Marksans Pharma Limited ($MARKSANS)

Ladies and gentlemen, good day, and welcome to the Marksans Pharma Limited Q4 FY '26 Earnings Conference Call, hosted by DAM Capital. [Operator Instructions] I now hand the conference over to Mr. Nitin Agarwal from DAM Capital. Thank you, and over to you, sir.

Thank you, [indiscernible]. Hi. Good afternoon. Good evening, everyone, and a very warm welcome to Marksans Pharma's Q4 F '26 Post Results Earnings Call, hosted by DAM Capital Advisors Limited. On the call today, we have representing Marksans Pharma Management; Mr. Mark Saldana, Founder, Chairman and Managing Director; and Mr. Jitendra Sharma, Chief Financial Officer. I will hand over the call to Mark for the opening comments and then we'll open the floor for questions. Please go ahead, sir.

Thank you, Nithin. Welcome, everyone, and thank you for joining us for our Q4 and FY '26 earnings conference call. We sincerely appreciate your interest and continued support for the company. Over the last several years, we have been consciously building a diversified global health care company with multiple growth drivers across regulated markets. FY '26 marks an important milestone in that journey. During the year, we crossed INR 3,000 crores in net income for the first time and delivered our highest-ever profitability. More importantly, we strengthened the quality of business through geographical diversification, portfolio expansion, improved margins and strong cash generation. We expanded our international footprint through new market entries in Germany, Canada, Ireland, while also strengthening our presence in Australia through our entry into branded prescription generics. Talking about regional growth, starting with North America, this remains our largest and fastest-growing market. Revenue for FY '26 reached 100 INR 33 crores, reflecting a growth of 20% year-on-year. Over the last 4 years, the revenue in this market has increased from INR 635 crores to INR 1,533 crores demonstrating the scalability of our operating model and the strength of our customer relationship. During the year, we launched 11 SKUs and currently have an additional products in the pipeline. In U.K., the business saw a clear recovery of trajectory during the second half of the year. while FY '26 revenue were marginally impacted by pricing pressure during the early part of the year. However, the Q4 performance was encouraging, with revenue reaching an all-time quarterly high of INR 308 crores, representing a growth of 12.3% year-on-year. We currently have 18 product approvals, new product approvals, products under review, 24 products awaiting approvals. Our next 4 years, we intend to file over 200 products in the U.K. market increasing and creating a strong medium-term visibility. Europe represents the next important phase of our growth strategy. Australia was another important highlight during the year. Our Q4 revenue reached INR 123 crores, reflecting a strong growth, but sequentially strong growth both sequentially and on a year-on-year basis. More importantly, through a pharma, we have entered the prescription segment for the first time and launched 11 branded generic products. [indiscernible] to see capabilities over the last 2 decades. This expansion meaningfully increases our addressable opportunities in Australian market and create an additional long-term growth driver for the business. Coming to profitability. FY '26 saw a strong improvement across all key operating metrics. Gross margin improved to 56.7%, while EBITDA margin expanded to 20.4%. The Q4 margin was particularly strong at 22.8%. This improvement was driven by better product mix, operating leverage, softened raw material cost during the second half and continued focus on execution efficiencies across the market. At the same time, we remain mindful of the near-term external headwinds. We expect obviously some [indiscernible] pressure on raw materials cost during Q1 FY '27 due to the ongoing geopolitical and supply chain disruption. Our balance sheet continues to remain of significant strength for the company. We closed FY '26 with a cash and cash equivalent of approximately INR 990 crores. This provides us with a substantial flexibility in invest behind future growth opportunities while remaining disciplined capital allocation approach. In line with our commitment to create a long-term shareholder value, the Board has recommended a final dividend of $0.90 per equity share, representing a 90% payout on face value for FY '26. Overall, we believe the company is entering the next phase of growth from the position of considerable strength. We will continue to build the diversified global company, expand into new regulated markets, strengthen our product pipeline, improve profitability and maintain a very robust balance sheet. More importantly, we believe in creating a business that is scalability -- that is scalable, resilient and positioned to deliver sustainable long-term value for all our stakeholders. With this, I hand it over to Jitendra.

