Sanjivani Paranteral Limited ($531569)

Ladies and gentlemen, good day, and welcome to Sanjivani Paranteral Limited, Q4 FY '26 Earnings Conference Call hosted by Kirin Advisors Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand conference over to Mr. Karan Thakur from Kirin Advisors Private Limited. Thank you, and over to you, sir.

Good morning. Thank you on behalf of Kirin Advisors, I welcome you all to the conference call of Sanjivani Paranteral Limited. From the management team, we have Mr. Ashwani Khemka, Chairman and Managing Director; and Mr. Pritesh Jain, Chief Financial Officer. With that now, I hand over the call to Mr. Pritesh Jain for the opening remarks. Over to you, sir.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us for the Sanjivani Parental Limited's Q4 and full year financial year '26 post results earnings conference call. Disclaimer. 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, contain or may contain certain forward-looking statements concerning our business prospects and profitability, which are subject to uncertainties, and actual results could differ from those in such forward-looking statements about the company. For the benefit of the participants who may be joining us for the first time, Sanjivani Parental Limited is an WHO GMP certified pharmaceutical manufacturer with over 25 years of operating experience. We specialize in sterile injectables and oral solid dosage form with a primary focus on essential and life-saving therapies. Our products are exported to more than 25 countries across the emerging markets, and we operate manufacturing facilities in Navi Mumbai and Dehradun, supported by an in-house R&D capability. In addition to our core formulation business, we are building new growth platforms through joint ventures in IV fluids in India and nutraceutical manufacturing in Europe. Financial year '26 marks an important year for the company as we transition from a single engine business to a multiple vertical growth platform. It is a first year of contribution from Pune infusion facility to the consolidated revenues. Our overseas nutraceutical venture continues to build commercial transaction. This is a result of strategic investments we made over the past few years to diversify both our manufacturing base and the revenue streams. Macro markets. During quarter 4 financial year '26, the export environment remained normal during Jan and most of February. However, towards the end of February, Iran-related geopolitical conflict disrupted the trade activities across the Middle East region. The situation impacted shipping routes, vessel movements, cargo handling and export logistics across the region. Since the Middle is a -- Middle East is a key export market for the company, we were not able to execute exports during the month of March 2026 due to disruption in the shipping and trade movement. As a result, revenues for the quarter were impacted. In addition, the company witnessed an increase in the raw material and the packing input cost during March '26. Higher input prices, along with lower operating leverage due to export dispatches impacted the gross margins during the quarter. Pharma sector. The pharmaceutical environment across a key export market remains robust with stable demand and healthy business activity during the quarter. We continue to see steady inquiries and consistent demand across key product categories and geographies. Export opportunities for the Indian pharmaceutical companies remain strong, driven by cost competitiveness, manufacturing capabilities and rising global demand for quality generics. Management is optis -- optimistic about the medium to long-term outlook and sees a significant opportunities in the international market. Company performance. Coming to the company's business performance due to disruption in export operations during the month of March '26 and resulting loss of export revenues, Q4 revenues witnessed a year-on-year decline. However, the company subsequently implemented alternative export and logistic arrangements to stabilize the shipments and normalize export operations. Management is now seeing improvement in export execution and expect a broader recovery in the export revenues during Q1 FY '27 that is April to June 2026 quarters. Hence, we believe that the impact of the disruption is now largely behind us. Our IVF facility in Pune, had reported revenue contribution of approximately INR 1.2 crores in Q3 financial year '26, which increased to INR 2.7 crores in Q4 25 -- in Q4 FY '26. The business is witnessing encouraging traction on the commercial front with customer engagement and order execution gradually improving. As highlighted earlier, while the facility itself is approved and commercialized, product-wise approvals remain an ongoing process. Commercial scale-up is therefore linked to addition and approval of individual products over the time. The company continues to -- continues to make progress on this front and part of operational traction is already reflected in Q4 FY '26 performance. Management expects sequential further improvement in the business contribution from the facility during Q1 FY '27 and over the subsequent quarters as additional products get commercialized and scale up continues. Outlook for financial year '27. Now coming to the broader outlook for financial [ '23 ]. We expect stronger momentum across all three verticals. In the base business, with export operations now broadly normalized, we expect recovery in the growth in line with underlying demand environment and continued expansion in export markets. In IVF business, FY '27 should see a clearer full year impact of operations supported by gradual scale up in commercialization and product portfolio expansion. Similarly, in plant-based nutraceutical venture, we expect improved traction during financial '27 as commercial activities continue to progress. Overall, we remain optimistic that financial year '27 will be a stronger year for the company, supported by improving contribution from all three business verticals. Transitional factors. Now on some of the transitional factors, crude oil prices and USD movement remain important variable for the input cost of the business. Certain raw material prices are linked to oil derived supply chain, while a meaningful portion of raw material procurement remains import dependent. Accordingly, sustained elevated crude oil prices and unfavorable currency movement can have some impact on input cost. While part of the cost increase can be passed on, some portion of the input cost pressure may have an impact on margins during the period. However, these are largely transitional factors and should moderate as operating conditions normalize. Now coming to the financial performance. So let me share the financial performance of the company for Q4 FY '26, stand-alone business performance. The base business reported a revenue of INR 105.1 million, reflecting continual operational movement across our core markets. EBITDA stood at INR 16.58 million, while EBITDA margins were at 14.7% during the quarter. Profit after tax came at INR 9.4 million. Segment-wise performance. Injectable revenues stood at INR 46.7 million, contributing to 44.43% of the revenue from operations. Tablet revenue stood at INR 54.6 million, contributing 51.95% of the revenue from operations. Market-wise performance. Export constituted 85.26% of the revenue from operations at INR 89.62 million, while domestic business accounted 14.74%. Core markets of Latin America, Middle East and Africa and CIS accounted for 76.09% of the revenue from the operations. Consolidated performance. On a consolidated basis, the company reported a revenue of INR 132.1 million during Q4 FY '26. EBITDA stood at INR 21.73 million with EBITDA margins at 15.74%. Profit after tax stood at INR 5.5 million with a PAT margin of 3.97% during the quarter. With this, we can now open the floor for question and answers. Thank you.

