Ajanta Pharma Limited (NSE: AJANTPHARM) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Yogesh Agrawal — Managing Director
Rajesh Agrawal — Joint Managing Director
Arvind Agrawal — Chief Financial Officer
Analysts:
Sudarshan Padmanabhan — Analyst
Foram Parekh — Analyst
Ankush Mahajan — Analyst
Abdulkader Puranwala — Analyst
Kunal Randeria — Analyst
Tushar Manudhane — Analyst
Rashmi Sancheti Shetty — Analyst
Pankaj — Analyst
Vishal Manchanda — Analyst
Chandragupta — Analyst
Shrikant Akolkar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Ajanta Pharma Q2 FY 2025 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Yogesh Agrawal, Managing Director of Ajanta Pharma Limited.
Thank you and over to you, sir.
Yogesh Agrawal — Managing Director
Thank you. Good evening and welcome to all of you. With me, I have Mr. Rajesh Agrawal, Joint Managing Director; Mr. Arvind Agrawal, CFO; Mr. Rajeev Agarwal, AVP Finance and Investor Relations.
I hope the results are already there with you. So, let me begin with the interim dividend. I am pleased to inform you that the Board of Directors have approved the first interim dividend of INR28 per share for the face value of INR2 per share totaling to INR350 crores. With this, the total payout in the current financial year becomes INR701 crores, which is 90% of the cash flow from operations of the H1 FY 2025. This is in line with our commitment of prudent capital allocation.
We will now take you through business-wise performance for the Q2 and H1 along with the comparison of the previous year same period. Let’s begin. We have completed first half of FY 2025 on a satisfactory note with notable achievements on sales, PAT and EBITDA. Branded Generic business, it saw a healthy growth of 19% on the back of our strategic approach and focused execution.
It is the result of our consistent efforts allowing us to strengthen our position as a leading player in the pharmaceutical industry. One of the achievements during the first half was our cash conversion ratio of 121% which was possible through our concentrated efforts of improving working capital cycle. This will certainly help us to improve our returns on investment going forward. We are confident of sustaining this momentum and driving continued growth in coming quarters. Our excellence in terms of strategy and operational execution will enable us to deliver long-term value to our shareholders.
Moving on to the business details. During the quarter, revenue from operation was INR1,187 crores, a healthy growth of 15% from our total business comprising of three verticals: Branded Generics, US Generics and institution business in Africa. During the quarter, 76% of the total sales came from the Branded Generics, which is spread across India, Asia and Africa. The sales stood at INR894 crores, posting 20% healthy growth during the quarter. This business exhibits assurance, sustainability and potential for the long-term growth.
Let me now take up the international business, and I will first start with Branded Generics business in Asia and Africa, which contributed 44% to the total revenue. Let’s start with Asia. In Asia, our presence spans across Middle East, Southeast Asia and Central Asia, encompassing around 10 countries. In Q2, sales was INR293 crores against INR230 crores, a growth of 28%. And in H1 sales stands at INR572 crores against INR484 crores, a growth of 18%. During the quarter, we launched six new products taking total tally to 13 in the first half in the region.
Let’s move to Africa. In Africa, the business is spread across over 20 countries. In Q2, sales was INR213 crores against INR157 crores, a healthy growth of 35%. And in H1, sales was INR443 crores against INR316 crores, a growth of 40%.
We launched one new product during the quarter, taking total tally to three in first half in the region. The growth was a little elevated in H1, but will be lower in H2, as we expect the growth for the current financial year to remain in line with our guidance given of mid- to high-teens.
Let us talk about other two verticals of international business now. US Generics. US Generics contributed 20% to the total revenue. In Q2, sale was INR232 crores against INR237 crores, posting a small dip of 2%. And in H1, sales was at INR460 crores against INR451 crores, a growth of 2%. The growth is in line to our guidance of mid-single digits as most of our launches in FY 2025 will happen in the last quarter of the year. Our superior execution continues to keep us as a preferred partner of choice for the distributors.
