Laurus Lab’s revenue in Q4FY18 grew by 18.5% yoy to Rs 560.2cr vs.472.8cr in Q4FY17. EBITDA, however grew marginally 1.6% yoy to Rs116.9cr in Q4FY18. EBITDA margins in Q4FY18 were at 20.9% vs. 18.2% in Q3FY18 and 24.3% in Q4FY17. PAT in Q4FY18 declined 36.9% yoy to Rs45cr vs. Rs71.3cr in Q4FY17.
ARV segment revenue grew 25% yoy Q4FY18 on improved volumes.
Synthesis business has continued to report robust revenue growth, 63% yoy growth in revenue in Q4FY18 due to higher revenue contribution from unit 5 as well as improved contribution from CMO business.
HEP-C business showed qoq improvement in Q4FY18, however this business has reported a de-growth in FY18.
Oncology business reported 45% yoy growth in Q4FY18.
Ingredients revenues grew by 4% yoy in Q4FY18.
The margins have declined due to 32% yoy growth in the COGs in Q4FY18. As % of sales, COGs stood at 51.9% in Q4FY18 vs. 51.3% in Q3FY18 and 46.7% in Q4FY17.
There was also substantial increase in the taxes paid in Q4FY17, company had paid total tax of Rs9.3cr, while in Q4FY18, company paid Rs19cr in tax, which also led to decline in PAT.
Company has said that it has cleared several inspections from US and African auditors at it various plants.
ARV business is expected to be a growth driver and expects 8-10% growth going ahead and company has said that it will increase its capacity.
The global ARV patient enrolment is ~18mn, will grow to ~23mn in next few years, which will keep the ARV medicine demand and benefit Laurus, after that company will gain the market share.
Company earlier had only first line therapies, however has added Lamivudine, which is a second line therapy and will boost its ARV revenue in FY19E. Company continues ARV supplies in Europe.
For the triple combination drug (Dolutegravir, Lamivudine and Tenofovir Disoproxil Fumarate), Laurus has received a waiver from USFDA and WHO due to the waiver letter by innovator. It has done bioequivalence for all three drugs and the chances of approval of this triple combination drug are high. This drug is being market by Aurobindo and Mylan in Africa and to other institutions under PEPFAR and WHO programs. Laurus believes that there is a significant big market for TLD combination.
Onco API has seen ~50% yoy growth in FY18 and this growth will continue in FY19E, as company adds a new capacity.
Hepatitis C business has come under pressure and has been constantly shrinking over the past three years, company expects revenue to stabilize at the FY18 levels.
In the synthesis business, it has started commercial supplies of NCE. The NCE supplies in the US will start after USFDA approval to the NCE.
In the formulations, company has filed 9 ANDAs and expects 10 more ANDAs in FY19E. It has launched Tenofovir after the final USFDA approval.
The USFDA target action date (TAD) for Metformin is in July.
Company expects significant formulations revenue from Q3FY19E onwards and expects approvals in Canada, Europe and US.
The profitability was impacted due to the addition of 500 employees in the last year, increase in the gratuity payment (change in the government regulation) and increase in tax rate.
It has also said that assets worth Rs600cr are not generating any revenue, however this will change in FY19E, as unit 2 and unit 5 will be yielding significant cash in FY19E. Unit 4 would require additional investment and meaningful revenue from this plant is expected in FY20E. Unit 6 is a captive API facility.
Company has taken some debt in form of ECB and expects no further borrowings.
Laurus Labs Ltd ended at Rs. 490.50, down by 8.95 points or 1.79% from its previous closing of Rs. 499.45 on the BSE.
The scrip opened at Rs. 504.75 and touched a high and low of Rs. 504.75 and Rs. 483.35 respectively. A total of 52,968 (NSE+BSE) shares were traded on the counter. The stock traded above its 200 DMA.
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