Earnings Call Transcript Analysis Report #
Financial Performance #
Key Financial Metrics:
- Consolidated Revenues: Rs. 8,359 crores ($977 million), up 16% YoY and 4% QoQ.
- Includes Rs. 605 crores from acquired Nicotine Replacement Therapy (NRT) business.
- Excluding NRT, underlying revenue growth was 7.5% YoY and a decline of 3% QoQ.
- Consolidated Gross Profit Margin: ~59% (up 19 bps YoY, down 91 bps QoQ).
- Global Generics Gross Margin: 61.3%
- PSAI Gross Margin: 28.6%
- SG&A Spend: Rs. 2,412 crores ($282 million), up 19% YoY and 5% QoQ. As % to sales: 28.9%.
- R&D Spend: Rs. 666 crores ($78 million), up 20% YoY, down 8% QoQ. As % to sales: 8.0%.
- Guidance: Expected to be in the range of 8.5-9% for the full fiscal year.
- EBITDA (including other income): Rs. 2,298 crores ($269 million), up 9% YoY, flat QoQ.
- EBITDA Margin: 27.5% (down 176 bps YoY, down 95 bps QoQ).
- Profit Before Tax (PBT): Rs. 1,874 crores ($219 million). PBT as % of revenues: 22.4%.
- Includes PBT from NRT business of Rs. 124 crores (this excludes interest allocation, only includes amortization).
- Effective Tax Rate (ETR): 25.1%.
- Guidance: Normalized ETR expected around 25%.
- Profit After Tax (PAT attributable to equity holders): Rs. 1,413 crores ($165 million), up 2% YoY, up 13% QoQ. As % of revenues: 17%.
- Reported EPS: Rs. 16.94 (post stock split and NCI).
- Operating Working Capital: Rs. 12,782 crores ($1.49 billion).
- Capex Cash Outflow: Rs. 709 crores ($83 million).
- Net Cash Surplus: Rs. 1,603 crores ($187 million).
Comparisons & Trends:
- The company delivered its “highest ever quarterly revenues and EBITDA in Q3FY25,” largely driven by the first-time consolidation of the NRT business.
- YoY revenue growth was strong at 16%, but underlying growth (ex-NRT) was a more modest 7.5%.
- Sequential revenue decline (ex-NRT) of 3% was noted, partly due to lower sales from products like Lenalidomide in North America.
- Gross margin improved YoY due to product mix and manufacturing leverage, offset by price erosion. Sequentially, it declined.
- SG&A increased due to NRT business consolidation, investments in new initiatives, and higher logistics costs.
- R&D investments continued to focus on complex generics and biosimilars.
- EBITDA margin saw a YoY and QoQ decline.
Strategic Initiatives & Business Updates #
Major Strategic Announcements & Focus:
- Continued commitment to strengthening core generics and investing in future growth drivers: consumer healthcare (NRT), access to innovative products, and biosimilars.
- Focus on R&D productivity, scaling manufacturing and commercial capabilities, and leveraging market access.
New Products, Services, or Markets:
- NRT Business: First quarter of consolidation. Integration to occur in a phased manner starting April 2025. Seller (Haleon) to provide distribution services during transition.
- India Launches:
- Toripalimab: First immuno-oncology drug for nasopharyngeal carcinoma.
- Elobixibat (BixiBat®): First-in-class drug for chronic constipation.
- Six new brands launched in Q3.
- Biosimilars Progress:
- Rituximab: Marketing Authorization secured in the UK.
- Denosumab: Filed in both US and Europe.
- Global Generic Launches:
- North America: 4 new products in Q3; 15-20 planned for the full year.
- Europe: 9