In H1 FY 2025, we have filed four ANDAs, received four final approvals and launched two ANDAs. We have 46 products available on the shelf and 22 ANDAs awaiting approval with US FDA.
Let’s now move to the US Institution business. This business contributed 4% in the total revenue, which comprised of antimalarial product. In Q2 sale was INR43 crores against INR37 crores, posting a growth of 16%. And in first half sale was INR85 crores against INR102 crores, posting de-growth of 17%. As informed earlier, this business remains unpredictable due to reliance on procurement agencies schedule and funds.
Now I invite Mr. Rajesh Agrawal, Joint MD, to take you through India business. Thank you and over to you.
Rajesh Agrawal — Joint Managing Director
Thank you. Good evening to all of you. I am delighted to share key highlights of India business. Our performance has been excellent on the back of increased volumes and new product launches. India business contributed 32% in total revenue. In quarter two, sale was at INR386 crores as against INR355 crores, a growth of 9%. And in H1, sale was at INR739 crores against INR674 crores, a growth of 10%.
India business includes revenue from trade generic, which contributed INR46 crores against INR45 crores in quarter two and INR87 crores against INR81 crores in H1 in same period of FY 2024. During the first half, we launched four new products, out of which — pardon me, during the first half, we have launched 11 new products, out of which four were first time in the country. We continue to outpace IPM by 190 basis points with Ajanta growing at 9.6%, surpassing IPM growth of 7.7% as per IQVIA MAT September 2024. This trend extends to most of the therapeutic segments we are in, where our growth was consistently outpaced — has outpaced the segment growth.
In cardiology, our growth for Q2 as per IQVIA was 16% against IPM growth of 12%. Though on MAT basis, we still lag due to price impact in one of our major products. In the covered market, we continued to be fourth largest in IPM and among top 10 in all our therapeutic segments. As per IQVIA MAT September 2024, our faster growth is contributed mainly by volumes, which was about 1.5 times to the IPM.
Cardiology contributed 38%, followed by ophthalmology 30%, dermatology 23% with remaining 9% coming from pain management
In the India branded sales. We have added about 200 medical representatives during quarter two, taking the total tally to 3,200-plus. This addition was in line with our strategy to increase — strategy of increased focus and expanding product basket in the existing therapies.
I now invite Arvind Agrawal, CFO, to take you through the financial performance. Thank you and over to you Arvindji.
Arvind Agrawal — Chief Financial Officer
Thank you, sir. Thank you. Good evening and warm welcome to the second earning call of FY 2025. On this call, our discussions include certain forward-looking statements, which are projections or estimates about future events. These estimates reflect management’s current expectations about future performance of the Company. These estimates involve a number of risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Ajanta does not undertake any obligation to publicly update any forward-looking statement, whether because of new confirmation, future events or otherwise.
We will look at the consolidated financials and provide year-on-year comparisons. The key financial highlights for quarter two and H1 of FY 2025 are as follows.
Total revenue in Q2 stood at INR1,187 crores against INR1,028 crores, posting growth of 15%. In H1, the revenue was INR2,332 crores against INR2,049 crores, posting growth of 14%. These growths were in line with our guidance of overall revenue growth in low-teens in FY 2025 on the back of mid-teens growth in branded generic, mid-single digit in USA and de-growth in Africa institution business.
Our gross margin stood at 77% in H1, an improvement of 200 basis points from FY 2024. This was the result of higher contribution from branded generic business in overall revenue. We expect it to remain in the similar range with quarterly movement of 50 basis points to 100 basis points due to a change in product mix.
Personnel cost in Q2 was at INR261 crores, an increase of 17%. And in H1, it was INR545 crores, an increase of 25% due to a one-time charge of over INR30 crores for changing gratuity policies in Q1. Increase in medical representatives in India will see the costs slightly going up in coming quarters.
R&D expenses was at 5% of total revenue. In Q2, expenses was INR57 crores against INR50 crores and in H1 it stood at INR108 crores against INR105 crores. We expect the expenses to be around 5% of revenue for the fiscal.
