low our estimate of INR 2,149mn. The revenue growth was mainly driven by the CMS (25.4% YoY growth) segment, led by 32 molecules (Development + Commercialize) with speciality API segment, which grew by 33.2% in Q1FY21. EBITDA margin expanded by 622bps to 16.5% level, which was 219bps higher than our estimate driven by 580bps improvement in gross margin led by improved product mix. Management is confident to improve margin profile from current level on the back of strong order book in CMS business, better traction in GDS business and cost optimization measures....
GMM Pfaudler Ltd (GMM), for Q1FY21, reported a weak set of numbers. Revenue marginally grew by 2.8% YoY to INR 1544mn (est INR 1721mn) mainly due to fewer production days (two months) led by the extended lockdown. However, Q1FY21 revenue includes execution of a deferred order of Q4FY20 worth INR 150mn-200mn.EBITDA remained flat at INR275mn (est INR342mn) with 55ps YoY decline in margin from 18.4% in Q1FY20 to 17.8% in Q1FY21, due to adverse product mix mainly impacted by proprietary business, where EBIT margin declined by 755bps on YoY basis with 23% contribution in consolidated revenue. However, the Heavy engineering business has reported a strong growth of 565% in revenue along with 21.3% EBIT margin (vs 2.8%YoY) in Q1FY21. This, we believe partly led...
Granules (GIL) posted revenues of INR 7,356mn with 23.6% YoY growth, which was ~6% above our estimate of INR 6929mn. Revenue growth was mainly driven by new product launches and an increase in market share of existing products. Gross margin improved (918bps YoY) due to higher formulation sales (52% of revenue vs 48% in Q1FY20). Subsequently, EBITDA margin expanded by 503bps to 25% level was 475bps higher than our estimate. EBITDA was partially impacted by one-off INR 280mn related to metformin recall (INR150mn) and COVID-19 related expenses (INR130mn). As per management EBITDA margin can be sustainable (~23% for FY21) as continued traction in the formulation business. GIL reported PAT of INR 1114mn, was above our estimate of INR 744mn driven by strong operational performance and lower tax rate (25.3% vs 32% in Q1FY20). Management expects to achieve 30% PAT growth in FY21 compared previous year and 25% for FY22 given the strong traction in base business along with new product launches in the US generics business. Post...
sulted in softening of key input materials like Benzene, Toluene, Phenol, Xylene etc. Although price correction in derivative products has been lower, resulting in higher spreads. We believe most of the outlook will be key things to monitor. Overall our Chemical coverage would post Revenue/EBITDA/ PAT decline of 13.6%/15.8%/22.7% YoY respectively. We expect the EBITDA margin of our cover- We expect Aarti Industries to report revenue decline of 13.5% on YoY basis, mainly due to decline in...
Weak demand coupled with logistic/Supply chain issue lead to Muted Quarter We expect the companies under our pharmaceuticals coverage to report flattish revenue growth in Q1FY21 with 14.2% decline in profitability, on account of weak domestic business, negatively affected by COVID-19 lockdown. The US business is likely to remain moderate on account of reversal of benefits of stocking at the wholesale level in Q4FY20, lower sales from seasonal products (gTamiflu, speciality products of Sun Pharma) and weak demand for injectables (Aurobindo) due to sharp drop in patients visiting physicians and hospitals. However, companies with higher exports will benefit due to appreciation in the USD-INR by ~5% QoQ. With respect to domestic markets, the growth is likely to favour companies with a larger presence in chronic therapy despite lockdown led restrictions....
Fine Organic Industries (FOIL) posted revenues of INR 2,473mn with 13% YoY decline which was below our estimate of INR2,734mn mainly due to loss of sales during last two week of March led by COVID 19 outbreak and logistic challenges in domestic as well as in many other countries. In the near term revenue outlook remains cloudy as management expects regaining pre Covid operational level can be possible post AugSep due to slow recovery in existing business and challenging environment in new business development. On the back of favourable product mix, Gross margin expanded by 505bps, which resulted in 226bps (YoY) improvement in EBITDA margin to 23.2%(est. 22.1%) in Q4FY20. Commissioning of new capacity (Ambernath 3) resulted in a sharp increase (178% YoY) in...
