Sanjivani Paranteral Limited (531569) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Sanjivani Paranteral Limited Q4 and FY '25 Earnings Conference Call hosted by S-Ancial Technologies. I now hand the conference over to Ms. Jill Chandrani from S-Ancial Technologies. Thank you. And over to you, Ms. Jill.

Thank you. Good evening, everyone. Welcome to Sanjivani Paranteral Limited Q4 and Full Year FY '25 Earnings Conference Call. From the management, we have with us today Mr. Ashwani Khemka, Chairman and Managing Director; Mr. Srivardhan Khemka, Executive Director; and Mr. Pritesh Jain, Chief Financial Officer. Now, I request the management to take us through the key remarks, after which we can open the floor for question-and-answer session. Now, I hand over the call to Mr. Srivardhan Khemka for his opening remarks. Thank you. And over to you, sir.

Thank you, Jill. Good evening, ladies and gentlemen. A very warm welcome to all of you to the Q4 and FY '25 Post Results Conference Call of Sanjivani Paranteral Limited. Before I begin, let me mention the standard disclaimer. The presentation that we have uploaded on the stock exchange, including the interaction in this call contains or may contain certain forward-looking statements concerning our business prospects and profitability, which are subject to uncertainties, and the actual results could differ from those in such forward-looking statements. Let's start with a brief overview of the company. Sanjivani Paranteral Limited is a WHO GMP-certified pharmaceutical pioneer with over 2.5 decades of experience, specializing in manufacturing injectables and oral solids. The company has established itself as a leader in the industry. The company's primary focus lies in life-saving drugs, and we export our products to over 25 countries. We are headquartered in Mumbai with WHO GMP-certified manufacturing facilities in Navi Mumbai and Dehradun. We cater to major therapeutic areas, encompassing central nervous system, cardiovascular system, antibiotics, gastroenterological, anti-diabetics and anti-allergy, supported by a strong R&D setup. We categorize our business into 3 verticals: the base business, which is Sanjivani Paranteral Limited, the parent company. This is the ongoing business, which focuses on formulation sales in export markets. And in the Indian market, we are primarily a CDMO player, though we have a nominal presence in the domestic formulations as well. The newer HAL Pune joint venture, which is SPL Infusion Private Limited, this venture is for manufacturing IV products, and here, we hold 60% equity, and Prague joint venture, which is Alevia Healthcare S.R.O. This venture is for manufacturing nutraceuticals, where we hold 45% equity. On the macroenvironment, the operating environment for Indian corporates remain broadly positive. The demand outlook across both domestic and key export markets continue to be encouraging, supporting expectations of healthy growth in the upcoming quarters. On the costs front, Indian companies are benefiting and are likely to continue benefiting from softer crude oil prices. On the freight costs front, there has been some normalization in recent past. Raw material prices across most industries have also remained stable, fostering confidence and driving incremental investments in both existing operations and new verticals. That said, recent tariff-related announcements in the U.S. and the push towards localized manufacturing are expected to impact capital expenditure decisions in the near term. Additionally, global currency markets remain sensitive to these developments and may witness continued volatility. In the pharmaceutical sector, structural growth trends remain intact. While the evolving U.S. tariff environment introduces some uncertainty, the broader outlook on the industry remains positive. API prices exhibited a softening trend during the quarter. And as with other sectors, the pharma industry is also expected to benefit from lower oil prices and reduced freight costs. Overall, the outlook across sectors remain constructive, supported by stable input costs, favorable demand and dynamics and growing confidence among businesses to invest in for the future. Now, coming on the company's performance. Sanjivani delivered a strong performance in Q4 and FY '25. Overall, the momentum is driven by revenues from the newer products and volume expansion of existing products. In Q4 FY '25, we reported revenue growth of 41.3% year-on-year. The export domestic mix was at 72.5% to 27.5%. Injectable tablet, nutraceutical, dosage mix was at 71.9%, 27% and 1%. In FY '25, we reported revenue growth of 28.8% year-on-year. The export domestic mix was at 81.5% versus 18.5%. Injectable tablet, nutraceutical, dosage mix was at 58.7%, 37.1% and 4.2%. Now, let us provide you an outlook for FY '26 across key verticals. As we look ahead to FY '26, we are pleased to share the outlook across all 3 of our verticals. First on Sanjivani Paranteral Limited. Over the past 5 years, we have significantly strengthened our business through focused initiatives such as new product development and expansion into new geographies. This strategic focus is reflected in the robust revenue growth from INR 17 crores in FY '20 to INR 70 crores in FY '25, underscoring our strong execution capabilities. Our facility successfully underwent multiple regulatory audits during the year. Notably, we received site approval from the regulator of a Francophone African nation. This approval not only enables market entry into that country but also opens doors to multiple other French-speaking African nations. We filed 48 new products in this region during the year, which will drive future growth. We are also making steady inroads into Central and Latin American markets by expanding both our product portfolio and market presence. Secondly, on SPL Infusion Private Limited. The Pune facility is now operational and commercial production will start shortly. Validation batches are underway and are expected to be completed within the next 10 days. The facility already has a robust order book that covers the next 90 days. This plant marks a strategic milestone in strengthening Sanjivani's presence in both institutional and private label health care segments. The Indian IV fluids market represent a significant long-term growth opportunity. Current domestic demand stands at approximately 7.2 billion bottles annually, while the installed capacity is only around 2.4 billion to 2.8 billion bottles, indicating a substantial supply-demand gap. Additionally, the IV business has high barriers to entry due to the difficulty in manufacturing sterile injectables, large packing volumes, transportation constraints and its institutional client base. Additionally, the exports opportunity is in multiples of the domestic one. On the revenue front, FY '26 will be the first year of commercial contribution from the Pune facility. Finally, on Alevia Healthcare, Prague. During FY '25, we successfully established our final stage manufacturing facility in Prague and initiated commercial operations. The early response has been promising, with encouraging feedback on both trial and commercial batches. Multiple prospective customers have visited the facility, strengthening our confidence in scaling up. We expect significant expansion in commercial operations from this joint venture during FY '26, positioning Prague as a meaningful contributor to our overall growth. Our presence in Czech Republic provides us customer access to broader European region, with total addressable market size of around EUR 70 billion. The nutraceutical market in Czech Republic and wider European region presents a growing opportunity, driven by increasing health awareness, aging population and a strong preference for preventive health care. The local manufacturing is going to be one of the significant factors alone. Globally, the nutraceutical market is valued at $330 billion approximately. We are trying to enter into high consumption developed markets such as the United States, GCC countries and other key regions of the developed world where demand for nutraceutical is already well established. Europe manufactured nutraceutical products have greater preference and acceptance in these markets. In summary, FY '26 is shaping up to be a pivotal year for the company. Building on the strong foundation laid in FY '25, we anticipate continued momentum driven by our strengthened base business, first full year contribution from our Pune facility and accelerated scale-up of the Prague JV. Our expectation reflects a dynamic growth trajectory, fueled by growing base business and our unwavering commitment to new strategic initiatives through joint ventures that enhance overall growth outlook for the company. We remain confident in our ability to deliver sustainable value to stakeholders in the years ahead. With this, let me hand over to our CFO, Mr. Pritesh Jain, for updating you on the financial performance.

