Sanjivani Paranteral Limited (531569) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to Sanjivani Paranteral Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is now being recorded. I now hand the conference over to Ms. Hazel Rathod. Thank you, and over to you, ma'am.

Thank you. Good evening, everyone. Welcome to Sanjivani Paranteral Limited Q1 FY '26 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 opening remarks, after which we can open the floor for the 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, Hazel. Good evening, ladies and gentlemen. A very warm welcome to all of you to the Q1 FY '26 Post Results Earnings 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 me start with a brief overview of the company. Sanjivani Paranteral is a WHO-GMP certified pharmaceutical pioneer with over 2.5 decades of experience specializing in manufacturing of 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 Herau. We cater to major therapeutic areas, including central nervous system, cardiovascular, antibiotic, gastroenterological, antidiabetic and antiallergy, supported by a strong R&D center. We categorize our business into 3 verticals, the base business, which is Sanjivani Paranteral Limited. This is the ongoing business, which focuses on formulation, sales and export markets. And in the Indian market, we are primarily a CDMO player, though we have nominal presence in the domestic formulations as well. The second vertical is SPL Infusion Private Limited. This venture is for manufacturing of IV products and here, we hold 60% equity. And the third is Alevia Healthcare, which is the nutraceutical venture in Europe, where we hold 45% equity. Let me begin with macro backdrop, which played an important role in shaping the Q1 performance. The quarter unfolded against a global environment that was both volatile and complex. Trade policy uncertainty was high, tariff structures in certain key markets were revised mid-quarter and negotiations between regional trade blocks created ambiguity in customs documentation and compliance rules. Geopolitical tensions, especially in parts of Middle East, directly impacted major shipping corridors. The security situation in Red Sea continued to disrupt the Suez Canal route, a key artery for moving goods between Asia, Africa and Europe. Many carriers were forced to divert vessels, which not only added incremental days of transit time but also increased voyage costs due to additional fuel consumption and higher insurance premiums. On top of route diversions, global container logistics remained under strain. Container availability was tight in several high-volume ports. This was compounded by congestion at transshipment hubs where vessels queued for days awaiting berths. In some cases, our consignments were loaded later than scheduled simply because the container equipment was not available at the origin port when needed. Currency and commodity movements also added to complexity. Crude oil prices moved within a volatile band during the quarter. These factors collectively kept input cost pressures alive for pharma manufacturers globally, even when core API prices were relatively stable. Turning to the pharmaceutical sector. Despite these macro headwinds, the industry continued to show resilience. Demand for essential medicines remained strong, driven by both chronic therapy needs and acute care requirements. Health care investment trends stayed positive, particularly in emerging markets. Public health spending continued to rise with governments in Africa, LatAm and parts of Asia expanding hospital capacity and access to medicines. These developments support a medium-term growth trajectory for the sector. That said, temporary supply chain bottlenecks did constrain execution in Q1 FY '26 but these are expected to normalize progressively over the year. For Sanjivani Paranteral, macro factors related to shipments had an impact during the quarter. However, the underlying demand remains intact and the logistical situation is already showing signs of easing. With our diversified market presence, diversified product portfolio and planned new product introductions and new market entries in the coming quarters, we remain confident on delivering a stronger performance for the rest of FY '26. Now coming on company's performance. Sanjivani delivered a steady performance in Q1 FY '26. Overall, the growth was driven by revenues from newer products and volume expansion in existing markets. In Q1 FY '26, we reported revenue growth of 8.9% year-on-year. The export domestic mix was 73.7% to 26.3%. The injectable, tablet and nutraceutical mix was 50.2%, 49.3% and 0.4%, respectively. During the last quarter of FY '25, the company successfully declared dividend for the first time in its history. This decision reflects the company's improved financial performance and underscores its commitment to rewarding shareholders while enhancing overall shareholder value. With this, let me hand over to our CFO, Mr. Pritesh Jain, for updating you on the financial performance in detail.

