IPCALABNSEQ3 FY25February 18, 2025

IPCA Laboratories Limited

20,413words
147turns
14analyst exchanges
3executives
Management on call
Ajit Jit Kumar Jain
MANAGING DIRECTOR
Harish Ompany Secretary
IPCA LABORATORIES COMPANY ABORATORIES IMITED LIMITED
Nitin Itin Agarwal
DAM CAPITAL ADVISORS DVISORS LIMITED IMITED
Key numbers — 40 extracted
13%
-- a growth of around The domestic formulation business has delivered around a growth of around 13% for the is ranked as 16th company as per IQVIA and its fastest quarter. On MAT December '24, Ipc
2.05%
MAT market basis point improvement in market share in this particular qu share at December '23 to 2.05% on MAT December current financial year. share at December '23 to 2.05% on MAT December current fin
7.4%
market segment, we are delivering better growth pharma market in this quarter has grown by around 7.4%. IQVIA is tracking our growth at pharma market in this quarter has grown by around 7.4%. IQVIA is
6%
rown by around 7.4%. IQVIA is tracking our growth at On acute segment, market has grown by around 6%. Our growth is tracked by IQVIA 11.4%. On acute segment, market has grown by around 6%. Our growth
11.4%
ng our growth at On acute segment, market has grown by around 6%. Our growth is tracked by IQVIA 11.4%. On acute segment, market has grown by around 6%. Our growth is tracked by IQVIA On acute segment,
8.7%
ent, market has grown by around 6%. Our growth is tracked by IQVIA nd in this period, we have as 8.7%. And on chronic segment, IPM growth is around 9.7% and in this period, we have as 8.7%. And on chr
9.7%
racked by IQVIA nd in this period, we have as 8.7%. And on chronic segment, IPM growth is around 9.7% and in this period, we have as 8.7%. And on chronic segm grown by around 17.1%. grown by around
17.1%
PM growth is around 9.7% and in this period, we have as 8.7%. And on chronic segm grown by around 17.1%. grown by around 17.1%. Overall, our formulation business has delivered a growth of around 6% for
12%
ered a growth of around 6% for the quarter and API business has also delivered a growth of around 12% for the quarter. If you look at our business has also delivered a growth of around 12% for the qua
24.25%
a growth of around 12% for the quarter. If you look at our FY '25 EBITDA margin, it is at around 24.25% as against 18.52% in Q3 FY standalone Q3 FY '25 EBITDA margin, it is at around 24.25% as against 1
18.52%
d 12% for the quarter. If you look at our FY '25 EBITDA margin, it is at around 24.25% as against 18.52% in Q3 FY standalone Q3 FY '25 EBITDA margin, it is at around 24.25% as against 18.52% in Q3 FY st
5.73%
tandalone Q3 If you look at 9 months basis, we have '24. There is an improvement of almost around 5.73%. If you look at 9 months basis, we have '24. There is an improvement of almost around 5.73%. deli
Guidance — 20 items
A.K. Jain
opening
“And overall guidance for the year was ut for whole of our financial year our EBITDA is likely to remain in the range around 21%, but for whole of our financial year our EBITDA is likely to remain in the range around 21%, b of around 23% to 24%.”
A.K. Jain
opening
“So both on standalone and consolidated EBITDA margins are better than our guidelines for FY25.”
Surya Narayan Patra
qa
“busine or in the light of that, are you going to give an upgraded guidance for Unichem?”
Surya Narayan Patra
qa
“Because -- or in the light of that, are you going to give an upgraded guidance for Unichem?”
A.K. Jain
qa
“So there will be almost around INR80 crore 80 crores kind of -- INR75 crores to 80 crores kind of decline in South Africa business because of some tender 75 crores to INR80 crores kind of decline in South Africa business because of some tender orders are lost and all those kind of things are there.”
A.K. Jain
qa
“t year's plan, and there will be significant improvements are likely But we are working on next year's plan, and there will be significant improvements are likely But we are working on nex to be there in South Africa business in the next financial year.”
