Supriya Lifesci.

Supriya Lifescience reported a strong Q1 FY25, with revenue from operations growing 22% year-on-year to ₹161 crores. EBITDA increased to ₹62.5 crores, leading to an EBITDA margin of 39%, a significant expansion from 34% in Q1 FY24. Profit Before Tax (PBT) saw a 40% increase to ₹60 crores, while Profit After Tax (PAT) reached ₹45 crores, up from ₹28.5 crores in the prior year, with a PAT margin of 28%.

The company's strategy to focus on regulated markets is yielding results, with the European market's revenue contribution surging to an impressive 51% in Q1 FY25, up from 43% in Q4 FY24. This shift, coupled with a customer base of 1,700 across 128 countries, is enhancing overall profitability. Management emphasized its commitment to delivering high-quality products and operational excellence, positioning the company as a strong alternative to China for API supply.

Supriya Lifescience is on track to double its total manufacturing capacity to 1,020 kiloliters by the end of September 2024 with the addition of Module E. The new Ambernath facility, focusing on finished formulations, contract manufacturing (CMO), and contract development (CDMO), is expected to begin partial production within the next 60 days. CDMO/CMO operations are projected to contribute about 20% of total revenue in the next 3-4 years, with initial revenues expected from Q3 FY25.

The company is expanding its product basket beyond anti-stimulants to include anesthetics, anti-anxiety, and anti-diabetic therapeutic areas. Two new product launches are anticipated by the end of FY25, targeting large global markets currently single-sourced from China. These new products, along with existing ones under validation, are expected to significantly contribute to revenue and margin in the next financial year, with full impact seen in the next financial year.

Supriya Lifescience has significantly improved its working capital management, reducing working capital days from 215 in Q1 FY24 to 168 in Q1 FY25. This improvement is primarily driven by a substantial reduction in the inventory holding period from 223 to 167 days. The annualized asset turnover ratio also strengthened to 0.68 this quarter, up from 0.63 last year, demonstrating enhanced operational efficiency and a strong financial position with a debt-to-equity ratio of 0.01.

The company successfully cleared a Health Canada joint audit with EDQM online in early 2024. While no further notifications have been received, USFDA and NMPA China audits are expected in the latter half of the year for the Lote facility. The Ambernath facility is slated for USFDA or EU inspection beginning of the next financial year, following its commercial production start and local authority certifications like WHO GMP.

Management highlighted a significant opportunity in the Brazil and Mexico markets, driven by a government ultimatum requiring GMP certificates for all imported products by December 2024. As a USFDA, GMP, CGMP, and WHO-compliant plant, Supriya Lifescience is well-positioned to become a preferred supplier. The company has been present in Brazil for 18 years and is actively discussing new product opportunities with customers following recent audits.