- Total revenues for the quarter were at ₹555 Cr (3% growth QoQ). EBITDA from the quarter stood at ₹68 Cr (25% growth QoQ). EBITDA margins for the quarter were at 12.1%. PAT for the quarter was at ₹40 Cr (29% growth QoQ).
- Non-Ibuprofen pharma business has performed better than Q2 and contributed 17% to the revenues. Overall, 37% of revenues from the Pharma segment comes from non-Ibuprofen.
- They filed 4 DMFs during the quarter, and they got GMP certification from MoH Russia for 6 products. They also got approval from the Korean FDA for 2 products during the quarter.
- Margins have been under stress due to continuous volatility in chemical prices and lower volumes in the Ibuprofen business.
- In the current year, they have spent ₹116 Cr in capex and they expect to spend about ₹150 Cr annually for the next couple of years.
- What matters in the API business is the cumulative capex rather than QoQ capex. They have spent over ₹400 Cr in capex over the last several years and many of those assets are still waiting to be fully utilized.
- Capacity utilization is currently at 65-75% depending on the asset, block and product.
- Ibuprofen volumes were 10% above Q2 level. Pricing is still negative. They believe the Ibuprofen business has bottomed out both in terms of volume and pricing.
- Most of their Ibuprofen business is in India and semi-regulated markets. In these markets there are no contracts. For the regulated markets they are expecting annual contracts in the range of $11/kilo.
- IBB prices are stable however they are facing pressures related to manufacturing rather than RM costs. The increase is more due to increase in energy prices.
- They have some dependency on China for Metformin and no dependency on China for Ibuprofen.
- Metformin contributes to about 16-17% of revenues. After Ibuprofen, Metformin is the largest revenue generator for IOLCP.
- All the facilities that they are building currently are multi product API plants. They are doing this to mainly de-risk the business in case any of the APIs go out of business.
- They expect Q4 to be similar to Q3 in terms of demand and profitability for Ibuprofen. They expect a 10% demand increase in the next financial year.
- BASF is back in Ibuprofen and it is putting pressure on players that are not sufficiently backward integrated. BASF’s plant is fully automated so the capex they have incurred on that is probably very high. IOLCP believes they can beat them on price.
- Over the past 2 years, most of the growth in the business has come from the non-Ibuprofen pharma portfolio. The management is trying to constantly de-risk the business from the cyclicality of Ibuprofen. They expect about 40% of next year’s pharma revenues to come from the non-Ibuprofen portfolio.
- The strategy is that 5 years from now, Ibuprofen will be a minority part of the overall pharma business