COHANCENSEQ1 FY23June 30, 2022

Cohance Lifesciences Limited

6,178words
110turns
13analyst exchanges
1executives
Management on call
Venkatraman Sunder
Vice President, Corporate
Key numbers — 35 extracted
rs,
. Venkat Jasti, the Managing Director and Mr. Venkatraman Sunder – Vice President, Corporate Affairs, and Mr. Subba Rao, CFO of the Company. Before we begin, I would like to mention that some statemen
Rs. 200 crore
, but it is still continuing. Sudarshan P: My second question is we are embarking on this capex Rs. 200 crore annually and that has also, you had mentioned that one of the specialty chemicals post the commer
Rs. 120 crore
revenues were because of the spike which would not be available this year? Venkat Jasti: About Rs. 120 crore. Ankush Agarwal: Which quarters we saw that impact because I remember last quarter of Q4 FY2022
40%
pact because I remember last quarter of Q4 FY2022 asking you this question is the higher growth of 40% that we were seeing for last two quarters if that had some impact of COVID, but you mentioned at t
Rs. 300 crore
four, five years some guidance on that? In one of the interviews you mentioned that it could be a Rs. 300 crore? Venkat Jasti: While the year 25-26 comes it will be around Rs. 300 to 400 crore we expect the
Rs. 300
ed that it could be a Rs. 300 crore? Venkat Jasti: While the year 25-26 comes it will be around Rs. 300 to 400 crore we expect the formulation business to derive. Ankush Agarwal: Just a clarification
400 crore
could be a Rs. 300 crore? Venkat Jasti: While the year 25-26 comes it will be around Rs. 300 to 400 crore we expect the formulation business to derive. Ankush Agarwal: Just a clarification lastly on t
30%
ok at Q1 number currently versus last year’s Q1 we have done fairly well, and we have grown around 30% year-on-year so just wanted to have a sense on that? See we cannot compare say like the generic
20 million
it Shah: My last question is how much there is cash in books lie after paying off Casper around $20 million? Sunder Venkatraman: We have Rs. 380 crores now. Moderator: The next question is from the lin
Rs. 380 crore
ere is cash in books lie after paying off Casper around $20 million? Sunder Venkatraman: We have Rs. 380 crores now. Moderator: The next question is from the line of Abdulkader Puranwala from Elara Capital.
Rs. 210 crore
From the last two quarters, if I just look at the quarterly sales and revenues, we are at close to Rs. 210 crore so since just to better understand best sort of a revenue available whether it is for chemical mo
10%
ader P: Venkat Jasti: Secondly on your guidance so earlier you have been guiding for a mid-teen 10% to 15% growth so are we still maintaining that on the Rs. 120 crore base value you have or exclud
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Guidance — 20 items
Venkat Jasti
opening
“As I was telling you last year results are because of the COVID related activity and all the stuff, this year will be a transformation year because the global innovators themselves are now coming back to the original role of inventing molecules for all other diseases rather than concentrating only on COVID molecules.”
Venkat Jasti
opening
“So, there will be a small gap, and because I only have six months' visibility, I can tell you right now that whatever we deliver will be similar to last year's performance filling in the gaps of those lost to COVID.”
Venkat Jasti
opening
“So the revenue accretion will take place only post that and another ten will be filed within this year and so the revenue generation from Casper will happen in 2023-2024 timeframe.”
Venkat Jasti
opening
“As I was telling you getting the new projects is a little bit slower because of the transformation process from the big pharma and we will know by November- December timeframe when the new budgets are taken care of by the pharma then this will be based on the talks we have with the customer as it will be coming back to the normal and we do have a good traction in the CDMO.”
Sudarshan P
qa
“So if you can give some color, I mean, I am not talking about on a quarter-to-quarter basis, but when we take say the next two to three years, as we talked about Casper is gaining some momentum going forward say from FY2024, but specifically from the pharma CRAMS and specialty CRAMS, how do we see the commercialization gathering momentum especially in the light of capex?”