Thank you, Srivardhan. Good evening, ladies and gentlemen. A very warm welcome to you all. Let me share some updates on the financial performance of the company. We would first update on Q4 FY '25 performance and then FY '25 performance. So coming on Q4 financial year '25, the company has reported a revenue of INR 18.2 crores and a growth of 41.3% year-on-year basis. The growth in the revenue was driven by revenues from the newer products and volume expansion of the existing products. The EBITDA was at INR 3.1 crores, a growth of 37.9% year-on-year. The EBITDA growth was due to the overall cost optimization. EBITDA margins were at 16.8% vis-a-vis 17.2% reported during the same period last year. Profit after tax was at INR 2.2 crores, a growth of 74.4% year-on-year. The profit after tax growth was a reflection on a broader operating performance. Now, coming on the full year financial year '25. The company reported a revenue of INR 70.1 crores, with a growth of 28.8%. EBITDA was at INR 11.6 crores, with a growth of 32.1% year-on-year. EBITDA margins were at 16.5% as against 16.1% reported during the same period last year. Profit after tax was at INR 8.1 crores, with a growth of 31.4%. The growth was a reflection on a broader operating performance. We have incurred a CapEx of INR 3 crores to INR 4 crores during the financial year '25 for the existing plants. In financial year '25, the company added 15 new products and the total count as of 31 March '25 stands at 160 products. The company plans to add 15 to 20 products in the coming year. During the financial year '25, we expanded our geographical footprint and entered 5 new geographies. With this, we can now open the floor for question-and-answers. Thank you.

[Operator Instructions] Our first question comes from the line of Shaurya Punyani from Arjav Partners.

First, just [ INR 3 crores ] net of 30-odd percent you have achieved. So is the growth momentum expected to continue? Like can we achieve the same number next year?

Your voice is not clear. Can you come again?

Sir, is the growth momentum expected to continue next year as well?

The broader outlook will be only available during the AGM time, and we are trying our level best to have it maintained, but we cannot confirm the same speed right now. It would be in the same aspect.

