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- 24 Jan 2024
- ICICI Securities
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WEAK NUMBERS ON GROWTH AND MARGINS FRONT
INDOCO - 284 Change: -0.65 (-0.23 %)News: Revenues grew ~9% YoY to Rs 448 crore driven by strong API traction (2x growth to Rs 33 crore) but the formulations growth was below-par with just 4% growth in the domestic formulations to Rs 213 crore and 4% growth in the exports formulations to Rs 195 crore. On the operational front EBITDA grew ~6 % YoY to Rs 65 crore with margins at 14.6%. lower EBITDA growth was non account of higher remediation costs at US focused Goa 2 plant and a one-time VRS cost of Rs 8 crore. PAT came in at 28 crore.
Views: While India growth was muted due to lower-than-expected respiratory sales and subdued growth from the legacy brands, exports slowdown was mainly due to significant decline in paracetamol tenders in Europe even as US growth was solid at 43% to Rs 86 crore. The performance continues to promise high and deliver less over the last few quarters both on the growth and margins front. The management is looking for a major overhaul, be it divesting of tail brands in the domestic formulations or initiation of site transfers and process optimisation for export driven plants. This, we believe is likely to take some time for normalisation of margins and growth trajectory.
Impact: Negative