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Advanced Enzymes: Weak numbers amid lower margins

News: Q2FY22 revenues grew 5.6% YoY to Rs.127.1 crore on the back of 4% YoY growth in human nutrition segment to Rs.92 crore. Animal nutrition witnessed growth of 3% YoY to Rs.13.6 crore whereas Bio Processing segment de-grew 36.9% YoY to Rs.11.8 crore. EBITDA margins contracted 982 bps YoY to 38.8% mainly due to higher raw material, employee and other expenditure. Subsequently, EBITDA de-grew 15.8% YoY to Rs. 49.3 crore while PAT de-grew 20.1% YoY to Rs.29.7 crore. Delta vis-à-vis EBITDA was mainly due to higher depreciation being partially offset by lower tax.

Views: AET reported a weak Q2 performance. Results were below I-direct estimates. However, strong margins and healthy return ratios reflect 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. We will get more insight post the conference call