Guj. Themis Bio.

Gujarat Themis Biosyn reported a robust Q3 FY23 with revenue reaching INR 28.2 crores, a significant 51.4% increase year-on-year. EBITDA for the quarter grew by 23.6% to INR 12.1 crores, though the EBITDA margin stood at 43%, indicating a decline of 966 basis points compared to the previous year. Net Profit (PAT) for Q3 FY23 was INR 9.8 crores, up 38.0% from INR 7.1 crores in Q3 FY22, with a net profit margin of 34.8%. The company attributed the margin compression to increased R&D expenditure of INR 2.44 crores.

For the nine months ended December 31, 2022, the company's revenue was INR 120.8 crores, marking a 40.3% year-on-year growth. EBITDA for this period increased by 31.9% to INR 59.3 crores, maintaining a healthy EBITDA margin of 49.1%. PAT for 9M FY23 stood at INR 46.3 crores, reflecting a 5.7% growth year-on-year from INR 43.8 crores in 9M FY22. The net profit margin for the nine months was 38.3%. The company has already surpassed its previous financial year's revenue and profit levels within these nine months.

Gujarat Themis Biosyn is progressing well with its INR 200 crores capex plan, which is spread over the next two to three years. So far, INR 14 crores have been spent, with an additional INR 13 crores in Capital Work-in-Progress (CWIP). This capex includes a CGMP R&D center and an API facility. The company also plans to increase its fermentation capacity by another 550 cubic meters, adding to the current 450 cubic meters, to support future demand and product diversification.

The new API block and the R&D facility are anticipated to commence operations by June-July 2023. The R&D labs will have two sections, with one starting in June-July and the other by November. Commercialization of products from the API block is expected within 6-9 months after its operational start. The additional fermentation blocks, part of the larger capex, are projected to come online by June-July 2024, enabling trial batches for new fermentation products.

While demand for Rifamycin-O remains strong, sales of Rifamycin-S were subdued in Q3 FY23. This was primarily due to delays in government and global tenders for anti-tuberculosis medicines, a tender-driven segment. Despite lower sales, the company has maintained production levels and is building inventory to prepare for the anticipated significant increase in volumes once tenders open in the next two quarters. Management confirmed running production capacity at 100% for the current year, up from 75% in the last two years.

The company is targeting a 25% revenue growth for the next financial year (FY24). The new API block is expected to contribute significantly to this growth, aiming for a 25-30% increase in revenue. Management emphasized a strategy focused on ROI rather than just turnover for new products. They are developing a diversified product basket, including high-value API products, with at least one product from the API block expected to have significant potential due to its role in changing current therapy.

Management acknowledged that while current fermentation products enjoy phenomenal margins due to depreciated facilities, new facilities will incur significant depreciation costs. Therefore, careful product selection is crucial to maintain healthy bottom lines. For future API products (non-fermentation), the company aims for a gross margin over material cost of 40% to 50%. They also noted that increased utility and fixed costs, along with R&D expenses, are impacting current percentage margins, but these are strategic investments for future growth.