Thank you, sir. In Q4 of FY '26, our operating revenue stood at INR 856 crores. an increase of 20.8% year-on-year compared to INR 708 crores in the same quarter last year. Revenue from the U.S. and North America market stood at INR 46 crores, an increase of 23.6% on a Y-o-Y basis, reflecting sustained demand momentum and strong execution in the U.S. market. U.K. and EU formulation business recorded revenue of INR 308 crores an increase of 12.3% year-on-year, marking the highest ever quarterly revenue. Q4 momentum was driven by multiple new product launches and improved order flow. Australia and New Zealand market revenue stood at INR 23 crores delivering 61.3% Y-o-Y growth. The rest of the world revenue stood at INR 19 crores. Gross profit for the quarter grew by 21.5% year-on-year to INR 465 crores with a gross margin of 54.4%, an expansion of 27 bps on a Y-o-Y basis. We recorded EBITDA of INR 195 crores in Q4 of FY '26, up 54% on a Y-o-Y basis. EBITDA margin expanded by 491 basis points on a Y-o-Y basis to 22.8%, reflecting strong operating leverage as revenue scaled up and cost control measures. Profit after tax stood at INR 149 crores, an increase of 64.3% on a Y-o-Y basis. EPS for the quarter was INR 3.3%. Moving to FY '26 performance. Our operating revenue stood at INR 2,931 crores compared to INR 2,623 crores in the same period last year, an increase of 12.5% on a Y-o-Y basis. The U.S. and North America market recorded revenue of INR 1,533 crores, up by 24% on a Y-o-Y basis and contributed 52% of our total operating revenue. U.K. and EU market revenue stood at INR 1,015 crores, contributing 34.4% of the revenues. Australia and New Zealand market recorded revenue of INR 303 crores. The rest of the world market recorded revenue of INR 99 crores. Contribution from these 2 markets stood at 10.3% and 3.4%, respectively. The gross profit was at INR 1,674 crores, up 13.2% on a Y-o-Y basis. Gross margin expanded 32 basis points on a Y-o-Y and stood at 56.7%. EBITDA for the period was INR 601 crores with the EBITDA margin at 24.4%. Profit after tax was at INR 420 crores. EPS for FY '16 was INR 9.2. In FY '26, cash generated from operations amounted to INR 438 crores, with the CapEx during the period being to INR 131 crores primarily for the new facility and ongoing maintenance CapEx. With a major CapEx cycle now complete, free cash flow generation continues to improve steadily. We delivered free cash flow of INR 328 crores during the FY '26. Our working capital remained at 138 days. We invested INR 89 crores in R&D in FY '26, which amounts to 3% of our consolidated revenue. We continue to remain free and the cash balance stood at INR 990 crores as of 31st March of 2026. With this, I would like to open the floor for question and answers.

[Operator Instructions] Our first question comes from the line of Ahmed Madha with Unifi Capital.

Just to understand your comments on the raw material cost indication., How should 1 look at the margins coming through? You spoke about the impact in Q1, but I'm assuming there will be some contractual pass-through with a typical lag or something. Can elaborate a bit. How should 1 think about the price hikes and the gross margins in near term?

Yes. So we are witnessing obviously raw materials, which directly or indirectly have petroleum-related ingredients or intimidates involved in that. So we are seeing price escalation of over 20% to 30% of these raw materials. That said and done, we are presently having inventory of a decent amount of inventory of raw materials and everything. But obviously, our hope is that this war comes to an end as soon as possible. And it's not only us, it's, I guess, a global wish list for everyone is hoping for the same thing. But if it does come to an end, then obviously, we see a collection of petroleum-related ingredients of products and prices correcting or softening back to its original levels. But today, we do see a slightly higher level of raw materials cost, and that's where we -- so far, we don't -- we are not seeing a big impact, but if we do run out of material, then we would have to buy it at a higher cost. And that's where we had mentioned that so that a bit of awareness comes into play out there.