Okay. And sir, what is the capacity utilization?

Your voice is breaking.

Yes, sir. Before you go ahead, Mr. Shaurya, may I request that you use your handset, sir, in case you're using a Bluetooth device?

Sir, what is our current capacity utilization percentage?

Sir, could you repeat your question, Mr. Shaurya?

Sir, what is the current capacity utilization?

Yes. The capacity utilization for the Mumbai plant is around 65%. And for the Dehradun plant, we stand at 40%.

Okay. And by what level are we -- expected this year, like if any ballpark number?

The Dehradun plant is expected to ramp up, say, around 50% to 55%. On the Mumbai plant, we prefer keeping the plant around 70% to 75% level, which was there in previous quarters. We expect it to be around that level.

[Operator Instructions] The next question comes from the line of [ Parth Shinde ], who is an Investor.

I just wanted to know for the next 1, 2 years, what product segments are likely to drive the growth for the company?

Currently, we are already present in most therapeutic areas. We will continue to expand in the same category only. They are central nervous system, cardiovascular, anti-diabetics, anti-allergic and so on.

Okay. And what is the debt that we can expect for the company in next year, next couple of years?

So let me answer this question. So the debt levels for the coming financial year would remain at the same as at March '25. And beyond March '26, we would -- it would be too early to comment for us at this juncture.

[Operator Instructions] Our next question comes from the line of Divesh Tated with Finterest Capital.

Congratulations on a good set of numbers. I just wanted to know about the 2 JVs. If you could give clarity about the HAL and the Prague JV. What are they running on, if HAL will give numbers in Q1 and also about the Prague facility.

So for the Prague facility, we are doing nutraceutical that is based out of Europe, what -- basically in the nutraceutical space, we are offering white labeling services. And we are currently in discussions with many customers who -- some of which have already visited the plant as well and further discussions are going on with some -- there are some trials going on, with some there are some analysis going on. So that is the current status of the Prague JV. And for the Pune JV, we are -- I mean, the plant is ready to go now and the commercials should begin very soon.

Okay, sir. And I just wanted to know about the thing that you have mentioned that we are in nutraceuticals and also in Europe. So it is a very tough market to get in. So what edge do we have, sir, so that our products will go live there, sir?

So currently, out of our India business, we are also a contract manufacturer for a very large nutraceutical company of the world. So we bring that experience of manufacturing quality nutraceuticals and that reputation that comes along with it. Regarding how we enter into the European market, we have our partner, Vitabiotics, with whom we are working, as well as having a facility in Europe gives us the label of Made in Europe, which is a very exclusive label, and it is a choice of preference in most markets that we go. And coming from the manufacturing background of India, we will be able to keep our running costs low in Europe. So that will enable us to offer European label products at a more economical price.

Our next question comes from the line of [ Priya Sachdev ], who is an Investor.

Congratulations on your numbers. I had a question regarding the working capital. How exactly has been the working capital movement throughout the FY '25? And what do we expect in the next 2 years probably?

So we have improved a bit on our working capital cycle, if you see the numbers. And going forward also, we will be on an improving trend only.

So can you give me the breakup of inventory or payables? How exactly do we expect it to grow or reduce by days?

Ma'am, we can't give you the exact inventory details on the call. But if you see the inventory trend as far as the numbers are concerned, we will continue to be in those trends only. As far as inventory, payables and receivables, we will improve by some further.

[Operator Instructions] Our next question comes from the line of Anant Khandelwal from Ashika Institutional Equities.

Congrats on a good set. I have a couple of questions. My first question is on -- have you started booking any revenue from the HAL plant?

Can you come again?

Sir, may I request that you use your handset, sir? Your voice is coming slightly muffled.

Yes. Is it better?

Yes, sir. Please go ahead.

Yes. My question is on whether we started recognizing any revenue from the HAL deal that we have -- have we started with revenue recognition?

No, this will be recognized in the current year, not in the last quarter which we closed. And it is as per the guideline, which is there, and it is well in the trend.

All right. And what's the geography split in the injectable business, if you could kindly repeat?

Sir, your voice is breaking, sir. May we request that you use your handset, sir, in case you're using a Bluetooth device?

Is it better now?

Yes, sir. Please go ahead.

Yes. My question is on what is the geography split in the injectable business?

So injectable and oral both, the geography split that we have shared on the presentation, injectable and oral, both are pretty much aligned on that front. Maybe a little bit more towards the Latin American market, but not by a massive number.

All right. And if you could share on what could be our anticipated product mix in FY '26?

Do you mean in terms of injectable versus oral?

Yes, yes, yes. Yes.

