Lupin beat expectations on Wednesday as fourth-quarter net profit more than doubled year-on-year to Rs 408 crore, spurring the stock to a 52-week high of Rs 738.80.
Speaking to CNBC-TV18, Kamal Sharma, MD, Lupin says that the boost to EBITDA margins, the overall control on quality and the ability to lower costs aided strong quarterly performance.
The Mumbai-based company's net sales gained 35 percent to Rs 2,537 crore. EBITDA increased 75 percent to Rs 665 crore and operating-profit margins jumped 610 bps to 25.5 percent during the quarter. The company's earnings were cemented by strong growth in US and Europe formulations sales (up 49 percent to Rs 1,212 crore). US revenue was up 33 percent to USD 205 million last quarter. Below is an edited transcript of the interview on CNBC-TV18 Q: How did you manage to double your profit and strengthen earnings?
A: We worked hard to achieve our first target pushing EBITDA margins up to 25 percent. from levels of around 18 percent. After that we focused on managing levels of quality across the business and this resulted in higher margins and the ability to manage costs. Also Read: Pharma sector will outperform broader markets: IIFL
We used Lean Six Sigma techniques through the supply chain matrix which brough costs down by about three percent. I hope the momentum will stay and margins continue to improve further.
So the three-percent improvement on Rs 9,600 crore base boosted EBITDA margins in this particular quarter and the year from 21-20 percent till last year to over 24 percent this year. Q: Will you be able to sustain a performance of this kind?
A: Obviously. Our year-on-year growth is 51 percent. So if sales has grown 37 percent and net profit has grown 51 percent - that’s a healthy matrix. Ideally speaking, if profits can grow little ahead of sales, it is very welcome. Least to say, they should grow in tandem.
This quarter is an exception because we had certain profits lying in the inventory last year which we did not account for in our actual reporting. Therefore, when you compare from the PAT of Q4 this year, you would see that huge jump of 162 percent. But I think 51 percent itself is a very handsome growth on profit.
There is one more trend that one must not lose sight of and that is the gradual improvement of EBITDA. Ten years ago, the EBITDA was 13-14 percent.
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