Marksans Pharma Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Marksans Pharma Limited (MARKSANS) Q4 FY22 Earnings Concall

 

Q&A Highlights:

Vijay Nahar – Individual Investor – Analyst

• Challenges affecting cost and what costs were passed on to the consumers?

Mark Saldanha – Managing Director

• The challenge was China lockdown.
  • Had cascading impact on all input cost of RM.
• Oil prices getting impacted by war.
  • Freight cost got impacted tremendously.
• MARKSANS working on passing whatever cost it can with the price increase to the customers.

 

Rajiv Rupani – Individual Investor – Analyst

• When does MARKSANS propose to pay the full amount and convert the warrants, issued to OrbiMed and the company, to shares?

Mark Saldanha – Managing Director

• At the time of warrant issuance, 25% money was received upfront.
• Warrant is convertible any time in next 18 month time.
• In terms of timelines, expects the conversion to happen in FY23 and the balance money will come in.
• Even if the share price is below the conversion rate, the warrants will be converted.

 

Rajiv Rupani – Individual Investor – Analyst

• The INR2,000 crore revenue target will be achieved in what timeframe?

Mark Saldanha – Managing Director

• Within the next 3 years.
  • The company is pretty much on target.

 

Rajiv Rupani – Individual Investor – Analyst

• EBITDA margin for FY23?

Jitendra Sharma – Chief Financial Officer

• Expects EBITDA margin pressure to continue.
  • Margins are under pressure.
  • Not seeing any immediate reduction in freight cost.
• Expects EBITDA in the range of 17-20% for FY23.

 

Rajiv Rupani – Individual Investor – Analyst

• Will the company be debt free for the next 3-4 years?

Jitendra Sharma – Chief Financial Officer

• Don’t plan to raise debt in the short term.
• Longer term, may have some debt in the book.

 

Piyush Oswal – Piyush Oswal and Associates – Analyst

• Reason for trade receivables constantly increasing?

Jitendra Sharma – Chief Financial Officer

• Receivable increase during the year is in line with increase in sales.
• Overall avg. receivable levels are around 90 days.
• MARKSANS doesn’t expect trade receivables to increase further.

 

Shakir Rao – Individual Investor – Analyst

• Plans with Access Healthcare acquisition?

Mark Saldanha – Managing Director

• A virtual company marketing formulation in UAE.
• Looking at Dubai as port of entry into Middle East.
  • Plans to expand to few geographies from this base.
• Dubai is a platform for distribution in the Middle East for MARKSANS.

 

Yogesh – Arihant Capital Markets – Analyst

• D&A increase of more than 100% at INR21 crore would be run rate going forward quarterly?

Jitendra Sharma – Chief Financial Officer

• Company has adopted Ind AS 116 while consolidating the US and UK balance sheet into the Indian parent company balance sheet.
  • Has taken warehouses in these geographies, providing for lease liability and corresponding write-of-use assets.
• In 4Q, provided the depreciation for the whole year on these assets, which had an increase of INR12 crore in depreciation.
• In the current year, it will come as a quarterly charge of INR3 crore every year.

 

Yogesh – Arihant Capital Markets – Analyst

• Reason for inventory debtor days jumping in FY22?

Jitendra Sharma – Chief Financial Officer

• It’s on account of increase in sales and increase in credit period to few customers in US and UK.
• Don’t expect it to go up further.
  • Will remain at around 90 days in coming quarters.

 

Yogesh – Arihant Capital Markets – Analyst

• Gross margin for FY23?

Jitendra Sharma – Chief Financial Officer

• Expecting in the range of 50-52%.