[Operator Instructions] We have first question from the line of Vinod shah from VS Ventures.

So, our revenue was down this financial year. So like what was the reason for that, especially in this quarter? So -- and how do we accelerate from here?

So as I discussed earlier when the -- during my opening speech, the March month for this quarter was highly affected due to the geopolitical tensions on account of war between U.S. and Iran. So the shipping routes, availability of the containers, and the logistical chain was disrupted. And hence, we couldn't do major shipments, which we normally do every year in the month of March. So that was the prime reason for drop in the revenues for the current quarter. Going forward, as I again said in the opening speech, we have found out alternate routes and modes to ship our material. So we have already started the shipments, and we expect a fair bit of recovery happening in the Q1 numbers for the current financial year.

Okay, sir. And what would be your like target for FY '27?

The targets for FY '27 on a base business, we should be around 80%, 85%. And on the IV Plant from the Pune, we should be in the range of 60% to 65% for the annual. Though these are annual numbers, but the quarterly numbers may vary but on an annual basis, we would be committed to those numbers.

So currently with tablet I think in this table have over50% of our revenue. So how do you see this product mix like in next two, three years? So I would saying [indiscernible] tablets currently contribute around 50% of the revenue. So how do you see this product mix evolving, let's just say, over next two, three years?

In two, three years down the line, the injectable will be study and it will be increasing, but tablet and capsule portfolio will be substantially increasing because tablet and capsule dossiers we have filed in various other countries and those dossiers acceptance and approvals are expected in the coming year. Few we got it last year and this we are expecting the same and it will be increasing, tablet portfolio will be increasing more. And when IV comes in picture, so I will be separate. And there also same thing will have export and domestic and institution.

[Operator Instructions] The next question from the line of Abhishek Basar from Alpha Well.

