Earnings Call Transcript Analysis Report #
Morepen Laboratories Q4 FY25 Earnings Analysis #
Financial Performance #
Morepen Laboratories reported mixed financial results for Q4 FY25 and the full year FY25.
Key Financial Metrics & Comparison #
- Annual FY25 Revenue: INR 1,830 crores, a 7.4% increase from INR 1,704 crores in FY24. Management noted this was “lower than expected,” aiming for 10-15%.
- Quote: “So last year, we had clocked a turnover of INR1,700 crores, INR1,704 crores. And this year, it is INR1,830 crores, 7.4% increase in the revenue, which is lower than expected.”
- Q4 FY25 Revenue: INR 470 crores, a 10.1% increase from INR 427 crores in Q4 FY24.
- Quote: “And in the year as a whole, for the quarter, it is 10.1% from INR427 crores last year, now this year, it is INR470 crores.”
- Annual FY25 EBITDA: Increased by 11.5% year-over-year. EBITDA margin improved by 40 bps to 10.5% from 10.1%.
- Quote: “EBITDA has increased by 11% against 7% increase in revenue, 11.5% increase in EBITDA. EBITDA percentage from 10.1% to 10.5%, almost 0.4%, which is like, I would say, 40 bps has increased.”
- Annual FY25 PAT: Increased by 22% year-over-year.
- Quote: “PAT percentage has increased 22%.”
- Q4 FY25 EBITDA & PAT: Declined year-over-year despite revenue growth, attributed to deferred export orders and non-repeat of large bulk orders from the previous year’s same quarter.
- Quote: “The EBITDA had gone down… because of the lower exports, our EBITDA has gone down in the last quarter. And EBITDA has gone down, I don’t have to tell that PAT would also go up (likely meant ‘go down’).”
- Gross Margins: Faced pressure, particularly in the API business due to price declines. A sharp sequential and YoY decline was noted, partly due to API price fall and partly due to accounting changes (AS 116) shifting some lease rental expenses from “Other Expenses” to “Depreciation.”
- CFO Quote: “Gross margin, we have already mentioned that there is a bit of price falling. It has affected our EBITDA margin in the API business.”
- CFO Quote on expense reclassification: “early rent was charged to expense. Now as per AS 116, so we had amortized it. So that part from other expenses that has gone to the depreciation.”
Revised Guidance or Forecasts #
- No formal guidance, but management indicated they are “working between 10% to 15%” for company-level revenue growth for FY26 and FY27.
- Quote: “We usually do not give any guidance, but we are working between 10% to 15%.”
- Expectation for every quarter to “touch – every quarter should be INR500 crores.”
Areas of Growth or Decline #
- Growth (Annual): Overall revenue, EBITDA, PAT. Medical Devices segment revenue grew 12% YoY (INR 496 crores). Formulation revenue grew 21% over two years (INR 344 crores in FY25). API exports grew 26% in value over 3 years, reaching 72.1% of API sales. New API product contribution grew 65% in 3 years to INR 114 crores.
- Decline (Q4): Q4 EBITDA and PAT declined despite revenue growth. API business saw muted revenue growth (3.5% annually, 4% in Q4) primarily due to significant price drops (average selling price down 24% in 2 years), despite a 57% increase in sales quantity over two years.
- Quote on API pricing: “From an average of INR26,000 per kg, we have come to INR20,000 per kg, INR20,300 per kg. So basically, this price drop is one thing which we had to absorb.”
Strategic Initiatives & Business Updates #
The company is focusing on expanding high-margin businesses, increasing export contribution, and new product development.
Major Strategic Announcements #
- Increased focus on export markets for APIs, reducing exposure to less profitable domestic API markets.
- Quote: “our more-and-more focus is towards increasing profitability, and you are seeing that export has been maintained rather increasing.”
- Significant expansion of medical representative strength for the formulation business, aiming to double the team from 200 to 400 in the current year, with a target of 1,200 in three years.
- Quote: “We are going to double our medical representative strength in this year from 200 to 400 and then to 750 and then to 1,200.”
- Capacity expansion across business segments:
- API: From 314 KL to 600 KL (514 KL already installed, targeting completion within FY26).
- Medical Devices: Glucometers (2.5M to 3.6M units/annum), Test Strips (420M to 600M strips/annum), BP Monitors (0.9M to 1.8M units/annum).
New Products, Services, or Markets Discussed #
- APIs: Strong portfolio in anti-diabetic (Sitagliptin, Linagliptin, Dapagliflozin, Empagliflozin) and cardiac drugs (Apixaban, Edoxaban, Rivaroxaban, Ticagrelor, Bempedoic acid). Resmetirom (for non-alcoholic fatty liver) developed and filed with DCGI for bioequivalence studies – a first for Morepen.
- Quote: “We have launched for the first time in the country, resmetirom, not launched, I would say, we have sent it to DCGI for approval.”
- Formulations: Launch of new Rx products leveraging in-house APIs (Ticapen, Apixamore, Empamore). OTC expansion with brands like LightLife (weight loss, online), protein supplements.
- Medical Devices: Launched ortho supports. Expanding international presence (Thailand, Qatar, Oman launched; US launch via Amazon.com planned for next quarter).