Other expenses in Q2 stood at INR353 crores against INR259 crores and in H1, it was INR615 crores [Phonetic] against INR534 crores previous year same period.
It may be noted that the other expenses include forex loss notional towards mark-to-market of hedges of INR26 crores in Q2 and INR18 crores in H1 of FY 2025.
As informed in previous call, the increase in expenses were in line with our guidance due to increased SG&A expenses. The expenses in H2 are expected to be in line with H1.
We achieved EBITDA margin of 26% in Q2 and 28% in H1. EBITDA stood at INR311 crores against INR291 crores, a growth of 7% in Q2 and INR642 crores against INR572 crores, a growth of 12% in H1 over previous year. If we ignore the notional forex loss in other expenses, EBITDA for Q2 becomes 28%. We expect the EBITDA to be around this range plus-minus 1% for whole of FY 2025.
Other income was at INR19 crores in Q2 and INR46 crores in H1 of FY 2025. It includes forex gain of INR12 crores in both Q2 and H1. Income tax stood at 25% during Q2 and H1. We expect the same to be around 24% for FY 2025. In Q2, PAT was INR216 crores against INR195 crores, a growth of 11%. And in H1, it was INR462 crores against INR403 crores, a growth of 15%. PAT stood at 18% and 20%, respectively, for Q2 and H1 of revenue from operations.
We incurred capex of INR130 crores in H1 FY 2025. Capex, including maintenance capex, for FY 2025 is estimated to be around INR200 crores. There was improvement during H1 FY 2025 in working capital days from FY 2024. Inventories stood at 67 days against 73 days and trade receivable at 81 days against 109 days.
Payables stood at 74 days against 85 days. This is the result of our consistent efforts in improving working capital cycle. In H1 FY 2025, we have generated a healthy cash flow from operations of INR776 crores with cash conversion ratio of 121% and free cash flow of INR322 crores with 70% PAT conversion. ROCE and RONW continue to improve and be comparable to the best in the industry. ROCE stands at 34% and RONW at 26 at the end of September 2024.
With these highlights, I open the floor for the question-and-answer. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Sudarshan Padmanabhan from JM Financial PMS. Please go ahead.
Sudarshan Padmanabhan
Yeah. Thank you for taking my question. Congrats on great set of numbers. Sir, my question is to understand a little bit more on the other costs. So even if I remove this INR25 crores FX, I mean I understand that you did say that there is going to be an increased SG&A, the amount seems to be on the higher side. So if you can explain whether the entire amount the increase that we see between the first and the second quarter, excluding the FX, is largely only the SG&A costs or is there anything else?
Second is if I’m looking at the SG&A costs as well as the sales and the launches, we are heartening to see that we are growing much faster than the IPM, that’s for sure and the new launches is also something that excites us. In terms of volume, I mean, when I looked at it, while the industry itself is growing less than 1% and we are growing at around 1.2% and new launches is about 3 %, can you drive some color with respect to the investments that we are doing into MR expansion and probably the SG&A? How do you see the volume growth for yourselves, say, in the next few quarters and few years?
Rajesh Agrawal
Okay. I’ll answer the second part first. On the domestic business, as you have correctly pointed out, the industry volume growth versus Ajanta, we are growing at 1.5 times the industry volume growth. The number of addition in the medical representatives that we have done has been very strategic with a view to optimize the coverages in the existing specialties more so.
So we have added strength a little bit to the dermatology segment where we have been doing exceptionally well for the last three years compared to the segment growth. We are also strengthening our pain management and also the cardiovascular. So this is what we have done. We are — I think we should be able to continue to perform better than the IPM in the volume growth even in the coming few quarters.
And on the first part of your question —
Arvind Agrawal
Yeah. Sudarshan, I think as far as SG&A expenses are concerned, I think you must be remembering that in the first quarter also, I said that there are a lot of expenses, which have not been done and they will come in the second quarter. So if you take full half year, that is something which is the most reasonable amount which you should consider for the expenses side because as against INR534 crores last year, we have spent about INR616 crores. Out of this INR616 crores, if you remove that INR26 crores, which is exceptional, then we are talking about INR590 crores, which is a very normal growth, which is there.