Venkat Jasti
qa
“But in general the seamless transitionary projects are happening and with the new budgets coming in at the end of the year by the R&D focus and going forward with all the other indications and the COVID and based on the talks we had that it is naturally the traction and hopefully the success of the molecules that the clinical trail will give.”
Venkat Jasti
qa
“So number of molecules has no meaning because it is only the mix and match it is the one that gives us some sense and also the continued revenue generation from the ordinary market products but giving you a guidance based on how many will convert and all that the stuff is as very big task and we do not have a clear picture on that neither do my customers.”
Venkat Jasti
qa
“See we are not going after the big blockbusters, we keep telling you, I mean these are the niche molecules and they are small volume molecules, and the total number will be filed by 14 to 15 in Casper itself.”
Ankush Agarwal
qa
“What do we think Casper would bring for Suven in three, four, five years some guidance on that?”
Venkat Jasti
qa
“While the year 25-26 comes it will be around Rs.”
Risks & concerns — 5 flagged
Which quarters we saw that impact because I remember last quarter of Q4 FY2022 asking you this question is the higher growth of 40% that we were seeing for last two quarters if that had some impact of COVID, but you mentioned at that time you know that this is broadly not COVID led growth this is largely organic growth.
— Ankush Agarwal
And one maybe before that, so at this time it is very difficult for me estimate because until we get into the year or two before we can not give you a quantification.
— Venkat Jasti
So we have dispensed away with that, it is a very difficult thing for us to tell which one gives you this and which one is going to give you that and in which phase.
— Venkat Jasti
So it is really difficult for us that is why we are doing a combined activity in the CRAMS so both commercial and the pre-clinical.
— Venkat Jasti
It keeps changing and why restrict to one year because every year, every quarter it keeps changing because if I supply a commercial market to the same customer he will be number one customer that quarter and then there will be a gap of six months to nine months then again it will come so it is very difficult it is out of the top six people it keeps changing number one and two and only specialty chemical is completely always is number one.
— Venkat Jasti
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Q&A — 13 exchanges
Q
The first question is from the line of Sudarshan Padmanabhan from JM PMS. My question is on the cost as you had talked in the first quarter and also in the opening commentary that raw material cost, the solvent cost as well as the transportation cost being higher. My question to you is when you are looking at it from a trajectory perspective how does the cost look when we are in the second quarter, have we seen some kind of cost coming off and how are we placed on this side?
Venkat Jasti
Not that much difference we see, I mean, whatever it is tapered down compared to earlier quarters, but it is still continuing. My second question is we are embarking on this capex Rs. 200 crore annually and that has also, you had mentioned that one of the specialty chemicals post the commercialization later this year a bunch of pharmaceutical CRAMS products which are in the late stages can get into commercial. So if you can give some color, I mean, I am not talking about on a quarter-to-quarter basis, but when we take say the next two to three years, as we talked about Casper is gaining some m
Q
Firstly, in your opening comment, you mentioned that last year we had some COVID led extra revenues and this year the organic growth would largely lead to filling up the revenues that would not be there. So would it be able to quantify how much of FY2022 revenues were because of the spike which would not be available this year?
Venkat Jasti
About Rs. 120 crore. Which quarters we saw that impact because I remember last quarter of Q4 FY2022 asking you this question is the higher growth of 40% that we were seeing for last two quarters if that had some impact of COVID, but you mentioned at that time you know that this is broadly not COVID led growth this is largely organic growth. So what changed that? No it was all the quarters and the third and fourth quarters are a little bit higher especially fourth quarter but what I am saying is the organic growth will fill that gap that is what based on the exiting orders and also based on the
Q
Congratulations for the good results for this quarter. Sir you quantified that around Rs. 120 crore last year was due to this COVID drug. Could you tell us roughly how much was if at all it was in this Q1 if there is any contribution for the COVID drug? We are not giving drug by drug that’s why we are only giving you the combined because it does not make sense to give something which is not going to be repeated and then again people just put in Excel sheets, compare and then we will not be able to meet that. So the best thing is to give you the combined because especially the COVID related dru
Venkat Jasti
We are restarting that activity with our customers the travels has not started yet and the activity which we are starting now hopefully will culminate into their trial in India so that they can start the activity. So we have started all over again. But do you see this to be a very good opportunity that you can materialize over next two, three years? Yes, it takes a lot even for any change with the innovator it takes at least minimum of three years before you see any tactical research, so we hope, unfortunately when we started this activity way back because in 2019 and in 2020 we came in and we
Q
My first question is on the CDMO side. From the last two quarters, if I just look at the quarterly sales and revenues, we are at close to Rs. 210 crore so since just to better understand best sort of a revenue available whether it is for chemical molecules which are driving the things or there are some traction what you have seen on the commercial side again, I am not thinking of any specific numbers but directionally if you could tell it would be useful?
