Laurus Labs Q4 Results: CEO Satyanarayana Chava Dissects Numbers | Talking Point | NDTV Profit

[Music] right on talking point uh and earnings edge with Dr Satan Naran chawa founder and CEO of laures labs with us on the show Dr chawa thanks so much for joining in um two ways to dissect these numbers I want to talk about quarter 4 first and U optically relative to what Bloomberg estimates were the numbers were below you had spoken about though that the possibility of making a dash towards that 20% Mark in quarter 4 it seems that you've started off on that note because you've come in at margins higher than what you've done in the previous three quarters put the quarter into perspective for us please uh Nas good morning um as we envisaged we're able to do very well with respect to revenues um and we also improved our AA margins uh to closer to 18 % um that's the uh trajectory we anticipate uh because we are not doing any new initiatives we are not investing any new capacities right now except continuing to invest in the craft science building additional capacity in Animal Health we believe any increase in sales from here onwards will certainly help us to improve our a margins got it Dr Chava um we heard we saw the press release post the earnings we heard the con call as well uh there is some stuff that you've guided to and I'll come to that in a moment but first uh the the key point I mean everybody's talking about the cdmo opportunity especially after the BIOS secure act we had a guest just before you um who looks at that space closely talking about that too 4% growth in quarter 4 on a YY basis in the CDM business there is growth did it live up to the expectations or is a larger portion of that cdmo optic that is being envisaged will come as the quarters Roll by there is as you fully aware cdmo business uh has much longer gestation period than the generics and you have to travel along with the clinical progress of the molec only the opportunity will be big if innovator chooses to add another source for a already launching one that we haven't seen what we have seen many projects at the later phases that means phase two phase three um we are doing validations right now a lot of our resources are consumed in delivering those kind of projects to our partner us why we are very bullish on cdmo space is because how much of resources we putting on those projects is an indicator internally for us to gaze how the future look like see today if we don't have any interesting project or projects we are also have to go through a lot of in introspection but right now we are focused on recruiting more Talent advancing programs and delivering programs as we committed that means all the team members are busy in delivering what we have promised to our customers and we have to wait for them to go to commercial uh some of them are nearing uh NDA filing some already filed and in the Health space there is we already got an order for NC which we will deliver in fi5 and another two molecules our partner is filing NDA during this year and one will go commercial next year so things are getting closer to our anticipation that is the reason we are very hopeful on our investments made both our strategy both our R&D resources capacity allocation will certainly yield revenues and we certainly yeld the number an Dr chawa this animal health order I I'll just proe this a little bit the animal health order I believe on the call you've said it is likely in November is this uh is this safely predictable because I mean or or are the timelines still fluid that instead of November it could well be October it could well be March as well for the next year um we are already started manufacturing so there is no ambiguity here we have order on hand and we started manufacturing so there is no ambiguity okay so the timelines on November that is one and you spoke about two or three or four things I'm just trying to understand are these um is this a bit of String of Pearls that you're stitching or are each of these large enough to make a meaningful differential for the cdmo business for lus as they materialize and Sh in the numbers uh in the animal health space we know what products we are making what quantities and what price we are selling so as we anticipated we will achieve Peak revenues in Animal Health in f27 U fa25 will be good ramp up in the product validations and then supplies 27 we'll see more pick up in validations and 27 will will be the year where we estimate we will reach the PE potential of our investment in the an in the crop science space currently we have one contract we know how much so these two have no ambiguity and we know what we're doing and another our steroid inter supplies to Aspen is also a contract in place we know how much so we are solidifying our business coming into contractual or Commercial Supplies the only one which is having big potential and lot of resources we put in is the human health CDM that's where we see company will have lot of opportunities and we also know how many projects we working in the human space that's the where we feel meaningful numbers will come in in the near future years but but I would presume Dr Chava that on this uh giving any kind of timelines is difficult isn't it or or is it is it kind of predictable if you will human health the human health the Quantum of opportunity is very big sure and at the same time it is not predictable there could be uh stumbling blocks where the program could be delayed FDA could ask more questions so we have no control on that our Animal Health crop Sciences steroid intermediate we have absolute Clarity because there are no surprises here positive or negative whereas in the case of human health we have many projects it's not that our future