Sudarshan Padmanabhan
Sure. So that should be the number that we should be looking at from a reasonably longer term, not necessarily taking every quarter into perspective [Phonetic]?
Arvind Agrawal
Yes. Yes.
Sudarshan Padmanabhan
Sir, one strategic question from my side before I join the queue. I think you have done an exceptional in terms of investing in SG&A in terms of the MR productivity on the businesses, I mean, the sub-segments that we are strong in, that’s typically your cardiac, opthal, derma and pain. We see a very strong cash generation, I mean, particularly in the first half.
How do you see yourself building your domestic franchisee? Would it be more verticals to the four lines that you are talking about or is there more deepening in the sense sub-segments of the same cardiac and ophthalmology that you’re talking about? If you can elaborate how you plan to deploy the cash organically, inorganically and develop the domestic side?
Rajesh Agrawal
It will be a mix of both the way we have planned. We will definitely add more medical representatives to the current specialties in which we are present. At the same time, we are also exploring GTM, go-to-market, strategies to penetrate into some of the other newer specialties.
So as they — as there is more visibility, we should be able to make up our mind, take the decisions and decide whether we want to enter those specialties. So that — all of that will take another six months for us to take a call on that. So it will be a mix of both.
Sudarshan Padmanabhan
Sure. Thanks a lot, sir. I’ll join back the queue.
Rajesh Agrawal
Thank you.
Operator
Thank you. The next question is from the line of Foram Parekh from BOB Capital. Please go ahead.
Foram Parekh
Thank you for the opportunity. My first question is on the India business. So I see that the growth is of 16%. So I just want to understand how sustainable is this 16% growth? Though I understand we would continue to surpass IPM growth, but would it be in this high — in this mid-teens or can we expect a lower double-digit run rate going forward?
Arvind Agrawal
I think, Foram, 16% which is growth we are [Phonetic] talking about because India business for the quarter has grown only 9%, no?
Foram Parekh
Okay.
Rajesh Agrawal
Actually, one of the specialties is what you’re referring to. So —
Arvind Agrawal
You are talking about cardio only?
Foram Parekh
Okay. So 16% growth is of the cardio business?
Arvind Agrawal
Yes. Yes. Yes.
Rajesh Agrawal
Yes, correct. That is correct.
Foram Parekh
Okay. So overall, we should expect 9% to 10% kind of run rate going forward?
Arvind Agrawal
Absolutely. Absolutely.
Rajesh Agrawal
That’s correct.
Foram Parekh
Okay. Got that. And second question is on the Asia side. If you could just explain what is going right? I mean, what is strengthening our growth in the Asia region?
Yogesh Agrawal
It’s increase in the market share on the existing products and there have been new product launches which we have done. And also we’ve added the people, as you would have seen from our field increase in last two, three years. So a combination of all these three, it is resulting into the healthy growth numbers for the Asia.
Foram Parekh
Okay. So we can expect the same run rate going forward as well?
Yogesh Agrawal
Yeah. So I think for the quarter with the growth we have posted around INR300 crores-odd sales. So I think it has to be fair to take that kind of run rate going forward for the next quarter.
Foram Parekh
Sure. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Ankush Mahajan from Axis Securities. Please go ahead.
Ankush Mahajan
Thank you and congrats for the good set of numbers. Sir, my question is related to the US business. Now the US run rate is $222, $230 from the last two quarters. So I’m just trying to understand, sir, if you throw some more light, what is your strategy for US markets for the next two, three years? How — what kind of a run rate that we can look and what are the new launches that we can expect in the US market?
Yogesh Agrawal
So we’ve had limited launches so far in the first half. And I think based on the price erosions and the new businesses acquired, this is the guidance we had given at the beginning of the year itself that US for the current year will be a mid-single-digit kind of growth, which we will be looking at. And things are going pretty much on the similar line. So I think we launched two products in the first half.