So my first question will be the new IV Fluid Infusion Plant in Pune that has commenced commercial production. What are the current utilization levels? And what does the ramp-up time line looks like over the next four to six quarters?

See, we have just started commercial production last year December 2025, and it's gradually picking up. And in the current coming year in the four quarters, it will be gradually 40%, 45%, 60% and by the fourth quarter, it will be at the 70% utilization.

Okay. So when do you expect the Pune facility to make material and visible contribution to your top line and margins? And what revenue potential does this plant represent at full capacity?

This year, it will be giving a representation in the balance sheet as our CFO told you very clearly that this year annually we will be doing around a revenue of INR 60 crores and it will having a profit that will be contributing to the main balance sheet and by gradually it improve -- improves and the capacity and utilization will be exceed -- exceeding.

Okay, sir. And also, I would to know about the nutraceuticals contribute only approx 3.45% of your revenue, right? So is something you plan to invest behind and scale meaningfully? Or does it remain a small opportunistic part of your portfolio?

Currently [indiscernible] current [indiscernible] owns 45% in that JV. And we are under negotiation for major -- majority stake, but it is yet to happen. When it will happen, we'll be announcing it. So in our balance sheet, the sales won't reflect because we are minority shareholder. What is the profit will be added to this manage?

Also, I would like to know about the export contribution that are nearly 78.5% of your revenue heavily consist of this region, CIS, Middle East and Latin America political volatility, if some of this region, how are you like thinking about the geographic diversification and de-risk the business?

No, we are not -- we have done export revenue contribution in the total turnover is 76%. Our risk is spread. We are into Latin America, MENA region, CIS, Southeast Asia. So nobody's having a lopsided effect CIS region is a very small contributor to the total turnouts.

[Operator Instructions] The next question from the line of Pratik Sha who is an in individual investor.

I just wanted to understand on [ IV Pune plant ]. So they have guided for approximately 15 million bottles for annual capacity. So could you share the production and the sales volume achieved in the last quarter along with what is the expectation for FY '27?

See the capacity installed is correct 50 million and last quarter we did approximately we had a revenue of INR 3.5 crores in all four months and as far as the bottle counts are concerned, it would be roughly 2 lakh bottles only as of now.

And what about the mid of revenue outlook for Prague Ventures?

Prague venture is a nutraceutical and as we told earlier also in the replies, we own 45%. We did a revenue of EUR 500,000 to EUR 600,000 last year and there balance sheet accounting is Jan to December. And being the first year, the profit did not come to our books. It will be released only in current year. And that is ramping up. And this year, we have a good order book in Prague, and we are doing healthy business there. And that is not affecting much due to the logistic issues. As you all are aware, the logistic issues have been a big issue, not only logistics is only a part -- but with the logistics comes many supplies from Middle East, like aluminum. India is dependent heavily on aluminum from Middle East, plastics. So those things are theoretic in supplies and the prices have gone up. So you have to maintain inventories to procure the orders and have a stock with you to suffice the current year.

Sir, can you please guide me how 2 lakh bottles give us the INR 3 crores revenue in Pune plant? Can you please elaborate?

Yes, just to correct myself, when I said 2 lakh, it wasn't 2 lakh, it was 2 million bottles. So that is a correction from my side. So 2 million bottles is contributing a revenue of around INR 3.5 crores.

Okay. So considering we have seen these logistic deception in the last quarter, how we are seeing this panning out for the next one or two quarters? Will we see some pain in the next one or two quarters or we are already over with it?

No see this till it is normalized, I don't know how long it will take we wait before the government is negotiating. But we have found out different routes. We are transporting our goods to Saudi Arabia to Turkey. And from there, we are distributing it. And it is -- cost has also increased in the logistic fair and other route is to Southeast Asia. So these are the tools everybody is focusing on and due to shortages of container and the shipping lines. So this challenge will be there for few one or two -- three months and then it we hope it will be normalized.

So as you mentioned the logistic cost and every expenses will be -- so what margins can we expect for F27 it will be dip or it will be in the range of 16%, 17%.

