Morepen Labs.

Morepen Labs achieved a historic Q1 FY25, reporting its highest ever EBITDA of ₹55.05 crores, a 93% YoY increase. Revenue grew 14% to ₹458.64 crores, and Profit After Tax (PAT) surged 147% to ₹36 crores. The company also successfully completed a ₹200 crores Qualified Institutional Placement (QIP), with 61% (₹123 crores) earmarked for capacity expansion. This QIP significantly boosted institutional holding from 4.91% to 10.61%, attracting eminent global investors.

The QIP proceeds are primarily directed towards increasing manufacturing capacities for both APIs and medical devices. API capacity will expand from 400 KL to 600 KL with an investment of ₹78 crores. Medical device capacities will see glucometer production double from 2.5 million to 5 million units, glucose strips increase from 500 million to 700 million, and BP monitors from 1.2 million to 2.5 million, with an allocation of ₹40-43 crores. These expansions are expected to be fully operational within 12-18 months.

The medical devices business demonstrated robust growth, increasing 20% YoY to ₹138 crores and now contributing 30.2% to total revenue, up from 26% last fiscal. The company highlighted its market leadership in glucometers and BP monitors in India, with 12.3 million meters installed. Strip sales are growing at 25-30%, with approximately 150 strips sold per meter per year. Morepen is also pursuing 100% backward integration for medical devices, including chip mounting, to enhance efficiency and reduce reliance on external suppliers.

The pharma business, primarily driven by APIs, grew 11% to ₹320 crores. Exports constitute 71% of the API business, showing a 31% increase this quarter. Morepen is a market leader in key APIs like Loratadine (67% share), Desloratadine (26% share), Montelukast (44% share), and Fexofenadine (22% share). The company aims for new products to contribute over 30-35% of API revenue by 2030, shifting focus from core products to drive future growth.

EBITDA margin significantly improved to 12% in Q1 FY25 from 7.07% in the prior year. Management targets an overall EBITDA margin of 15% in the medium term (2-3 years) and expects to improve it by at least 3% over the next three years. For FY25, specific EBITDA margin targets are 10.5% for pharma and 15% for medical devices. The company projects an overall revenue growth of 15-20% for FY25, driven by new capacities, backward integration, and market expansion.

Morepen is actively working to capture market share, particularly in the glucometer segment, following media reports of a competitor (Roche) potentially reducing its sales focus in India. The company is leveraging its established brand, extensive retail presence (128,000 outlets, targeting 3 lakh in 3 years), and marketing campaigns (e.g., KBC with Amitabh Bachchan). To combat counterfeit products, Morepen is implementing new holograms and changing packaging designs, acknowledging the challenge of consumer verification.

The company is preparing to launch a weight loss product in India between September and October, leveraging a joint venture with a UK partner for the basic ingredient. This product targets the growing obesity market with a home-use solution. Morepen is also actively pursuing global market opportunities for its medical devices, with audits from major international retailers like Walmart, Walgreens, and CVS, aiming for exports to become a dominant part of the medical devices business in the next 2-3 years.