Thank you, Srivardhan. Good evening, ladies and gentlemen. A very warm welcome to you all. Let me share the updates on the financial performance of the company for Q1 FY '26. The company reported a revenue of INR 17.9 crores and a growth of 8.9 percentage year-on-year basis. The growth in the revenue was driven by revenues from the newer products and the volume expansions. The EBITDA was at INR 2.7 crores, a growth of 10.8% year-on-year. The EBITDA growth was broadly in line with the revenue growth. The EBITDA margins were at 15% vis-a-vis 14.7% reported during the same period last year. Profit after tax was at INR 1.7 crores, flat year-on-year basis due to higher depreciation and interest expense. With this, we can now open the floor for question and answers. Thank you.

[Operator Instructions] The first question if from the line of [ Akash Patel ], who is an individual investor.

I had 1 question -- a couple of questions. First one on what is the status on the Pune venture? When will the commercialization start on that front? And the second one was on the status of Prague JV, when -- so when will the commercialization start over there as well?

Yes. Thank you. See Pune plant, the validation batches and stability batches have already been done and the final audit has been completed. We are expecting the commercial license in this month itself and the commercial production will start by the end of this month or first week of September. And regarding the Prague, we have started the small order processing has already started. Commercialization is on. And since being Europe and a lot of restrictions are there due to the geopolitical situation but things will be improving within a month's time and those will be reported once the year ends in December for the European markets.

Right, right, right. Yes, that were the main questions from my end. And any guidance on how -- what's on the future -- how is the future looking like in the near term?

It will be as per the guidelines which we have given and the company will be on the right path and things will be better to look upon.

The next question is from the line of [ Ria Sharma ], who is an individual investor.

I had to ask you regarding the capital expenditure. So what is the CapEx for the base business for this quarter? And what are our expectations for the FY '26 and '27 year?

So the CapEx part we had already provided the numbers on a annual basis in the previous and we stick to those number and we do not share the numbers or disclose for the quarter-on-quarter basis. And as far as the whole year financial '26, the numbers would remain as disclosed in the previous quarter and '27 would be too early to comment as of today.

The next question is from the line of [ Sagar Mehta ], who is an individual investor.

[Technical Difficulty] question on SPL [indiscernible]. So what is our planned revenue and capacity ramp-up trajectory for this unit? And what is the annual revenue potential we see for FY '26 and '27?

Yes. Sagar, could you please repeat your voice got interrupted in the middle.

Yes. So my question is, it's a follow-up question on SPL unit. So what is the planned revenue and capacity ramp-up trajectory for this unit? And what is the revenue potential for the FY '26 and '27 in this?

Yes. So the plant is expected to start within this month only. We see the plant starting and ramping up to 65% to 70% capacity in the first year. As far as the revenue potential, we have commented on the same in the earlier calls. I will again specify. We will reach around INR 75 crores to INR 80 crores of top line from this plant.

Okay. And sir, with regards to the order book and the export opportunity within this part. And what is the margin guidance would be from this unit?

Yes. So again, Sagar, we have mentioned the numbers in the previous call. They are not currently on the tip of my tongue right now. We can come back to you on that. But they are mentioned in the transcript now.

The next question is from the line of Anupam Agarwal from Lucky.

My first question is again on SPL unit. I interacted with you in the last call and the idea in the guidance that you had called out that time was to get approval in April itself and to start commercial supplies from May. Why has there been a delay in getting approval from the party?

So it is -- Anupam, it was not that the inspection, everything was over, stability studies and validation batches were going on after that. And this takes time because the Government of India's new guideline on GMP and Schedule M revised has been come into effect. And that is why the reason was there for delay in this. And we have the final inspection done recently and we may expect the license at any moment. The trial batches, everything for stability has been kept already from the month of June, July and start of August. And commercial will be starting by the end of this month or subsequent, this will be there on the line.

And why is there a delay in getting the approval? Is it because we conducted the trial batches in a delayed manner or what?

No, no, it is not that we had conducted earlier. There's a -- now there's an online system. The online system, there are a lot of companies who are there in pipeline. We are, in fact, ahead. There are many companies in India who are in the line for the last 8 to 9 months. And once those are processed, they can't do. For us, it has been done out of the way to take it ahead in CDSO (sic) [ CDSCO ] website, Delhi.