But in the next half, as I said, we are looking to launch around four products. So our growth rates will be slightly skewed towards Q3 and Q4. And I think next year onwards, hopefully, we have more approvals and we’ll be able to launch more products. So the growth rates for the next year onwards, I think, will dissipate or could be higher than what we are currently projecting for the current year.
Ankush Mahajan
So sir, what kind of run rate we can expect in upcoming quarters?
Yogesh Agrawal
It can be slightly higher than what it is right now.
Ankush Mahajan
Thank you, sir.
Operator
Thank you. The next question is from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead. Abdulkader, please go ahead with your question. Your line is open.
Abdulkader Puranwala
Yeah, am I audible?
Operator
Yes, you are.
Yogesh Agrawal
Yes, you are audible now.
Abdulkader Puranwala
Yeah, sure. Thank you sir for the opportunity. So my first question was pertaining to the second half of fiscal ’25 in terms of revenue. So for this quarter, we saw good growth in Asia and Africa. But I think in your opening remarks, you mentioned that Africa will closely move to that mid-teen kind of a growth while your India growth is also now expected anywhere between 9% to 10%. So I mean could you help us understand how should your second half of fiscal ’25 look like? And second — yeah, so that would be my first question.
Yogesh Agrawal
So as we have guided for the Branded Generics business for the whole year, we had given the guidance of going into the mid-teens. So we feel that we are on course to deliver that kind of numbers for the Branded Generics business. The percentage of growth in different territories can go up and down. Let’s say, right now, Asia is at the higher, which may taper down, Africa may continue at a higher level.
So I think combination of India, Africa and Asia for the whole year, I think we feel comfortable in giving the guidance of the mid-teens. Whereas for the US, as I said, it could be in the low single digit to mid-single digit for the US business and institution is very unpredictable. So we don’t give the guidance for institution business.
Abdulkader Puranwala
Got it, sir. And, sir, my second question is pertaining to the freight cost. I mean, any improvement what you have seen into the kind of surge we were witnessing previously, or any thoughts/comments would be helpful.
Arvind Agrawal
No. Actually, the freight cost remains almost at the same level as we mentioned. It has been elevated because of the Red Sea problem. So, as we mentioned, the annual burden was about INR30 crores. So in the half year also, there is some impact of that, which is definitely there.
Abdulkader Puranwala
Okay. Thank you. I will join back the queue.
Arvind Agrawal
Thank you.
Operator
The next question is from the line of Kunal Randeria from Axis Capital. Please go ahead.
Kunal Randeria
Yeah. Hi, sir. Sir, on the Asia branded business, has the non-Philippines, non-Iraq contributed a lot more than the normal?
Yogesh Agrawal
No, we don’t give out breakup of the specialty. It’s the combination of that. It doesn’t really matter. We look at Asia as one territory and which is what we share.
So yes, unfortunately, we’ll not be able to give you the breakup of the Asia business.
Kunal Randeria
Sure. Not a problem. Not a problem. Okay. Sir, second question, again, is the fact that you have distributed INR350 crores as dividend, I should assume that there is no inorganic activity on the horizon?
Rajesh Agrawal
Inorganic activity, as of now, well, clearly, we don’t have anything. So — but we can’t rule it out for the future.
Arvind Agrawal
And anyway, Kunal, one thing which I mentioned last time also and now also I can repeat, that the M&A activity will not be dependent on this because I will have the flexibility of borrowing at any point of time, if there is some good proposal, which is there in hand.
So, at the moment, there is nothing. So we are distributing because that’s the better way to utilize the capital. But at any point of time, that is not going to be dependent on whether the cash is available or not available.
Kunal Randeria
Right. And just one more clarification. You mentioned that you added sales reps in the derma division, right?
Rajesh Agrawal
Yes. Derma, also in — yeah, go ahead.
Kunal Randeria
No, so my question is maybe if you’re going to add 200, 300 every year, would it be largely derm-specific or it’s just across the board?
Rajesh Agrawal
No, it will be across the board. We are also looking at some incremental additions in cardiovascular, also in pain management. So, it will be across the specialties.