No the margin dip will not be there as you know the dollar has appreciated so that is covering up most of the things. So that part will be taken care of on that margins will be added the live what has been told.

The next question from the line of Matrishah from Sappire Capital.

First thing on the IV side, could you help me out with what sort of steady state margins do you expect on the IV business going forward?

Going forward on an annualized basis, we expect EBITDA margins of around 17% to 18%.

And currently for FY '26, we break even on the margins for the IV business?

Yes, we were able to achieve the EBITDA margin target, which we mentioned right now. But the interest in the depreciation part is taking since it was a newly operated or newly started business. So gradually, even that will even out and the bottom line will come out properly.

We expect to break even in FY '27 is that -- and the capacity year is 60 million or 16 -- 16 million?

Definitely yes 100%. The capacity for the whole year is 16 million on annualized.

Okay. And the 2 million bottles that we kind of had sales for the INR 3.5 crores, that was for quarter three and quarter four. Is that?

Correct.

Okay. Okay. Secondly, you mentioned that we'll be also increasing the IV business internationally. So the guidance that you gave of INR 60 crores, INR 65 crores, are we expecting any international sales coming in this year or we still need to -- and the margins on the export side are on the similar range, 17% to 18%.

yes this year and we expecting same this current year only and we are similar and sometimes better also.

Sometimes better also. Okay. And the INR 80 crores, INR 85 crores kind of base guidance you've given for this year, it seems what sort of growth are we expecting on the tablets, on the injectables, and nutraceuticals? Where do you see the growth coming in from -- for this INR 80 crores, INR 85 crores guidance?

The growth is coming majorly from the injectable side and tablet also coming to equally 10%, 12% growth will come from injectable and 7% to 8% and nutraceuticals will also ramp up 8% to 9%...

8% to 9% -- and on the nutraceutical side, any time line on when we can be the majority stakeholders for that business or it's still in the...

No, we have been trying since last two years. We are waiting hope for the good.

Okay. So the nutraceutical business, we are directly adding the PAT to our numbers. Is that correct? Right now, we are not recording any revenue.

Yes. We add the PAT number to the balance sheet. But this year, we could not because that was the first year and limitations were not here. Current year, it will be limited and it will be added to the balance.

Okay. So they say there was no kind of proportion from nutraceutical?

No. It was at -- in our notes, we have mentioned it, we had our contribution was there. And since it's the first year, the European Union doesn't allow to take the dividend on the profit first year. Next year, it will be due.

Okay. That is great and any issues on the sales in April and May to Middle East right now because it kind of contributes the majority portion of our export revenue.

It's not majority, it's a divided in our regions. Yes, we face some challenges but now we have found a different route where we can supply our materials to those areas as I told my in my earlier statements we are looking via Saudi Arabia and to pass on the consignments in those areas.

And they are agreeing to take on the kind of extra charge on the logistics that is being added.

Yes some -- yes you have read some government notification also, some portion of this is going to be reimbursed by the government of India some small portion will be and some government buyer.

And on the aluminum and plastics also you mentioned that the sourcing difficulties. So are we able to kind of find alternative channels for those as well for raw matter?

Yes, yes. Raw material there's not much issue here only the packaging but like plastic is a major component and aluminium so that we have found a various speakers from China, Taiwan.

[Operator Instructions] The next question from the line of Tri Vikram Gupta from who is an individual investor.

Firstly, I just wanted to understand a bit on the receivable side. So we actually see receivables from FY '25 to FY '26 have stayed at similar levels. But if we compare to FY '24 numbers, there is a huge jump in receivables. So I just wanted to understand the underlying reasons behind this.

Yes. The receivables, if I compare to previous financial year, that is March '25, we were at 17.3 last year. This year, we are at 11.5, so there is an improvement in number of days reserve business this year.

Yes. So I -- but if you see last to last year, the receivables were considerably less. So why has this spurt in receivables come?

Yes. So if I see the turnover for last to last year, the turnover was too low. We were at around INR 54 crores, and we are still growing from that stages. So as we grow further, this number may vary even further.