A.K. Jain
qa
“So there will be continuous of those materials, the cost of API production will go down.”
A.K. Jain
qa
“So there will be continuous of those materials, the cost of API production will go down.”
A.K. Jain
qa
“So there will be continuous improvements will happen in Unichem's operation further.”
A.K. Jain
qa
“But I would say that the margins are improving and will continue to improve, but the guidelines we will be able to give margins are improving and will continue to improve, but the guidelines we will be able to give margins are improving and will continue to improve, but the guidelines we will be able to give along with our annual results.”
Risks & concerns — 13 flagged
aids to the various programs the impact of that.
— A.K. Jain
So currently, we have not heard from any are still assessing their -- the impact of that.
— A.K. Jain
So how much of that will impact, right now it's So that business is around difficult to say, but yes, that is the number which we have, which is relating to the U.S.
— A.K. Jain
aids difficult to say, but yes, that is the number which we have, which is relating to the U.S.
— A.K. Jain
aids difficult to say, but yes, that is the number which we have, which is relating to the U.S.
— A.K. Jain
So there will be almost around INR80 crore 80 crores kind of -- INR75 crores to 80 crores kind of decline in South Africa business because of some tender 75 crores to INR80 crores kind of decline in South Africa business because of some tender orders are lost and all those kind of things are there.
— A.K. Jain
Sir, secondly, just on the API products portfolio level, is the inventory now more or less Sir, secondly, just on the API products portfolio level, is the inventory now more or less Sir, secondly, just on the API products portfolio level, is the inventory now more or less getting normalized at industry level or we are still seeing pricing pressure?
— Tushar
getting normalized at industry level or we are still seeing pricing pressure?
— Tushar
Somewhere some solvent prices Right now, we have not noticed any kind of pricing pressure.
— A.K. Jain
Also considering the concern of the tariff and all that, so how should one really position about Unichem's larger concern of the tariff and all that, so how should one really position about Unich concern of the tariff and all that, so how should one really position about Unich portion of the business, which is U.S.?
— Surya Narayan Patra
So only Pisgah and Krebs are little cause of concern.
— Harish Kamath
So only Pisgah and Krebs are little cause of concern.
— Harish Kamath
And as far as the new product offerings are So we are not seeing any kind of challenge.
— A.K. Jain
Q&A — 14 exchanges
Q
Congratulations for the good set of numbers, sir. My first question is on the gross margin, sir. Congratulations for the good set of numbers, sir. My first question is on the gross margin, sir. Congratulations for the good set of numbers, sir. My first question is on the gross margin, sir. the quarter, what we are witnessing is in the gross margins. So I think the positive surprise in the quarter, what we are witnessing is in the gross margins. So I think the positive surprise in And if I see this is one of the highest ever gross margin number that we have seen for the And if I see this is one
A.K. Jain
articular quarter was exceptionally high mainly because the overall, See, gross margin this particular quarter was exceptionally high mainly because the overall, See, gross margin this p let's say, turnover in this quarter has grown by around 10%. Material cost, there is a significant let's say, turnover in this quarter has grown by around 10%. Material cost, there is a significant let's say, turnover in this quarter has grown by around 10%. Material cost, there is a significant reduction, against 10% growth, material cost has come down by around 5%. So that is the reduction, against 10% growt
Q
Firstly, congratulations on a great set of numbers, essentially with respect to the margins. My Firstly, congratulations on a great set of numbers, essentially with respect to the margins. My Firstly, congratulations on a great set of numbers, essentially with respect to the margins. My first question is with respect to generics. This quarter, there was a slight bit of weakness. Could first question is with respect to generics. This quarter, there was a slight bit of weakness. Could first question is with respect to generics. This quarter, there was a slight bit of weakness. Could ehind that k