Understood. So now like you are saying commercial supplies will start in September?

Yes, yes.

Okay. Understood. My second question is, if you can maybe call out a couple of more reasons as to exactly what happened in the logistic issue because I'm hearing this only from your comment and not from any other pharma company comments as to logistics being a major reason for the setback in this quarter. What exactly happened? If I see sequentially, our sequentially numbers have been slightly on the poor side, particularly on the injectable side. So if you can maybe give some idea there?

Yes. So Anupam, actually see the logistics aspect, it impacts certain ports. So what we experienced when shipping product to Latin America was lack of container availability. And this might have happened due to the ship shortage -- the vessel shortage that is heading towards that direction. Secondly, we feel that there is some kind of choke that the Chinese carriers also create. And in the Middle East area, where we ship our product, the Iran aspect has affected the movement of the vessels. So all in all, logistics has been an impact to our operations in terms of the shipping of the final product. Now coming to your second -- could you repeat your second part of the question, please?

It was on the injectable side. Sequentially, INR 13 crores of revenue has gone down to INR 9 crores. Any particular reason behind that?

Sir, no particular reason. As you know, the total size of the company's revenue is not that large. It is just order lumpiness. This quarter, it has dropped. The next quarter, it will pick up. It's nothing to do specifically with the business per se.

To say that Q1 is slightly a leaner quarter and it picks up over the second, third and fourth quarter?

Yes, correct. Correct. You can see our trend in the past also. Q3 and Q4 are always better for us compared to Q1 and Q2.

Okay. Understood. Any idea -- any color you can give us on the pricing and volume for the CDMO business? Is that certain thing -- is that something that is affecting?

No, not as such. The overall Indian market is -- has slowed down in terms of volume. So we have not -- I mean, we personally have not experienced any impact from that because we have a very small portion of our revenue coming from the CDMO business. And as regards to pricing also, we have not experienced much pressure on the CDMO front since these are long-term contracts and long-term relationships that have been going on for more than decade.

Understood. Just a bookkeeping question. There seems to be a major dip in other expenses line items sequentially from INR 4 crores to INR 2.5 crores. Can you call out the reason behind that?

Yes. So there's a drop, as you said. The primary reason for those is, one is the cost optimization. And secondly, we had a very fewer audits in the current quarter compared to the previous quarter.

Slower, sorry, what's slower?

We had lower -- we had fewer inspections for our plants as compared to the previous quarters.

Okay. Understood. By when are we expecting the Prague income to come in the P&L? Is it December that you called out?

Yes, yes, December will be hearing. And in the fourth quarter, the income will be shown in the balance sheet.

So Q4 basically now.

Yes, yes.

The next question is from the line of Tanmay Jhaveri from Finterest Capital.

Sir, my question is, last con call, we mentioned that we'll be adding new products and new categories -- we'll be introducing new product categories. So have we done any so far in this quarter?

In Q1 and Q2, both put together, we have added around 8 products. No specific guidance on the categories as such but we have added 8 products to our portfolio.

Okay. And so my next question is, if we see quarter-on-quarter, our nutraceuticals revenues have been going down. So like how do we see this segment performing in the next few quarters, maybe Q2, Q3?

We definitely see this picking up. Due to the geopolitical tensions, the first preference is always given to medicines. So we are active in many war zones. So that impacts our nutraceutical revenue. However, we see it will recover and grow from here on.

Okay. And if you could just give some guidance on the margin going forward for this year?

Yes. So the margins would be in the same line as the guidance has given. So for base business at EBITDA level, we should be around 15-odd percentage.

15%. And so considering that I guess will it be fair to say that we'll be doing around INR 75 crores to INR 80 crores of revenue this year?

Yes, correct. This year, we will be doing around INR 75 crores to INR 80 crores.

The next question is from the line of [ Pankaj Kumar ], who is an individual investor.

So sir, I'm seeing that EBITDA margin is stable on yearly basis and quarterly basis, which is 14.8%. So my question is that what is the outlook on EBITDA margin and the driver for the same?

Yes, we are back online. I think there was some network issue.