Venkat Jasti
It is a combination. It is a 60/40 tilting towards the commercial. Secondly on your guidance so earlier you have been guiding for a mid-teen 10% to 15% growth so are we still maintaining that on the Rs. 120 crore base value you have or excluding that we are maintaining the guidance? No, as I mentioned in my earlier opening statement, last year which is because of COVID which is to the tune of Rs. 120 crore, filling that gap itself on organically is a challenge for us and we are hoping that it will be done but 10% to 15% growth we have not given this time because as I said this is a transformat
Q
My question again on CRAMS business can you give us the total number of molecules can you give the breakup in phase one, phase two and phase three currently we have?
Venkat Jasti
As we have stopped giving you that breakup because the numbers are not giving you the right indication because if I give you as I was telling earlier if I have 100 but I believe generally it is only 120 so the number has no meaning. So we have dispensed away with that, it is a very difficult thing for us to tell which one gives you this and which one is going to give you that and in which phase. Because there is a gap for everything from phase one to phase two it is a year gap and phase two to phase three is a year and a half to two-year gap, three to the last it is a three-year gap all these
Q
One question on the formulation business, your annual report mentions about four wheels that you are putting in there and you also are mentioning that once we have start to improve well there would be a significant growth and it will be a profitable driver. So can you give us some sense which year are we looking at that all these products will start to do well is it like FY2025-2026 any broad idea you can give?
Venkat Jasti
As I said by the time 2025-2026 comes in, we should have about Rs. 300 crore to 400 crore on both sale plus profitability numbers put together. I thought Rs. 300, 400 crore you are seeing on only Casper that is including Suven’s growth for all. See the Casper has not yet started. We are putting together. Secondly you have mentioned about new service offering for forward integration and lifecycle management for the existing clients can you give us some more perspective on that? As I said we started this activity way back in 2019 and there is somehow two customers they are showed willingness and
Q
Just a bookkeeping question from my end what would be the revenue contribution from top two customers in FY2022?
Venkat Jasti
It keeps changing and why restrict to one year because every year, every quarter it keeps changing because if I supply a commercial market to the same customer he will be number one customer that quarter and then there will be a gap of six months to nine months then again it will come so it is very difficult it is out of the top six people it keeps changing number one and two and only specialty chemical is completely always is number one. Sir I was specifically asking for this because in this year in your annual report, you had mentioned? I am not going to give you breakup for the customer to
Q
Just one clarification; just like the last year you said that in pharma CDMO there is Rs. 120 crore of one off this quarter with the Rs. 210 crore is there any one off or this is like the base.
Venkat Jasti
Yes, a small amount of one off is there. And last question on the Rs. 600 crore that you said this can you give the Rs. 200 crore in replacement? So from this Rs. 600 crore we have, out of that Rs. 400 crore is repalcemnt on capex - one is for the Suryapet block is Rs. 200 crore and when we have do more we went to the R&D then that will be for Rs. 200 crore that can be next year or a year after. The other Rs. 200 crore is only mainly for the technologies and for the additional block at Pashamylaram as and when we see the traction, we have to do proactively ahead of time that most probably will
Q
Just one question on the formulation business which you are saying that by 2025 it become a Rs. 300 to 400 crore of the topline so just wanted to also understand how the margin profile would look of this is it would it be in line with what the company level margin? some color on that would be helpful.
