increase in KSM prices (mainly PAP) and loss of MEIS benefit (~150bps). Favourable forex and Air freight collected from customers was part of Sales which was added to Gross margin in Stock Q1FY21. However, EBITDA Margin managed lesser impact (decline of 126bps to 23.7% in Q1FY22 ) CMP (INR) due to lower other expenses (-4%YoY). GIL reported a PAT of INR 1202mn, which was above our Target Price (INR) estimate of INR 1018mn driven by ordinary operational performance. As per management, the KSM BSE code supply situation is likely to improve with an increase in the number of domestic suppliers and the recommencement of supply from the Chinese source. The management has stated that it is looking to decrease the share of core molecules from 84% currently to 60% by FY25 with focusing on launching higher-margin products across different geographies....
Solid Q1=Low base coupled with Healthy demand momentum in domestic/export market We expect the companies under our chemicals coverage to report solid revenue growth (65.1%YoY) in Q1FY22 with 141.8% growth in profitability, mainly led by restoration of demand in end -user industries and low base (covid-19 had posed challenges in Q1FY21). We expect higher double-digit volume growth for most companies under our universe. Increased freight costs due to severe disruptions on supply routes impacted imports (since the last few quarters), leading to a surge in selective chemical prices in the domestic market. The growth trajectory from the export market looks promising with the commissioning of new capacity for selective players. We believe most of the...
We expect the companies under our pharmaceutical coverage to clock 38.8% (YoY) earnings growth base effect. Currency appreciation could improve the top line by 1.8% on a YoY basis. Overall, our pharmaceutical coverage would post Revenue/EBITDA/PAT growth of 14.2%/23.8%/38.8% YoY in Q1FY22. We expect the EBITDA margin of our coverage universe to improve by 176bps YoY, led by We expect Aurobindo Pharma's revenues to grow by 5.6% YoY to INR 61.6bn. US sales are expected to decline due to Natrol divestment and price erosion. The EU is expected to grow faster YoY supported by currency tailwinds and a lower base. EM and ARV to grow at a steady pace. The company's EBITDA margin to decline by 49bps due to higher R&D; spends and other expenses. PAT...
Fermenta Biotech Ltd (FBL) has posted revenue of INR 995mn with a 54.1% YoY increase, which was 15.8% above our estimate of INR 859mn. The revenue growth was mainly driven by strong traction in Human VD3 business and higher contribution from Fish Oil Cholesterol. In Q4 FY21 the volumes of Human Vitamin D3 40 MIU were higher by 101% over Q4 FY20, while the volumes of Animal Vitamin D3 Feed 500 were lower by 14% over Q4 FY20. While on an annual basis, the volumes and average prices of Human Vitamin D3 40 MIU were higher by 71% and 4% respectively over previous year, however the volumes and average prices of Animal Vitamin D3 Feed 500 were under pressure and were lower by 35% and 17% respectively over previous year. Reported EBITDA margin contracted by 439bps to 10.2% level impacted largely due to 1284bps decline in the gross margin impacted by higher contribution from Fish Oil Cholesterol with low margin. Management is confident to improve margin profile from the current level on the back of strong traction in Human VD3, demand recovery in...
Fine Organic Industries (FOIL) posted revenue of INR 3,229mn with a 30.6% YoY increase, which was 9.2% above our estimate of INR 2,958mn. The revenue growth was mainly driven by better realization supported by the price increase. FOIL has witnessed a sharp increase in key raw materials...
IG Petrochemicals Ltd (IGPL) has reported a seller margin performance led by a sharp surge in PAN/ OX spread and optimum utilization at newly commissioned capacity during the quarter. Revenue grew by 58.1% YoY to INR 4244mn mainly driven by higher realization due to short supply during Q4 as there is a healthy demand in the Paints, Plasticizers and other user industries. EBITDA surged by ~8x YoY to INR 1448mn (est INR 1178mn) with 2815bps YoY expansion in margin from 6% in Q4FY20 to 34.1% in Q4FY21 (est. 30%). This was mainly driven by 2687bps expansion in gross margin (47% vs 20.1% in Q4FY20) supported by improved PAN/OX spreads. Currently, PAN/OX spread is hovering between $250-$350 compared to a 10-year avg of $215 vs ~$320 in FY21 (as per our calculation)....
growth in profitability, healthy balance sheet with improving return ratios, we continue to remain Face Value (INR) optimistic about the mid to long-term growth prospects of the company. The stock has experienced a Average volume significant re-rating in the recent past as the company has been consistently delivering strong growth 3 months along with margin expansion. We foresee a 16.7% revenue CAGR, 277bps margin increase over 6 months FY21-23E. The balance of portfolio among high value and high volume products will help it clock a 1 year faster growth in earnings. Considering better growth visibility, we raised our earnings estimate for...
Healthy Q4; Input cost increase to dent margin in the near term Granules (GIL) posted revenues of INR 7993mn with 33.2% YoY growth, which was 3.7% above our estimate of INR 7710mn. Revenue growth was mainly driven by an increase in the market share of existing products, new customer additions in the API segment and increasing penetration of PFIs as a category. During Q4, FDs grew by 34% (YoY), PFIs grew by 85% (YoY) and API sales were up by 9%(YoY). Better realisations across our existing molecules and new launches contributed to the increase in gross margins by 378bps (YoY). Subsequently, the EBITDA margin expanded by 861bps to a 25.3% level was 167bps higher than our estimate. EBITDA Margin improvement was mainly on account of higher sales and volumes over a lower base of the previous year. The low base of the previous year was...
Hikal posted revenue of INR 5,325mn with 40.5% YoY growth which was above our estimate of INR 4,859mn mainly driven by strong growth in the both Pharmaceutical and Crop protection segment. On segmental performance: The crop protection segment grew by 54% (YoY) to INR 2348mn on the back of strong volume growth in existing products and commercialization of a new product from their newly built facility in Panoli Pharmaceutical segment revenue surged by 32% to INR 2,977mn based on increased volumes of existing API Generics and CDMO products. During the quarter, the company has filled US DMF for Favipiravir API to supporting both domestic and global markets. Despite 129bps contraction in gross margin, EBITDA margin managed to improve by 188bps to 20.5%, was 142bps...