Sure. But on your conversation with your customers, how is that going to because that's -- I mean, obviously, everyone is hoping for the things to settle down. But if not, how will be your contracts being renegotiated? And secondly, are you seeing raw material cost inflation in the API paracetamol, ibuprofen, those sort of APIs or the solvent costs? And where will you see a major problem?

I think directly, they all have some petroleum-related products or either solvents or something going into them. So technically, the cost even on commoditized molecules have gone up. I don't see any raw material which has not gone up per se. With regards to renegotiating our contracts with our end customers, that's always an option open. But because there is no clarity that we would like to wait and watch because of tomorrow, things do correct, then it will -- the overall market will correct dramatically. And the last thing we need is to press a panic button today because we are sitting on inventory or a lot of products. So I think everyone is waiting and watching. And if you had asked me 30 days back out of saw probably come to an end sometime back, but it is still going on. And every day, it's like tomorrow, right? So -- but I do believe that area is hopeful that it will come to an end. And and I don't think it benefits anyone, including the U.S. for continuing what's happening today.

And do we have to assume we have inventory through Q1 or Q2 rather?

We have inventory to Q1 to a great extent. Obviously, there is being -- while we talk of raw material prices going up, we are also helped a bit on the ForEx part of it. So we do have some cover because, obviously, the foreign currencies have gone up. So some leverage is there to absorb that cost price.

Sure. And on the logistics side? Last time, when the Red Sea crisis happened, we had 1, 2% margin decline.

But now it is still around the same, about 2%. But again, this keeps dragging I don't have a crystal ball. But right now, the logistics per se is very is very prone to price changes depending on circumstances. And if this comes to a stop, it will go back to its historic lows. But right now, it is -- creeped up but nothing to be alarmed of.

Sure. The other question was on the unit. How has been the utilization in Q4? And any comments on the new product launches?

Yes. I mean it's new product launch is happening every quarter, but it is getting better. And you can see the results are a reflection of our strategy that we did in terms of the a consolidated number itself is a reflection of the decision that we took to get into the facility and invest resources. So obviously, it is playing out very well as per expectation. We still have a potential of maybe 40% to 50% of growth coming from there. And we are working towards that.

Our next question is from the line of Maitri Sheth with Choice Institutional Equities.

Just 2 questions that I had. One is on the revenue guidance. So given the current macro situation as is on track to achieve the INR 400 crores revenue at? And second is on the pipeline. What sort of pipeline launches have you planned in North America and Europe for FY '27?

Yes. So to give some color on guidance here, I mean, we are -- our target is still there for INR 4,000 crores in the next 2 years. We have we have come up with our business strategy and our business model. We have come up with our road map to double our revenue in the next 3 to 5 years. So yes, I mean, INR 4,000 crores within the next 2 years is very much on the plate right now. And with regards to pipeline, our pipeline keeps growing because obviously, it's a never-ending pipeline, We keep developing products because that fuels a bit of a growth. That's a part of our growth strategy. So we've got a healthy pipeline and we do see 2026 -'27 pipeline increasing by, like I mentioned, about 50-odd products in the U.S. and in other geographies, that's much larger than what is there in the U.S. So we are keeping in tune based on requirements of the market and finding the niche products into the respective markets so that we can be differentiated at all given times. So we do have a 3- to 5-year horizon. Obviously, whatever we invest today or file today, you'll see results only in end of 2027, only '28 because it takes about a year or so to get approved.

Our next question is from the line of Adityapal with MSA.

Yes. Great set of results last time, you had said that INR 3,000 crores would be missed, but you completely exceed in the guidance. So congratulations on that. The last part of my question but I just wanted to touch upon a couple of years back, we had signed a CMO contract with a domestic API manufacturer? And will that come into play to protect us from a -- from a gross margins get affected because of the API crisis?