Yes. So it should remain the same only because we are working with similar kind of products and both the plants, we are pitching in all the markets that we are present in. Injectable definitely has more uptake since the volumes begin pretty quickly on that front. But oral is also going pretty well, given our service and our treatment of the customers. So the mix should remain the same only.

Our next question comes from the line of [ Kiara Singh ], who is an Investor.

Can you just give me a -- share the outlook for FY '26 in terms of revenue, EBITDA, PAT and margins?

Ma'am, we wouldn't be giving or sharing the exact margins as of now. But as far as the going forward trajectory in terms of revenue and profit, we will be in the same range.

Okay. And going forward, if we had to break down in terms of geographies, from where should we expect growth to come, from which geographies in the near term?

So currently, we are stepping into the French, African market, and it is a pretty time-consuming market from our -- what our initial research shows. Ideally, we expect growth to come in from there, but that will be on the later end of the FY '26. For the current 2 to 3 quarters, we are majorly focused on to our existing markets in the Middle East and the Latin American zone.

Our next question comes from the line of [ Akash Verma ], who is an Investor.

Congratulations for the good set of numbers. So sorry, I just missed the initial comments. Can you please help me with the -- how many new products were launched in FY '25?

Yes, we managed to launch 15 products. So that takes our total basket up to 160.

Great, great. And what are the, like, planned launches for FY '26 and FY '27?

FY '27 is a little too soon to comment right now, but FY '26 also we are slated to launch 15 to 20 more products.

Nice. And just wanted to know that your employee costs have increased significantly. So how many employees are now versus FY '25?

So we have new employees and since newer geographies we have entered and the market requirement for regulatory team is higher and a lot of intellectual property people have joined the company into the marketing field, so that is the reason it has increased, and it will be taking care of the volumes which are being increased.

Okay. And how many people are there in research and department and sales?

In research, both the plants put together, around 13 people are there. Regulatory, we have got around 14 people.

Our next question comes from the line of Parth Shinde, who is an Investor.

I just wanted to understand about the HAL JV. How has that been shaping up? And in terms of meeting the targets that we set for us, how is that performance doing?

As we told you earlier in the starting remarks that the plant is fully commissioned and the trial batches are on and [ strategic ] things are going on and commercial production will start. We cannot expect the first year to be 100% capacity utilization. First year, we'll be doing around 60% to 65% of the capacity utilization, and that is very well on track. And in the beginning, we have told that the order books are also in place for first 90 days, and things are looking good from here.

[Operator Instructions] Our next question comes from the line of Anant Khandelwal from Ashika Institutional Equities.

I just wanted to ask that are we on track to start our commercial production at the HAL JV in the first quarter? And should we see some numbers coming in in the first quarter? Or is there still some -- is the situation still a little dicey or so? I believe there is some kind of a delay in the commercialization of the project. If you could give us some idea about it, that would be helpful.

Yes. As you are asking everything, and we are also very much eager and by god's grace and hope everything, we should have some commercial production in this first quarter.

And any color on the kind of -- I mean, of course, you cannot give me the exact numbers, but any ballpark numbers that you could...

Your voice is not unclear.

May we request you to use your handset again, please?

Yes, I was using my handset only. Is it better now?

Yes, sir.

Yes. I just wanted to understand that -- I understand that you cannot give us the exact number, but if you could give us some kind of ballpark as to where we could see these numbers going ahead, let's say, now that we are already 2 months into the quarter. So we cannot expect a lot from this -- in this quarter, but the kind of numbers that we can expect going into and so on and so forth.

See, as we told you earlier through S-Ancial in this year, volume and quantities which -- and the sales which we have committed, it is going to happen. And maybe some quantity may be less because the days are less in this quarter. But from the second and third quarter onward, it will be ramped up fully.

Our next question comes from the line of Akash Varma, who is an Investor.

Yes. I wanted to know for HAL, what was the CapEx in FY '25?

Yes. So the CapEx for the Pune plant was in the range of INR 30 crores to INR 35 crores.

Okay. And what are the key learnings of the last few years' growth in terms of like strategy, products, markets and regulatory?

So currently, we see people moving into the ROW markets more and more as post-COVID, lot of local manufacturing has started, starting with the developed market currently. And secondly, the learning about having a larger product basket is something that is playing along well with our market. Having a large offering definitely enables us to discuss and expand the customer's lifetime value and definitely enables us to enter markets with more strength.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Srivardhan Khemka for closing comments.

Yes. Thank you all for joining us today. We really appreciate your trust and support and continued confidence in us. We look forward to speaking again in the next earnings calls. With that, we conclude today's earnings call. Thank you.

Thank you. On behalf of Sanjivani Paranteral Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.