Okay. But sort of sales has grown by INR 14 crores and receivables have grown by around INR 10 crores. So I just wanted to get an idea around that.

So, dear see the receivable numbers may not be in proportion to the increase in the revenues. It all depends on my newer customers terms of payment with the customers.

As you, gentlemen just see we had a sales turnover of the base business was INR 65 crores up and the receivable was INR 1.5 crores, okay? And this is just two months, 65 days cycle. And if you see last year, it has gone up to 90 days. So it has improved. So the entire market is not a cash market or an market. So 60 days is a very fairly good for a farmer in today's scenario if you are able to receive them -- our receivers within 60 days.

Next question that I have is regarding the infusion plant that we have. So you've been guiding for great -- good volume growth from this quarter. So I just wanted to understand when is the time line when we'll be on a INR 10 crores to INR 15 crore quarterly run rate? Can you just shed some light on this?

Second quarter, it will be same line, and we have already started ramping up. And this quarter will be a good quarter. But analyze we have told very clearly that we are going to cross around INR 60 crores.

Okay. Is there some quarter that you're expecting that we'll have an inflection point where we can reach INR 10 crores to INR 15 crores?

It would be difficult to comment on this right now because as I earlier said, we are more focused for the annualized numbers and commenting or saying anything for the quarter and quarter would be difficult at this juncture but definitely as we move forward from Q1 to Q4, we will be moving northwards moving.

And lastly, what margin profile are we expecting from our baseline business going ahead?

So the baseline business, the EBITDA would range around 15.5% to 16.5%.

We have next question from the line of Rupen Sha who is an individual industry.

So my first question is that the pharmaceutical and injectable space is seeing increase in competition from both like domestic and international players. So how are we differentiating on quality or pricing or customer relationship? Where is our competitive mode? I want to ask.

See we are in the industrial business for more than almost 2.5, 25 years more and we have not any quality issues and everything and our customer support and our customer tires are more than 15 years old. And we have been in developing new products every year for this markets and finding new dosers every year. So our base business is stable and with the customer base it is increasing gradually and we have opening new markets every years.

So it's like a legacy and relationship we have.

Yes. Plus we have more focus on the quality. So that is what is differentiating us plus the turn around time for deliveries of the material with the customers new as well as the past. So that is one more point which is differentiating us from the other players in the market.

Can you use any players direct like apple to apple comparison player?

It would be difficult to comment on other peers for an apple to apple comparisons because the markets which we deal the products which we deal may or may not be the similar markets and the products for them as well.

So any few if you want to mention that.

Yes, I didn't get the last sentence which you mentioned.

I mean any few if it's not an apple to apple but any business vertical we are you know similar with them so any peer you would like to mention?

Like see there is a company life science is there -- these are the companies they do what similar portfolios and similar cannot be 100% similar but there are.

My second question is have you seen any pricing pressure in your sport market that in the past years or have you are you managing without packetizing margin that's the case?

No, we are not importing much of our material import contribution is less than 1% of the total revenue.

Third question. My actually third question is could you give us a phase of our current working capital cycle like data days or inventory days and ...

There's a disturbance from your side. Please there's a call coming to you either. We are not able to hear you.

Sorry. Let me repeat my question that would you give us the sales of your current working capital cycle like data days, inventory days.

See the data days as I said earlier also we are improving year on year we would continue to improve. So right now from this financial year the data days were around 65 to 70 days. We would be in the range of 55 to 60 in the coming periods. The creditors will also improve because the more we have a fleet cash flow we can better manage the creditors and get higher discounts if at all. So this is how the working capitals will go look like going forward.

Any strange point up there are especially in given high expectations?

No.

And when do you think when do you think about five years from now as our future? Where does we look at like you know revenue or geographics or any product profile?

So it's a too long a period to comment right now. So we won't be commenting right now anything beyond a year.

[Operator Instructions] We have next question from the line of San Shura Karn from Financial Fitness.

What is the contribution of the Middle East for our top line?

So it's in the range of 40% to 45% region.

