Pharma company Granules India has reported a 6.16 percent year-on-year growth in Q3FY20 profit at Rs 64.03 crore, impacted by an impairment loss of Rs 32 crore in Granules-Biocause Pharmaceutical, which is now being sold by the company.
"The divestment of Granules Biocause, a joint venture company located in China, has progressed further with a one-time provision charged for impairment of Rs 32.03 crore provision taken in Q3FY20," company said in its BSE filing.
Revenue from operations in Q3 grew 11.4 percent YoY to Rs 704 crore. Operating numbers were very strong as earnings before interest, tax, depreciation and amortisation (EBITDA) surged 44 percent YoY to Rs 163.15 crore and margin expanded to 23.17 percent (from 17.93 percent) in Q3.
Here are key highlights from Granules India's conference call by Narnolia Financial Advisors:
Management Participants: C Krishna Prasad - Chairman and MD, Priyanka Chirugupati - Executive Director
The overall sales for Q3FY20 grew by 11 percent YoY and remained flat sequentially at Rs 704 crore.
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The 5 core molecules of the company contributes around 85 percent of the overall revenue. The formulations sales grew by 23 percent YoY to Rs 379 crore majorly on account of Ritalin ramp up.
The gross margin for the quarter increased by 755 bps YoY to 50.7 percent on account of increased revenue from GPI, better product mix and contribution from the new API facility in Vizag.
EBITDA margin for the quarter increased by 524 bps YoY to 23.3 percent on account of positive contribution at the gross margin levels and minimal increase in the fixed operational expenses.
PAT for the quarter grew by 6 percent YoY to Rs 64 crore, adjusted for the one time exceptional item of Rs 32 crore provided for impairment in Biocause, the PAT grew by 59 percent.
The company expects a cash flow of around Rs 200 crore from the sale of both its JV, and based on that the board has approved a buyback proposal of Rs 200 per share at total value of Rs 250 crore.
The free cash flow (FCF) for the quarter stood at Rs 59 crore; for the 9MFY20, the FCF stood at Rs 155 crore compared to Rs (-38) crore in March 2019.
The gross debt as on December 2019 stood at Rs 902 crore as compared to Rs 1,040 crore at the end of Q3FY19. The R&D spends expensed for the quarter stood at Rs 22 crore (3 percent of sales).
The company has received 3 ANDA approvals and has filed 2 ANDAs this quarter. As on December 2019, there are 19 ANDAs awaiting approvals.
GPI- the revenues increased by 11 percent YoY to Rs 88.72 crore, EBITDA stood at Rs 19.38 crore and PAT Rs 3.45 crore.
The major focus of the company would be on improving the FCF and ROCE.
The company’s major focus would be on the bottom line which is expected to be driven by better product mix, new launches from GPI, and contribution from the new facility in Vizag and Metformin facility and new Oncology facility (yet to be commercialized).
The Vizag facility has been commissioned, and is expected to break-even in FY21 and contributes meaningfully from FY22.
Guidance:
EBITDA - 21 percent + sustainable.
20-25 product filings in the next 2-3 years.
Revenue CAGR 20 percent, PAT CAGR 25 percent and ROCE of 20 percent+ in the next 2-3 years.
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