A.K. Jain
By and large, this lower generic numbers are mainly because of South Africa. We were doing By and large, this lower generic numbers are mainly because of South Africa. We were doing By and large, this lower generic numbers are mainly because of South Africa. We were doing in South Africa in a year. I think this year, the number a business of around INR120 crores in South Africa in a year. I think this year, the number a business of around maybe around round INR40 crores-or-so. So there will be almost around INR80 crore 80 crores kind of -- INR75 crores to 80 crores kind of decline in South Afr
Q
Sir, just extending your comment now with backward integration of Unichem's formulations Sir, just extending your comment now with backward integration of Unichem's formulations Sir, just extending your comment now with backward integration of Unichem's formulations and subsequently, chronic share increasing in India formulation business. Qualitatively, at and subsequently, chronic share increasing in India formulation business. Qualitatively, at and subsequently, chronic share increasing in India formulation business. Qualitatively, at ould share, compared to FY '25 consol EBITDA margin, what
A.K. Jain
So right now, the budget exercise is going on. So once the budget numbers are finalized and So right now, the budget exercise is going on. So once the budget numbers are finalized and So right now, the budget exercise is going on. So once the budget numbers are finalized and overall -- so normally, we give those kind of guideli so normally, we give those kind of guidelines along with our -- the first quarter the first quarter -- last quarter results. So around that time, we will give the guidelines. But I would say that the quarter results. So around that time, we will give the guidelines. But
Q
the EU and the U.K. market? Sir, on the generic business, sir, can you provide an update on the EU and the U.K. market? Sir, on the generic business, sir, can you provide an update on How have they sort of done so far in 9 months and how are you looking at it going forward? How have they sort of done so far in 9 months and how are you looking at it going forward? How have they sort of done so far in 9 months and how are you looking at it going forward?
A.K. Jain
Overall, U.K. was also very fiercely competitive market. So overall, I think U.K. numbers are Overall, U.K. was also very fiercely competitive market. So overall, I think U.K. numbers are Overall, U.K. was also very fiercely competitive market. So overall, I think U.K. numbers are ith what we had previous year 9 months. So it has not grown. muted more or less in the line with what we had previous year 9 months. So it has not grown. muted more or less in the line w we had good growth in EU. So around 14%, 15% is the overall growth there. EU numbers is -- we had good growth in EU. So around 14%,
Q
Yes, sir. So this is an extended question about APIs. In fact, sir, API export particularly, that Yes, sir. So this is an extended question about APIs. In fact, sir, API export particularly, that Yes, sir. So this is an extended question about APIs. In fact, sir, API export particularly, that us for a longer period of time because of our cost was one of the key earning driver also for us for a longer period of time because of our cost was one of the key earning driver also for effectiveness there. But if I see that, okay, during the COVID period, the kind of run rate, what effectiveness there.
A.K. Jain
the API business buildup was around chloroquine Let's say, on COVID period, the major -- the API business buildup was around chloroquine Let's say, on COVID period, the major and hydroxychloroquine because they were required for COVID and that has also came with and hydroxychloroquine because they were required for COVID and that has also came with and hydroxychloroquine because they were required for COVID and that has also came with good pricing and all. So that has given overall high numbers around that time. And good pricing and all. So that has given overall high numbers around that good
Q
Sure.
Management
Q
Sir, the first question is on the gross debt levels. If you could give out the gross debt levels and Sir, the first question is on the gross debt levels. If you could give out the gross debt levels and Sir, the first question is on the gross debt levels. If you could give out the gross debt levels and hould we think of it going ahead? how should we think of it going ahead?
