Advanced Enzyme's margin pressure continues in Q4ADVENZYMES - 263 Change: -3.40 (-1.28 %)
News: Revenues declined 1% YoY to Rs. 132 crore on the back of 7% YoY de-growth in Human nutrition segment to Rs. 86 crore being partially offset by growth of 16% YoY in Animal nutrition to Rs. 15 crore. Bio Processing segment de-grew by 5% YoY to Rs. 19 crore while Specialized manufacturing sales was at Rs. 11 crore this quarter. EBITDA margins contracted 1060 bps YoY to 31% mainly due to higher other expenditure. Subsequently, EBITDA de-grew 27% YoY to Rs. 40 crore while net profit declined by 23% YoY to Rs. 24 crore.
Views: Advanced Enzyme reported below par performance this quarter and margins was significantly below I-direct estimates. We believe lower margins is likely due to cost attributable to SSPL integration, higher freight cost and employee expenses. However historically, strong margins and healthy return ratios is testament to the pricing power and balance sheet strength of the company. Going ahead, the management intends to augment its R&D capability for better facilitation and strengthening of in-house R&D capability, which bodes well in the long run in its quest to improve scalability and a possible foray into more complex enzymes and launch more products in target market of probiotics.