Kunal Randeria
Right. And this 200, 300 adding, would it be annual kind of an event or is it just for this year?
Rajesh Agrawal
So as of now, we have added those many for the first six months. Again, as I said earlier, the strategies are still being chalked out. And there is no such particular number that we have in mind that those are the number of medical representatives we will add every year. So as and when opportunity presents itself, we will be adding.
We are hopeful that in the next six months, we’ll add some more in the current year itself, not frozen yet as to how many.
Kunal Randeria
Got it. And just one more, if I can squeeze in. In the last two or three years, you’ve added sales force in Asia and Africa. So, are you still adding in those geographies or is it done for now?
Yogesh Agrawal
Not significant enough. There will be minor incremental additions. The bulk of the additions which we have done, I think that [Indecipherable] There could be incremental, maybe 2%, 3%, 5% at some most addition, not negative, not very sizable one.
Kunal Randeria
Got it. Perfect. Thank you and all the best, sir.
Yogesh Agrawal
Sure.
Operator
Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Tushar Manudhane
Yeah, thanks for the opportunity. Am I audible?
Yogesh Agrawal
Yes, Tushar. Tell me.
Tushar Manudhane
Sir, on the gross margin side, maybe if I would have missed the comments, like, sequentially, the proportion of branded generics is largely stable, but still the gross margin has improved by at least 130 bps. So if you could help us clarify that?
Arvind Agrawal
It depends on the product mix, actually. So, within the business also in the Branded Generics business, there are different segments etc. So it all varies from that point of view.
Tushar Manudhane
Okay. So similar gross margin can be expected for the coming quarters as well, right?
Arvind Agrawal
Depending on — so that’s why I said, variation can be there of 50 basis points to 100 basis points, depending on the product mix which is there or the business mix, which is there.
Tushar Manudhane
Understood. And sir, earlier participants in one of the comments you highlighted that, I mean, as far as the Asia business goes, it would be like INR300 crores quarterly run rate for the next two quarters. Is that the guidance sort of to take for Asia business?
Arvind Agrawal
Yeah, we can consider that way. That’s what MD indicated just now.
Tushar Manudhane
Got it. So, Africa business, given that the base is sort of low in second half of FY ’25 and India business is also growing reasonably well, we have already done 20% in Branded Generics for first half. So is mid-teen sort of a growth for full year ’25 like sort of too conservative?
Yogesh Agrawal
No, I think that’s a realistic growth which you can expect. I think Africa, the current base, I think it will taper down for the next quarter. Asia will sustain. But I think overall basis, when you put everything together, India, Asia and Africa, I think mid-teens is a realistic number, which we feel is doable.
Tushar Manudhane
Got it. And sir, lastly, I just finished on the EBITDA margin guidance for full year ’25, if you could repeat that?
Yogesh Agrawal
So EBITDA margin guidance for the whole year from the beginning, we have said 28%, plus-minus 1% can be there depending on the market conditions and the product mix. So, we still hold it true for that. I think for the whole year 28%, plus/minus 0.5% or 1%, that is the variation which can occur. So I think that is a realistic thing which you can consider.
Tushar Manudhane
All right, sir. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rashmi S from Dolat Capital. Please go ahead.
Rashmi Sancheti Shetty
Yeah, thanks for the opportunity. Again, on this Africa branded business, the quarterly sales had actually declined quarter-on-quarter. Is it something related to seasonality or the supplies were higher in quarter one and that’s why it got adjusted in quarter two? And you also mentioned that in the second half, it would taper down. So, if you can just explain the strategy? Is it something the seasonality effect or more to do with the supply chain?
Yogesh Agrawal
So, in the Q4 of the last year, our sales were slightly on the lower side, which was about INR113 crores. At that time, we had mentioned that because of some supply disruption at that time, I think it was some strikes, the Red Sea or something was there.
Rajesh Agrawal
The Red Sea. Yeah. Yeah.