So when we say middle east we say middle east and Africa region both.

And can you please quantify the impact of this raw material price hike on the margin?

Raw money price has increased though in the month of March it was it had sky rocketed. Abnormally due to the war and certain speculation in the market who has a material they jack up the prices but now it is settling down and we are covered and we know we usually keep inventory of almost two months.

I mean if this price continues or sustain will we be able to pass on the raw material price increase to the customers.

Yes. Yes. Yes. We are very well aware of and we have done the same in the past also during COVID times also we had passed on this one to the customers.

And for the Pune IV facility how many products are currently approved and how many are in the pipeline?

Currently we have five approval and 18 are in the pipeline.

And what could be a timeline for the approval you know which are in the pipeline?

The pipeline approval should have come in the month of February and March but due to the issues in the approval process and transfer of people in the government it takes some time but we expect a quite chunk of approval in this month only and now the approval process initially it used to be very easier now if anybody who started a new plant and getting approval it is taking people two years with three years since we are in this field and injectable to many years so it was easier for us to get it but though it took some time and now we are in the line with this.

When you projected a topline of around INR 60 crores from this IV line so are you considering doing you know this 18 products which are in the pipeline as well to contribute.

Not full 18 from that 18 maybe six.

[Operator Instructions] The next question from the line of Shaki Sinde from Shency.

I have two questions on margins [indiscernible]

Your voice is your voice is not clear. Voice is not clear. We are not able to hear.

Sir, my question is on margins on EBITDA margins. I think this qurterly reported softer margin compared to the full year margin. So my question is to understand what will be the margin target for FY'27?

So this the big business we made the margin will be increasing as we have been in this similar market and the last hookups were there for the month of February and March and our many approvals are expected in this month and by this quarter. So newer and good higher person [indiscernible]

Again for the PAT if we look we have lower -- so my next question is again on margin on PAT margin which is like a lower is compared to the full year, so could you just walk us through a key drivers of that gap and whether any of those are onoff in nature?

See the PAT margins are derived from the EBITDA margins only. So the way my EBITDA margins will vary the similar variance would be also visible in the PAT margins. So as we said key we have some good products which are expected with higher EBITDA margins. So if those come into and as I already provided the guidance scheme the base business would have an EBITDA margin of 15.5% to 16.5 % range. So accordingly the PAT margins will also reflect going forward.

Okay. And as a new Pune plant scaler, how do you expect the fixed cost absorbation to play? And what is your medium-term EBITDA margin target for the business?

Ma'am for even for Pune we have said key for the whole year we would be looking at a number of around [ INR 60 crores ] grows on the top line and with an EBITDA margin in the range of 17% to 18%. So this will play out throughout the quarters. Maybe a quarter or two, we may see initial two quarters, we may see a low of EBITDA ,or strain on margins because the plant is newer the expenses would be higher but as we scale up in Q3, Q2, and Q4, the margins would be better and we will we would end up the whole year at around 17% to 18% EBITDA for Pune plant scaler.

We have next question from the line of vinosa from VS Master.

So sir, manufacturing you highlighted the manufacturing team. So could you walk us through like some specifically operational changes or process in improvements that you made in FY'26 and that could structurally improve our margin?

See improvement of margins come from various sources as everybody knows and even you know -- but as far as the structural changes we are very closely monitoring our input cost the API, the packing material cost so that the margins which we are targeting should be delivered to you.

And are we able to pass on the input cost or are we like taking a gate on our PM? So how is it?

Yes, we are able to pass on because we don't have a long-term contract with our buyers wherein we are stuck for the price fixation. So our price part is open depending on the international price reveals and rates. Okay.

Thank you. That was the last question. I now had confess over to Mr. Karan Thakur for closing comments.

Thank you everyone for joining the conference call of Sanjivani Paranteral Limited. If you have any further queries you can write to us at research direct.com. Once again thank you everyone for joining the conference.

Ladies and gentlemen on behalf of Kirin advisor that conclude this conference. Thank you for joining us and you may now disconnect. Thank you.