A.K. Jain
900 crores in the balance sheet for Ipca standalone. Overall, I think gross debt is around INR900 crores in the balance sheet for Ipca standalone. Overall, I think gross debt is around And we have almost around INR600 crores of cash. So net of cash, we have around And we have almost around 600 crores of cash. So net of cash, we have around INR300 cash what is available with us. And I think next financial year, crores kind of debt overall, cash what is available with us. And I think next financial year, crores kind of debt overall, practically that number will become nil because debt repayment
Q
Congrats on a good set of numbers. My first question is on the U.S. portfolio for Ipca that's Congrats on a good set of numbers. My first question is on the U.S. portfolio for Ipca that's Congrats on a good set of numbers. My first question is on the U.S. portfolio for Ipca that's going to be marketed by Unichem. What is the potential revenue opportunity for you over the going to be marketed by Unichem. What is the potential revenue opportunity for you over the going to be marketed by Unichem. What is the potential revenue opportunity for you over the next 3 to 5 years as per your own estimati
Harish Kamath
'13, when exchange rupee- See, before our U.S. FDA issue started, maybe in the year 2012-'13, when exchange rupee See, before our U.S. FDA issue started, maybe in the year 2012 formulation business with about 10 dollar was about INR60, we did about INR250 crores formulation business with about 10 dollar was about e have just manufactured and shipped 4 products. Few products. So out of those 10 products, we have just manufactured and shipped 4 products. Few products. So out of those 10 products, w other products are on the verge of getting manufactured. So gradually, we will build our other pro
Q
Sir, just again on Unichem, given that they are also now primarily into U.S. business and Ipca Sir, just again on Unichem, given that they are also now primarily into U.S. business and Ipca Sir, just again on Unichem, given that they are also now primarily into U.S. business and Ipca also has. So any thoughts on sort of merging Unichem along with Ipca? also has. So any thoughts on sort of merging Un
Harish Kamath
No, no. There is no currently any such plans. But the product folio of Unichem and Ipca except No, no. There is no currently any such plans. But the product folio of Unichem and Ipca except No, no. There is no currently any such plans. But the product folio of Unichem and Ipca except few products which are common, rest are all different products. And as Mr. Jain has said, we few products which are common, rest are all different products. And as Mr. Jain has said, we few products which are common, rest are all different products. And as Mr. Jain has said, we ake their products to other markets
Q
And with respect to margins at standalone level, just wanted to understand going ahead, how And with respect to margins at standalone level, just wanted to understand going ahead, how And with respect to margins at standalone level, just wanted to understand going ahead, how I mean, are there any other, as you said raw materials, we did not get much of but do we -- I mean, are there any other, as you said raw materials, we did not get much of but I mean, are there any other, as you said raw materials, we did not get much of but you're saying it's only by the mix. So how do you look at going ah
Harish Kamath
Other than material cost, there was some increase in manpower cost because of addition of Other than material cost, there was some increase in manpower cost because of addition of Other than material cost, there was some increase in manpower cost because of addition of people. So as you recollect, the last 1, 1.5 years, we have added a lot of people in the domestic people. So as you recollect, the last 1, 1.5 years, we have added a lot of people in the domestic people. So as you recollect, the last 1, 1.5 years, we have added a lot of people in the domestic market. Now they are slowly becoming
Q
alone basis, you are already 23%, 24%. Would On the EBITDA margin front, I think on a standalone basis, you are already 23%, 24%. Would On the EBITDA m ess margins are materially higher, if you can give it be fair that presume the domestic business margins are materially higher, if you can give it be fair that presume the domestic busin some color given the fact that the employee productivities are rising, raw material prices have some color given the fact that the employee productivities are rising, raw material prices have some color given the fact that the employee productivities are rising
Harish Kamath
See, Mr. Jain has already explained, the major reason for this number is because of product See, Mr. Jain has already explained, the major reason for this number is because of product See, Mr. Jain has already explained, the major reason for this number is because of product mix change. So if you see business wise, there is hardly any change in whatever we have been mix change. So if you see business wise, there is hardly any change in whatever we have been mix change. So if you see business wise, there is hardly any change in whatever we have been wise, there are different elling from the beg
Q
Sir, in the second quarter, you had mentioned that there was some U.S. sales at Ipca level that Sir, in the second quarter, you had mentioned that there was some U.S. sales at Sir, in the second quarter, you had mentioned that there was some U.S. sales at was shipped out, but not booked. Have we booked those sales this quarter? was shipped out,
Harish Kamath
Sorry, you're not audible now, Harsh. What was your question? Sorry, you're not audible now, Harsh. What was your question? So we were saying that there were some U.S. sales in second quarter that were not booked, So we were saying that there were some U.S. sales in second quarter that we So we were saying that there were some U.S. sales in second quarter that we but not booked in the second quarter. Those sales have been booked in they were shipped out, but not booked in the second quarter. Those sales have been booked in they were shipped out, the third quarter? the third quarter? You are no
Q
So sir, we have done phenomenally well in the past years in domestic business. So how do you So sir, we have done phenomenally well in the past years in domestic business. So how do you So sir, we have done phenomenally well in the past years in domestic business. So how do you see this business behaving as compared to IPM in the at least next 2, 3 years, if you talk a bit see this business behaving as compared to IPM in the at least next 2, 3 years, if you talk a bit see this business behaving as compared to IPM in the at least next 2, 3 years, if you talk a bit about it?