Not to a great extent because what's driving the prices up are the intermediates. It is ultimately the intimates that are driying the pricing up. While the prices -- so we are keeping a tap of every intermediate also that goes into API, right? So -- but obviously, we are getting -- we have more sites on our licenses. So we have the flexibility to play around. But at any given time, at least from that raw material, we sit on a good 5 to 6 months of inventory at all given time. So we are sitting on inventory, which we don't feel may impact us if the war is called of tomorrow.

Understood. Understood. The other part was you mentioned about currency impact, which is benefiting us. So definitely, the on the revenue side Yes. But on the raw material side also, [indiscernible] and other raw materials which are predominantly denominated in either USB or Yuan, they're also strengthening against the INR. So are we facing impact on that? Because it will be a dual thing, right? Your overall USD. Yuan denominate prices are also going up and then the currency is also standing against INR. So we'll be facing raw material impact on that as well?

Yes, you are right. import will get a bit more expensive, but the value chain of getting into finished product and shipping it out is always higher than only the actives. And hence, the overall dollar benefit is much better, and it does leverage that increase in raw material price. I mean it does absorb a decent amount of the raw material price.

Understood. Understood. Just last question. I'll merge my 2 questions. So 1 is, when you were answering to the previous participant on passing on prices, so what I largely understand that this are fixed, the OTC side of business is largely fixed 2-year contracts and until we hit the only in overseeing come back to the table? Because last time when the [indiscernible] happened, you said that if we invoke the force mejure then the entire contract is back to -- back into the negotiation table. And the other thing is on the passing on the price, the other thing on the face -- so faces have also the prices are close to 2.5 or tripled what we saw during the Red Sea impact to us. are we seeing that same -- the quantum impact the same or a bit lower?

No. It is much lower than Red Sea. It was very low compared to the Red Sea, if you are taking that as a comparison. because out here, see, the vessels are going freely except for the Strait of Hormuz, , right? And those are more oil tankers related and all that stuff. So it is not the containers that are getting clogged up and everything last. So I think although the transit time has increased slightly, marginally, but vessels are flowing freely from other routes. So the impact of freight barring the fuel and fuel cost has not gone up to that level due to scarcity of containers or stoppage of shipping line.

Understood. Understood. And on the DC contracts? The OTC contracts, see, while it is for over duration, you're right on that. But historically, if you look at it in core times, we went through that, and we were successful in revising our prices without actually a trigger of any cost measure. The problem that we have in this situation right now, we don't -- everyone expects, if I go to the buyer and then expect more to end tomorrow, at least as for the President of the United States as like the deal is imminent. So that's where a lack of clarity to some extent and hopes that it will end tomorrow. is something that no 1 is panicking and 1 believes that this will drag on because I don't think anyone can afford it to drag on who country can afford it to tag on. And and everyone globally is impacted by it. So I believe that there will be some outcome, but I think we always expect it to be earlier better. And that's where we don't want to go for something where tomorrow, the crude comes down or prices come down and then the buyer comes to us and says, okay, let's revise your prices or we have got cheaper cost of growth on some else. So nobody -- right now, everyone is waiting and watching. And if it does prolong or if it does go into full blown off war then obviously, we would have to a different discussion with the buyers at. But it is possible to go and we look into this because everyone knows this is like a force majeure, it's beyond our control.

Our next question is from the line of Rajat with Fortune.

Yes, top-notch results, sir. My query is more with respect to 7 to 8 years long term. So I think back in Q2, you had mentioned expanding on current land banks to achieve INR 900 crore to INR 10,000 crore capacity. So by which FY should we achieve this roughly $1 billion capacity? And what should be the approximate cost? Because I'm looking at road map for us to reach a $1 billion revenue by FY 3.

