In This Article:
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Revenue: INR9,666 million, a decline of 19% from INR11,895 million in Q2 FY24.
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Gross Margin: 62% in Q2 FY25, up by 1,036 basis points from 51.7% in Q2 FY24.
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EBITDA: INR2,033 million, 21% of sales, up by 313 basis points from Q2 FY24.
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R&D Spend: INR524 million, 5.4% of sales, compared to INR496 million in Q2 FY24.
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Net Debt: INR7,973 million, slightly up from INR7,941 million in Q1 FY25.
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Cash Flow from Operations: INR2,007 million, compared to INR329 million in Q2 FY24.
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CapEx: INR1,324 million, primarily invested in Granules Life Science.
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ROCE: 16.9% in Q2 FY25, compared to 12.9% in Q2 FY24.
Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Granules India Ltd (BOM:532482) maintained healthy margins despite a voluntary pause in manufacturing, driven by strong sales of formulations and a favorable product mix.
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The company resumed dispatches in late September and began a phased restart of manufacturing operations in October, indicating a recovery from the temporary pause.
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Granules India Ltd is enhancing its organizational structure by appointing new leadership in operations and manufacturing to strengthen its quality culture.
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The company is focusing on new product launches from its GPI site in the US market, particularly in the CNS and ADHD segments, which are expected to drive future growth.
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Granules India Ltd has made significant progress in its R&D efforts, with increased spending and a growing list of product approvals globally, demonstrating a strong commitment to innovation.
Negative Points
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The voluntary pause in manufacturing and distribution at the Gagillapur facility impacted sales, leading to a 19% decline in revenue compared to Q2 FY24.
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The US FDA inspection at the Gagillapur facility resulted in six form 483 observations, requiring corrective actions and initiatives to address these issues.
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The API and PFI segments experienced reduced contributions due to price erosion and softer demand, particularly for paracetamol, affecting overall performance.
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The company's net debt remained high at INR7,973 million, indicating financial pressure despite operational improvements.
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The cash-to-cash cycle increased to 213 days, reflecting operational inefficiencies and challenges in managing working capital effectively.
Q & A Highlights
Q: Can you provide details on the remediation costs related to the US FDA observations and whether these costs have been fully accounted for in FY25? A: The remediation costs are expected to be up to $2 million for this year and have already been accounted for in the second quarter. These costs will be reflected in the other expenses. - Krishna Chigurupati, Executive Chairman of the Board, Managing Director