Venkat Jasti
Yes, I want to give a clarification to everyone that is unlike the true generic formation this is like a CDMO activity for us, and our margins is almost in the same level as not of the full CRAMS but in-between the specialty chemicals and CRAMS.
Q
Good set of numbers. Just two questions actually something related to the previous one only. The Casper business which you earlier had indicated that it is relatively lower margin compared to our base business so will FY2024 actually be given whatever scale up happens will it impact the weighted average margin at the company level, or the business will still be small enough that the overall margin may not impact so much. It will not impact as far as we are concerned that is what our guestimate is that only time will tell but as of now we are based on the whatever little experience we have at t
Mayur Parkeria
But no major impact on the capacity currently has because of that is that right. Replacement means we are going to replace this block only when once this is in place the other one will be taken off.
Q
Sir again just clarifications you just mentioned that the formulations margins will be somewhere between the specialty chemicals and pharmaceuticals did I heard that right.
Venkat Jasti
Yes. But going back again to what you said in Q4 FY2022 that formulation margin will come around 25% EBITDA margin so again there is a difference between what you had said earlier and what you are saying now. You only heard this right but after that I also came back and said that at my initial guestimate is wrong because I would not have much experience on this side and now that we have some experience on the probability we have toned it down that number not at 25% of the total volume that last time itself I said not with this time. No you said 25% margins, I am not saying volume. I do not kno
Q
Just one clarity, on ANDA filing you indicated that total 40 ANDA would be filed by end of FY2023 so just wanted to understand that?
Venkat Jasti
Together both in Suven and Casper put together. I wanted to understand whether that all the ANDA would be partnered or there would be some of them directly will be selling? No I have six customers already including rising so the bulk of it will be for the rising because all the Casper things will be for rising as you know and in Suven it is spread out to all the other people also. So rising is not the only path, I think? As per Casper it is rising by only one but in Suven six customers are there already. Okay so for example if 20 ANDA it is filed by Casper that all 20 ANDA will go to rising ph
Q
Thank you, everyone for tuning in for Q1 results of Suven Pharmaceuticals Limited. As I said, last year was a good year and there are some one offs and those one offs gaps will be filled organically this year but the transformation at the customer level and also the transformation from the COVID led to other growth. We are not able to give you any additional guidance rather than meeting the last year’s numbers. Hopefully, I will be able to give you some guidance at the end of this quarter and hope to surpass the last year’s numbers. I thank you again for tuning in and we will talk to you in th
Management
Speaking time
Venkat Jasti
48
Moderator
14
Rashmi Sancheti
11
Ankush Agarwal
10
Sachin Kasera
7
Ranveer Singh
4
Sudarshan P
3
Darshit Shah
3
Dheeresh Pathak
3
Abdulkader P
2
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Opening remarks
Rishab Barar
Good day everyone and thank you for joining us on this call to discuss the Q1 FY23 earnings for Suven Pharmaceuticals. We have with us Mr. Venkat Jasti, the Managing Director and Mr. Venkatraman Sunder – Vice President, Corporate Affairs, and Mr. Subba Rao, CFO of the Company. Before we begin, I would like to mention that some statements made in today's involve risks and discussion may be uncertainties. Documents relating to the Company's performance have been mailed to you earlier. in nature and may forward-looking
Venkat Jasti
I now request Mr. Jasti to share his perspectives on the performance and outlook. Over to you, Sir. Thank you, Rishab. Thank you everyone for tuning in and good evening to all. As you know, Suven results will not be comparable quarter-on-quarter basis, because of volatility and the nature of the business. If you see on a quarter-on-quarter basis there is less growth in revenue. But compared to the last year same quarter we might see a better growth in terms of revenue, EBITDA, profitability and on all aspects. Last year was a very good year for us, as you know some of these old molecules which were repurposed for the COVID as inspirational sales. Also there is one other COVID molecule which was launched by the global innovator. So, those sales were there. As you know, because it was the pandemic, you may not get that every year and that maybe considered as a one-off thing, but filling that gap we feel itself is going to be a task for us. We are hopeful to meet the numbers delivered las
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