That's a good outlook. But see, I mentioned in the previous call that we have a we have a road map and a business model to double our revenue in the next 3 to 5 years. And we are quite optimistically working towards those objectives. We have different geographies, our focus is into. But in terms of infrastructure, we still have spare capacity -- and as and when we believe it is a time to expand our capacity through land banks or through acquiring new plants. We are already looking out, and we're already planning for that state. So I think we may be a bit early, but we are still working on that.

Okay. Okay. Okay. Okay, sir. And just 1 more question. With this respect to this, do we have any impact because of Trump Rx, like this time cap labs, does it have any partnership with Amazon Pharmacy.

This is not something new. It's a very old market in Rx. So there's nothing new out there, and we are not impacted this.

Our next question comes from the line of Viraj Mahadevia with [indiscernible] asset.

Congratulations on a good Q4. Can we take Q4 as an exit run rate for FY '27, i.e. could you replicate this level of revenues and profits for the full year?

So basically, historically, if you look at our historic trend over the last couple of years, the first quarter is normally always because of seasonality, right, first quarter is always on the lower side. the second quarter is better than the first quarter. Third quarter is actually a peak and then in the fourth quarter, obviously, is stronger but not as strong as the third quarter. But obviously, this time is a bit different, but it is historically, that's how it goes, depending on how long the season, the winter season actually prolongs. So that's where the fourth quarter remains. But historically, the first quarter -- so we have always stressed in all my calls that we cannot because of our business model and the way that we cannot look at it on a quarter-to-quarter basis. But on a year-to-year basis, we definitely are very optimistic of growth and hitting our objectives.

Great. Secondly, sir, can you update on the Teva facility? What is the utilization there? Has it fully ramped up? Is there still a lot of capacity in the room? Are you adding more lines?

So we are at very close to 50% of our capacity today, maybe shying away from the 50%, but very close to that. We still have a huge scope of utilization out there. So we're optimistic on that. We are planning some CapEx but within the facility because it's huge, But that is to launch different dosage forms or something which is not already there in the plant. So -- so we are working -- it's a part and parcel of our pipeline products that we need different dosage forms to be launched. So for that, obviously, we need to have [indiscernible] or CapEx involved to ensure that we get those products into our pipeline.

Understood. And on the INR 990 crores of net cash, any plans to deploy it? Any suitable acquisition candidates? I think we've been on the lookout, you publicly said for better part of the last 2 years? And if not any plans to distribute it to shareholders?

Yes. So basically, obviously, we have declared dividends. But primarily, the reason -- we are in active dialog or 2 targets. And as a matter of fact, 1 target, we are doing due diligence, the other 1 have not started yet. So I'm more optimistic that 2027 will see some M&A transactions at, and that's where we have kept the corpus because we look at INR 990 crores, and we feel in terms of absolute value, it is big, but if you look at it from a acquisition, you read that much yes? Yes. I mean you spend $50 million, $60 million and and we will wonder where the money is going.

And would these targets be in PS, any particular therapy manufacturing, front-end licenses? Just a little [indiscernible] around what these potential audits look like?

So these targets are a mixed basket. Obviously, we are looking at platforms. We are looking at different geographies. So my focus is always to diversify in different geographies. That said, is done if a target does come up come across in a geography that we are very strong, and we will obviously explore and take it to another level. But for us, we've been always very conservative to make sure that whatever we acquire is value basically return on investment and create value for the shareholders. So we are very conservative in the valuation, We don't go for some high ticket deals and so much absolutely fully aware of that, yes. But we are looking at it, and we are optimistic that 2027 will see some activity out there.

[Operator Instructions] Our next question is from the line of Nishita Sankesh with Sapphire Capital.

So I just had 2 questions. One is that you mentioned that margins could be impacted due to the price inflation we see. So like for the full year FY '27, can we sell the EBITDA margins in the same range of 20%, 21%? Or do we expect them to be lower

No, I think it will be the same.

Okay. And if you can give some items on the top line level. Can we see the growth of 18%, 20%? Or is it what range can we expect the growth to be in?

I mean conservatively because I always like to be that way, but -- between 15% to 20%.

