.K. Baheti - Director - Finance & CFO, Mr. Mitanshu Shah - Head - Finance, Mr. Ajay Kumar Desai - Sr. VP - Finance, Mr. Jesal Shah - Head - Strategy
Introductory Remarks from Pranav Amin
Good evening everyone! Thank you for joining the fourth quarter conference call. I am sure you all have received our unaudited financial reports by now. Since the auditors are based in Mumbai and they are facing challenges completing the audit during this lockdown period. We will, however, publish the audited accounts whenever the situation returns to normal. However, in the interest of stakeholders, we are going ahead and publishing the financials today.
Key Highlights on Financials from Mr. Mitanshu Shah
Thank you Pranav! I will take you through the quarter ending year March 31, 2020.
During the quarter, total revenue grew by 30% to Rs 1,207 crores
Pre R&D EBITDA is 42% of sales. Net profit after tax was up 81% to Rs 225 crores
EPS for the quarter is Rs 11.93 per share vs Rs 6.58 in the previous year
During full year 2019-20, total revenues grew by 17% to Rs 4,606 crores, EBITDA at Rs 1,213 crores is 26% of sales
Pre R&D EBITDA is 39% of sales. Net profit after tax was up by 42% to Rs 129 crores
EPS for the full year was Rs 43.98 vs Rs 31 in previous year
CAPEX for full year including capital advances was Rs 731 crores, very close to the last year number which was around Rs 650 crores
Cumulative CAPEX, ongoing project under WIP including pre-operative expenses was Rs 1,492 crores
Cumulative financial assistance was at Rs 677 crores
The gross borrowings in the consolidated balance sheet are Rs 1,749 crores which are up by around Rs 620 odd crores from last year and we have Rs 81 crores of cash in hand
Net borrowings stand at Rs 1,666 crores. Net equity driven at 0.52
We have declared a dividend in the previous board meeting on March 6, 2020.
Insights on International Business
It was another good quarter for the international generics business. GMP compliance continues to remain a focus area for us. Our formulation plant F1 was recently audited by the FDA which received four observations. These are largely to do with SOP improvement. We have submitted our response and are waiting to hear back from the FDA. Apart from formulation 1, the other plants are in place.
We have filed 25 ANDAs for the year. R&D expenses were at Rs 185 crores for the quarter and for the full year we have spent Rs 645 crores, approximately 14% of sales.
We have launched five new products during the quarter and 22 new products during the year
We plan to launch approximately 10 products in the first half of this financial year as well
The international formulation business increased by 80% in the quarter to Rs 710 crores whereas for the year, it grew by 40% to Rs 2,473 crores
The US generics grew by 85% to Rs 77 million for the quarter and 52% to $217 million for the year
The ROW business grew by 63% in the quarter and was flat at about Rs 500 crores for FY20
Key Highlights on the domestic numbers
Overall for Q3, sales grew by 18% to Rs 342 crores and it grew to Rs 1,425 crores for the financial year with 3% growth
Specialty segments grew 10% in the current quarter and for the acute it grew by 24% in the current quarter
This quarter has been a quarter of some recovery for our business as you guys are aware that last financial year we did kick certain strategic decisions which impacted our business for the last three quarters of the year
All our cyclic growth are completely aligned in terms of hydro molecules driving our key growth segments
Over the last two years, we have been focussing aggressively on the pharma side with a market driven approach to communicating to our customers and after this, after some amount of peak damage, it started to give us big dividends and allowed us to cut through the clutter. Along with that, there is still substantial scope for the business to ramp up over the next four quarters in terms of operational as well as in terms of strategic interventions that we have taken. So, we look forward to driving the business.
Impact of COVID-19 from Mr Shaunak Amin
The impact of Covid for this quarter has been neutral. There have been some positives as well as some negatives in the month of March and we are seeing that trend to continue in April. So, it's working out to be equal for us.
In terms of the business, in terms of the turnaround, we are very confident that this is sustainable and it's not a one quarter trend. It will sustain for the next 3-4 quarters at least for sure. In terms of Covid, I think the impact has been neutral because it’s only the last week of March that we actually started seeing some impact of Covid related disruptions.
I can’t predict if there will be a slow down in the growth of the acute segment because of lockdown in the next three month. The only slow down we have observed is in those non-essentials. Women healthcare has been affected. We are balancing it and see a quick recovery of that.
General updates
The domestic product launches for the last quarter has been in single digit and no large launches in FY20
Gross margin trend to be hovering around 70-75%
Core CAPEX was at Rs 300 odd crore, Project CAPEX at Rs 370 odd crores, allure R&D capitalisation at Rs 120 odd crores for FY20, allure on an annualized basis is Rs 75 crores
First few weeks, there was a shortage of the labour cost. We are working at our 70-80% of our regular capacity when talking about manufacturing plant status or logistics situation compared to given few weeks back
No issue in supply of logistics outbound and inbound. Shortage of people at ports didn’t impact us
If the current lockdown extends, we don’t see any impact
Pharma is an area for which demand hasn’t really changed because of lockdown and so, market-wise, we are not seeing any changes