IG Petrochemicals Ltd (IGPL) reported weak Q4FY20 performance on all fronts due to sharp fluctuation in Raw material and finished product prices. Revenue de-grew by 14.2% YoY to INR 2,685mn (est INR 3,388mn). EBITDA declined by 56.3% YoY to INR 160mn (est INR 332mn) with 574bps YoY contraction in margin from 11.7% in Q4FY19 to 6.0% in Q4FY20 (est. 9.8%). This was mainly due to depressed gross margin (20.1% vs 23.9% in Q4FY19) led by a reduction in PAN/OX spread due to extreme volatility in raw material prices and nationwide lockdown due to COVID 19 impacted production volumes. Other expenses include one-time expense related to impairment in the value of the investment in subsidiary INR 2.95mn. During FY20, production of PAN volume has de-grew by ~3% on YoY basis. Net profit declined by 76.2% to INR43mn (est.INR142mn), due to operationally weak performance. From the time of plant shut down on March 24 (due to nationwide lockdown) till resumption of the plant in April raw material prices went down by 40-50% which led to an Inventory loss of ~35mn, which also impacted quarterly performance....
revenues. EBIT margin of Crop protection segment improved by 302bps (YoY) with ~46% contribution Target Price (INR) to overall EBIT. Pharmaceutical segment EBIT margin contracted by 45bps with ~54% contribution to overall EBIT. PAT came below our estimate at INR245mn (est INR329mn) dragged by operationally weak performance and higher tax expenses (35.1% vs 30.8%). On RM Sourcing from China: Hikal...
DCAL Q4FY20 revenue came 22.8% below our estimate at INR 5,121mn (est. INR 6,637mn) decline by 21.2% YoY due to tapered growth in CRAMs business (-18.3% YoY), lower other operating income (INR 93mn vs INR 383mnin Q4FY19) and postponement of commercial supply (USD ~5mn) to Q1FY21. CRAMS India revenues de-grew by ~30% YoY and accounted for 18% of the revenue. Car- Sector Outlook bogen Amcis BV revenues declined by 11% YoY. EBITDA margins contracted from 26.1% to 25.8%...
Granules (GIL) posted revenues of INR 5,999mn with 2.2% YoY decline, which was ~14% below our estimate of INR 6945mn. Revenue growth was mainly impacted by the restriction imposed on export of Paracetamol API, PFI and FD's (which was uplifted for PFI & FD's in the month of April and for the API in the month of May) and disruption in logistics (revenue loss of INR600 to700mn). However, post lifting of restriction on the export of paracetamol, capacity utilization has improved significantly now. Gross margin improved (754bps YoY) due to higher formulation sales (57% of revenue vs 52% in Q4FY20). However, EBITDA margin expanded by barely 75bps to 16.7% level was 279bps lower than our estimate due to higher employee cost (up 43.8%) and one time INR 217 Mn impairment of...
GMM Pfaudler Ltd (GMM), for Q4FY20, reported a decent set of numbers. Revenue de-grew by 5.3% YoY to INR 1318mn (est INR 1593mn) mainly due to a revenue loss of INR 300mn led by the nationwide lockdown. EBITDA showed growth of 13.4% YoY to INR225mn (est INR323mn) with 280ps YoY improvement in margin from 14.2% in Q4FY19 to 17.1% in Q4FY20, due to favourable product mix mainly led by Glass-lined business, where EBIT margin improved by 463bps on YoY basis with 63% contribution in consolidated revenue. However, the Heavy engineering business has dragged growth momentum with 59.5% de-growth in revenue and -18.6% EBIT margin (vs 2.1%YoY) in Q4FY20. The loss came up as GMM couldn't ship the order to their Middle East client due to lockdown followed by higher fixed overheads. As per the management, heavy engineering can add strong growth on the...
below our estimate of INR 2,032mn. The revenue growth was mainly driven by the CMS (62% YoY growth) segment, led by 25 molecules with speciality API segment, which grew by 18.9% in Q4FY20. EBITDA margin expanded by 498bps to 15.6% level, which was 274bps higher than our estimate due...
We expect the companies under our pharmaceuticals coverage to report revenue growth of ~6% in Q4FY20 with 14.2% growth in profitability, driven by strong traction in India and API business. The US revenues are expected to decline by 1.6% YoY mainly due to high base and lack of meaningful launches. However, strong ramp-up in gTamiflu and steady base business performance in some US focused players due to potential increase in stocking at the wholesaler level can surprise on the positive side. With respect to domestic markets, the growth is likely to favour companies with larger presence in acute therapy led by extended acute season. Growth in other emerging markets and Europe is likely to be driven by new launches. The recent INR weakness will also benefit Indian pharma companies, but some of the margin benefit is being offset from EM currencies and higher API...
Largely Unaffected Q4; Lockdown likely to impact Q1FY21 earnings We expect the companies under our chemicals coverage to report revenue growth of ~4.2% in Q4FY20 with 7.3% growth in profitability, driven by the benefit of price increase in few chemicals and reduction in the tax rate. Chemicals being basic building blocks of end-user applications are most likely to feel the slowdown in demand due to nationwide restricted movement. Indian chemical companies' have a raw material dependency on China. Still, most companies have adequate inventory to cater to demand in the near-term (at least for the current quarter). With the gradual resumption of work in Chinese factories, supply issues are expected to resolve. Additionally, crude derivatives as raw material for chemical companies will be positive for the gross margins given the drop in oil prices....
