Dishman Carbogen Q3 2022 Concall Highlights

  • They have had a very strong quarter – especially in CRAMS where the pipeline continues to be very strong. 
  • They are seeing good interest and strong growth in the Vitamin D analogues. The cholesterol business is stable and the disinfectant business is seeing increased interest from customers.
  • They have seen a rapid rise in transportation and logistics costs. There are also price rises in Central Europe for basic utilities like electricity, gas and water. 
  • Consolidated revenues for the quarter were ₹562 Cr (20% growth YoY). Gross margin for the quarter was at 77%. EBITDA for the quarter was at ₹109.5 Cr (75% growth YoY) and the EBITDA margin was at 19.5%.
  • Employee costs have gone up as they have had to hire additional scientists. They usually have a development pipeline of $90-95 million whereas now they have a pipeline of $115 million. So the additional employee costs will translate into incremental revenues in the future.
  • There is a significant improvement in the CRAMS India business. Revenues for the quarter were at ₹40 Cr (97.8% growth YoY). They are seeing an uptick in the customer orders and have a strong order book which they are in the process of executing. They have clearances from most of the customers to restart production and most plants in the Bavla facility are up and running.
  • The Swiss, France and China business reported one of the strongest quarters. Quarterly revenues stood at ₹393 Cr (31% growth YoY). CRAMS UK reported a revenue of ₹28 Cr (16.5% growth YoY). 
  • In total, the CRAMS segment reported a revenue of ₹461 Cr (34.3% growth YoY)
  • The major contributor to the Marketable Molecule segment was Carbogen Amcis BV, their Dutch subsidiary which reported a revenue of ₹54 Cr (15.6% decline YoY). The dip in revenues for the quarter was due to lower shipments of Vitamin D Analogues. They are expecting much higher sales in Q4. The Other segment which largely includes traditional products from India reported revenue of ₹46 Cr (16.2% decrease YoY). 
  • Overall, the Marketable Molecules segment reported a revenue of ₹100 Cr (16% decrease YoY). 
  • The Capex for the quarter stood at $19.3 million and about $50 million for 9 months FY22. Another $10 million of Capex is expected to happen in the next quarter. The Vitamin D Analogue market is relatively stable at the moment. They are seeing incremental growth in low volume high value products.
  • They have partnered with Boston University on a number of research projects looking into the impacts of Vitamin D Analogues on COVID and on Obesity, especially patients who have had gastric bypass. 
  • Disinfectants are a traditional business. They have started a research project based on some of the R&D work that they did in India on encapsulating certain disinfectants. They are studying ways to encapsulate disinfectants for bacteria with a microbial or viral agent.
  • They currently have 10 or 11 products in validation, one product dropped off last month and the customers decided to not continue with the product. But they have enough products in the pipeline to sustain growth.
  • France is the biggest investment they have made. The building is complete, the shell and the main infrastructure is being installed. They are in the process of installing all the specialized equipment. The commercial operations are expected to begin in January 2023. 
  • The joint investment in Switzerland with an important client is on target. The building is complete and they are installing the equipment. It is expected to be operational by September or October this year. 

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