Our next question is from the line of Manav with Sunrise Capital.

Congratulations for a good set of numbers. My first question would be that you've entered the Europe market organically. So do you still plan to look at any possible opportunities for M&A in the region?

Yes. We've organically entered early into Germany. Europe is a cluster of different countries and different stores like you have North Europe, you have the Nordics you have Eastern Europe. So it's a cluster of many countries and many cultures and many different -- each country has its own modes of open or the sales have happened. So yes, we are exploring, obviously, to expand our footprint and become prominent players in Europe per se, not only in Germany. So we are looking at different countries within Europe also.

Got it. And sir, my second question would be when will we see some revenue contribution from new markets like Germany, Ireland and Canada?

So Canada products are on the file, and we should see a small part of it trickling towards the end of the financial year. But Europe, we are expecting it to be earlier than expected. I mean, within this year, we are expecting maybe second half or to see some results.

[Operator Instructions] Our next question comes from the line of Kamal an Individual Investor.

My simple question is, what is operational capacity available out of 16 million units as of now?

Are you asking for capacity -- utilization capacity.?

Yes. Right now, we have total capacity of 6 million units. And even though 8 million for with Teva will might be expandable. So what is right now operation capacity of level?

That's slightly below 50% for the Teva blank.

No, no, sorry. Let me restate out of 26 million, are we about 18 million units per year already available operation capacity?

Okay. Yes, different facilities or you are talking of all 3 facilities put together? Yes. Yes, yes. Yes. So we are at 13 billion to 14 billion 50%. You can see like around 50% to 55%.

Okay. And what about the which strategically get into the company 4 years back and some state they have shown what is their plan either they are objective has been achieved or what some color on it, sir?

I can't speak for them, but I think we see the start of the company and they see -- they are quite happy with the progress and the road map that we have in place. So I can't speak beyond that on the outlook, but I'm sure they are happy with our strategy. R&D spending near 3%.

What is the outlook for next 3 to 5 years for R&D?

Not much of that we'd like to keep it at that. Okay, keep it that will continue like that.

Last question is, do we have any land bank outside Goa? I think fees back some news are there. And in ARPU, we have some land bank, et cetera, for new facility or something. Is it right or it is outside go presently?

We don't have anything

Our next question is from the line of Ahmed Madha with Unifi Capital.

Two questions. Firstly, on Australia geography, leaving out the seasonality in the cocoa season, what sort of rate can be sustained with all the new launches we have done? Obviously, Q4 was very strong. But moving forward, what sort of growth rate 1 can assume? And what sort of scale?

Like in the previous call that I mentioned, we have a business model to see us -- a roadmap that to see us $100 million. I think we've reached halfway mark out here, but I am very optimistic and very confident that within the next 3 years, we should hit those objectives of milestone of $100 million.

Okay. Sure. And in terms of the new geographies EU markets and Canada. Can you give some sense of what progress you made in the Canada market. You spoke about the European region in the call earlier?

The Canadian market, a lot of products are in the filing right now. So -- and we see approvals trickling in somewhere towards the latter part of this financial year. And apparently, we are creating -- it will be an organic setup, but we are creating an organic setup of the operations, but we still have time to create that because product approvals are not there. So we don't want to set up to be sitting idle. But we do see revenue generation. One has to understand that Canada is relatively a smaller market. than any of our countries, any of the geographies we are into. So it is -- but it's a part of our strategy of expanding our footprint into different geographies, and that's where Canada comes into play.

Our next question comes from the line of Mihir Damania with Fidante Asset Management Company.

Just 1 question from my side. Considering that we have a decent roadway for growth in silane million. land or so. My understanding is that we still currently only hold around 60% in the entity. And considering you also had INR 1,000 crores cash in the books, why not the by the outright 40%? Or is there some contract?

Well, the management is running that, right? So the other 40% is working hard and growing the company and helping us achieve our objective. So we are happy with that.