plans are sced by one program we have multiple programs if all program succeed move to the next pH we will see significant Opti um but we are having a basket apprach so I don't see a challenge for us in that space But the Quantum of business opportunity in the human space is enormous got it now u i I believe again on the call you said that the ability to go back to the 20% margin I'm bringing a margin question here because we talking about cdmo and I believe you said that the ability to go back to 20% from the current let's say quarter 4 16 and a half 17 or% to maybe 20% would hinge on how well cdmo does you have some sense about November for the animal health order but some of the others might be moving as well do you reckon as an average 20% for F525 is a possibility or is it difficult to say we certainly see it's a possibility if you see the overall Year see you know the unlike the generic business the cdmo business um is doesn't go by quarter by quarter you deliver the order in particular month so um for the overall year we definitely feel we will be meeting or exceeding the number near us but but but difficult to say I mean you moved from 15% for three quarters in a row to 17% in quarter 4 yeah 16 and a half 17 if I'm not wrong but do you reckon that this uptick could continue into quarter 1 as well or again even that is difficult to say would you be at 17 18% in quarter 1 or is it possible that you may move back to 15 but overall you will do 20 I think overall we are very confident do 20 years I I'll put that that we know when we are going to deliver each project so the um commit not commitment Comfort to uh cross that of 30% will be very high for the overall year for the overall year okay so it could be lumpy but overall you could probably see an average of 20 OD per coming in okay fair call um um the just one quick broad brush question Dr CH we have just five minutes but just trying to understand uh are there significant benefits that could come in from the bioc secure act in the US because a lot of people are saying that India could be a bit potential beneficiary do you see that and how far dated would it be or could it be immediate Indian companies will certainly benefit from this bio SEC act but I don't expect it is going to be in the next quarter maybe in the next financial year because the technology transfers uh validations approval within their doers will take its own time but it is a good Che so Indian companies will certainly benefit from this bio act got it uh API portfolio Dr chawa moving tracks You' said that price headwinds are expected I'm trying to understand how will it be impact numbers will it be of such a small headwind that you go ahead and say that volumes will take care of the price headwinds see as we have seen in our API we started stabilizing our Revenue stream from the apis the one surprise for us was the significant growth we have seen in our oncology AP we continue to see good opportunities in the anology space that will grow we thought to 300 cres is the peak revenues but now we believe we can even cross 500 crores oncology sales so that is growing very well with good margins and in the CMO space in generic APS is also picking up very well so the arbs will continue to have some advents as you mentioned but those ads will able to manage with softening of R prices or the efficiency improvements internally okay so price headwinds yes but not so Stark that you can not take care of it via efficiencies and volumes would that be a fair way to assess it absolutely got it sir okay capex plans for fi25 700 crores pretty similar to what you've done in f524 well with the larger capex be committed to Dr chaa as we have mentioned in our investor presentation also in the call we also just started construction of a fermentation facility ADV uh because we saw some opportunities in the GMP fermentation space we are doing GMP fermentation in v and then food proteins related food and cosmetic um Precision fermentation at B so both we'll see kex in this f25 and also we are increasing little bit of capex in our formulations to meet some uh ter packaging requirements from our partner um we are adding little bit of APA capacity but significantly we're adding more into contract manufacturing Stace got it Dr chawa one final question really and that is um whether you see not fi25 but maybe fi 26 um or thereabout as a year of change of sorts and where I'm coming from is purely numbers sir from fi21 to f524 end uh the revenues have stayed Circa 4,800 to 5,000 except for fi23 where there was a bit of a step up and then it's come back again uh operating profit f524 versus fi21 has hared and I know that those were exceptional years but they've come off quite materially when do things not necessarily go back to the those levels but when do things improve is it is is that can be the expected in f26 fi25 f27 or is it difficult to say I think we came out of the goods because any new Revenue growth for us is going to show significant benefit in our margins and we believe the f24 was year of consolidation fi25 will see growth and fi 26 27 we see significant growth I I'll put that way yeah I I know you I understood on the call you shying from giving an exact guidance and I will not press you to do that but just wanted a color about what this could shape up like great Dr chaa out of time but thank you so much for taking the time out and being with us and all the best for the quarters ahead thank you n thank you for INSP questions not at all thank you for joining in and viewers thanks for tuning in to this Pharma focused or Healthcare focused talking point show today [Music]

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Length: 15min 1sec (901 seconds)

Published: Fri Apr 26 2024