Harish Kamath
So more or less, whatever our growth, 1.5x IPM growth, hopefully, we should continue with So more or less, whatever our growth, 1.5x IPM growth, hopefully, we should continue with So more or less, whatever our growth, 1.5x IPM growth, hopefully, we should continue with that coming few years. that coming few years. And how big our pain management therapy would be in the overall business? And how big our pain management therapy would be in the overall business? And how big our pain management therapy would be in the overall business? About 52%. Sir, somewhere the largest product would be Zerodol
Q
. I don't think there is No, more or less most of the areas we have covered in the con call. I don't think there is No, more or less most of the a anything further to be added. Thank you. Thank you all the participants. Thank you very much. anything further to be added. Thank you. Thank you all the participants. Thank you very much. anything further to be added. Thank you. Thank you all the participants. Thank you very much.
Management
Speaking time
A.K. Jain
37
Harish Kamath
25
Moderator
16
Shiva
12
Surya Narayan Patra
10
Tushar
10
Nitin Agarwal
9
Gagan Thareja
7
Bharat
7
Pulkit Singhal
6
Opening remarks
Nitin Agarwal
Thank you, Muskan. Good afternoon, everyone, and a very warm welcome to Ipca Lab's Q3 F Thank you, Muskan. Good afternoon, everyone, and a very warm welcome to Thank you, Muskan. Good afternoon, everyone, and a very warm welcome to '25 Post Results Earnings Call On the call today, Post Results Earnings Call hosted by DAM Capital Advisors Limited. On the call today, Jain, Managing Director and Mr. we have representing Ipca Lab management, Mr. Ajit Kumar Jain, Managing Director and Mr. we have representing Harish Kamath, Corporate Counsel & Company Secretary . I will hand over the call to Mr. Jain Kamath, Corporate Counsel & Company Secretary. I will hand over the call to Mr. Jain to make the opening comments and then we'll open the floor for questions. Please go ahead, to make the opening comments and then we'll open the floor for questions. Please go ahead, to make the opening comments and then we'll open the floor for questions. Please go ahead, sir.
A.K. Jain
Thanks, Nitin and DAM Capital for organizing this call. Today's call and discussions and Thanks, Nitin and DAM Capital for organizing this call. Today's call and discussions and Thanks, Nitin and DAM Capital for organizing this call. Today's call and discussions and looking statements based on our current business answer given may include some forward-looking statements based on our current business answer given may include some forward tical business face. expectations. This must be viewed in conjunction with risks that pharmaceutical business face. expectations. This must be viewed in conjunction with risks that pharmaceu Our actual future financial performance may differ from what is projected and perceived. You Our actual future financial performance may differ from what is projected and perceived. You Our actual future financial performance may differ from what is projected and perceived. You may use your own judgment on information given during the call. may use your own judgment
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