Do we not have like a call option or any decisions of just increasing the stake on monetizing some.

We don't have that. And again, I do believe we can grow a lot as partners than individually. So the management is very capable of basically planning growth moving forward. So I think so far, we are happy with what we see.

And while currently, let's say, setting right now to close to INR 3,000 crores odd we've done a very good job scaling this company into a U.S. and a as market generic company. But if you look at after a particular scale, a lot of other companies are moving into -- some are moving into CDM or some or you need to biologics. But we are still currently is still focusing on oral solid Spain wheelers like generic products. Do you see any merit in diversifying maybe 3 to 5 years down the line into other adjacency -- or do you think there's still runway for growth additional next 3 to 5 years before you kind of went to something different?

So every geography, every country we operate different -- so we don't have a thumb rule. If you look at our portfolio in U.K., it is more tilted into Rx than in [indiscernible] and our revenue is much more split. But every country that we operate, we basically have a very diversified and balanced portfolio. So as time goes by, we will basically cover any stone. I mean, we ensure no stone is left unturned. But we do see I do believe INR 3,000 crores is a tip of the spot and we have a lot of potential of growth based on our strategy that we are executing as on today. So we've come to 1 -- we've achieved a great milestone, but is still got a long way to go.

[Operator Instructions] Our next question comes from the line of Jugal Shah, an individual investor.

Congratulations on a great set of numbers. Now I've been your system with for last 5 to 7 years. So last couple of quarters were challenging. So good to see this quarter. And actually, the dividend which you have provided, which is, again, very welcome. I have 2 questions. One, Mark, is on the working capital side. I do see that increasing year-over-year. So just wanted to have an understanding like what is the comfort level? And-- do we see it going down?

So basically, last year, we were hit with the uncertainties of tariffs. If you look at the whole of the past year, -- there was a huge amount of uncertainties and it went on. There was a lot of kiosk prebilling. So it was a conscious decision for us to ensure before products, nobody knew what will happen tomorrow. So before our products get into any tariff zone, we decided to go heavy on inventory, both in scope as well as raw materials. So I mean it was better sage than sorry, and our Board and everyone we discussed and we decided, let's just be just secure ourselves as much as we could produce or whatever material we could keep on the store. Now if you look at the petrorespect, this year, we have different challenges, and that's related to fuel. But it is helping us in terms of what we did last year. So we are not panicking that the prices are going up because we are sitting on whatever we build last year. So we are depleting some of that inventory that we built -- but again, it's difficult to ideal case scenario, we would love to go a bit later. But geopolitically, we don't know what comes next. So we have to just keep on track of that and be 1 step ahead if possible. I'm least concerned about the working cycle today because we are it is basically helping us out in what we are doing today.

Okay. Good enough. The last question which I had, Mark, is from now onwards to the next 2 to 3 years, what regarding your -- where would you see the highest amount of revenue in terms of percentage if you could just give a rather idea in terms of a pipe like you use Australia Zealand?

So I do see -- eventually, if you look at 3 to 5 years, obviously, U.S. will be a core driver always. But at the same time, I would put a lot of stress. I would put a lot of vantage on Europe. Our U.K. is also growing nicely. And obviously, I've already given a guidance for Australia. So I'm quite confident on Australia part of it. So all our geographies will grow, but the new geographies that come into play will be Europe and we are working hard to ensure that it will be within one-off highlight subsidiaries, which are doing recent milestones of that.

Is it safe to assume that pricing power would be higher in U.S. compared to other geographies?

Pricing power?

I mean -- sorry, go in terms of margins.

In terms of margin, Obviously, U.S. is highly very competitive. So it won't be -- it's a huge market, so a lot of pricing pressure comes out there. But I do believe Europe is relatively better. And then again, U.K. is also doing fantastically well depending on depending on the rod basket mix that we offer. So it's quite evenly distributed from all angles.

Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you, everyone, for the continued support and interest. And please be safe and take care and have a great evening. Thank you.

Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.