Yogesh Agrawal
So that’s why some of the sales got pushed out into the Q1 of this year. So, the Q1 was slightly having the effect of the Q4 pushed out into the Q1. And if you see from that Q2 and Q1 are quite comparable. So, for the whole year, I think we should be in a healthy position. I think quarter-to-quarter, year-over-year — quarter-on-quarter, the kind of variations for the different reasons. They are not like sequentially. So the best way will be to see the year-on-year growth. I think that kind of averages out the peak and valley.
Rashmi Sancheti Shetty
So roughly in second half, we should see the same kind of INR400 crores plus sort of sales like INR230 crores [Phonetic], INR220 crores of sales for quarter run rate it should be the stable sales to assume?
Yogesh Agrawal
No, no. For the next quarters, run rate will be slightly lower than this.
Rashmi Sancheti Shetty
Okay
Yogesh Agrawal
Yes, yes.
Rashmi Sancheti Shetty
Okay. Got it, got it. And that’s the reason you are guiding for the mid-teens sort of growth even in Africa branded business?
Yogesh Agrawal
Correct. Correct. Correct.
Rashmi Sancheti Shetty
Okay. And one bookkeeping question on the interest expenses. Interest expenses have gone up significantly in quarter two. We don’t have any debt. But your interest includes some right to lease assets in that component. So anything to do with that? What is the number that we should look for the whole year because the number is pretty high, Y-o-Y basis also and on quarter-on-quarter basis also?
Arvind Agrawal
Rashmi, I think you are right. So that is a little bit of elevated thing. It may remain a little higher than this because what is the — for the quarter, what is the amount, which is there, you can consider that for the next two quarters.
Rashmi Sancheti Shetty
The amount which is there in the quarter two, you said you said, right?
Arvind Agrawal
Yes. Quarter two.
Rashmi Sancheti Shetty
Okay. Thank you. That’s it from my side.
Operator
Thank you. The next question is from the line of Pankaj [Phonetic] from IKIGAI AMS [Phonetic]. Please go ahead.
Pankaj
Yeah. Good evening. First on the working capital, the Company has done a fabulous job both —
Operator
Sorry to interrupt you, but we are unable to hear you.
Pankaj
Can you hear me now?
Operator
Yes. Please —
Yogesh Agrawal
Yeah, we can hear you now.
Pankaj
Yeah, yeah. So on the working capital, all of you have done a great job on receivable days and inventory.
Rajesh Agrawal
Yes.
Pankaj
Is it the optimum level and what has led to such sharp improvement on receivable days? It’s really heartening to see. If you can just help us share your thoughts on the same?
And the second point is that from a core business perspective, India, business, Africa, Asia, all are doing well, but as for the other optionality for growth we are creating so that the way we saw in some of the other listed companies like, for example, Torrent, over a period of time different acquisitions helped them become a very large company. What are the other optionalities from a growth perspective, if you take three, five-year view is the Company working on. These are my two questions.
Yogesh Agrawal
Yeah. So let me take the second question first. So we are looking at multiple growth drivers. One is we have a very strong and rich product pipeline under approval in various countries as well as under development in the R&D which we’ll launch in the existing market.
Number two, we are also looking into branching out into the — some other more therapeutic segments and they are very actively at advanced stage. They will be taken up for the execution in maybe quarters and next coming years. In different territory, it may be executed at a different point in time. So that will be the second growth driver.
As you would have seen that we have started — last two, three years, we’ve done a very big ramp-up in the field size in the international market. And as Joint MD has mentioned, for the first half we have addition of 200. There will be some more addition during the year. So that will be another growth driver which is there.
And fourth is we are actively looking at entering into the new markets also. So it’ll be premature for me to comment which countries and all, but there is some action which is there, or BD team [Phonetic] is actually working very actively there. So there will be a number of initiatives which are there to help sustain the growth momentum. And in terms of acquisition, it is very difficult for anyone to time it. So we will see what opportunities we get and where we are at that point in time. So if that happens, then that could be another addition for the growth driver.
So I think we have multiple growth drivers in place which should be able to help continuing the growth in the future.
Pankaj
Okay. Great. That’s good to hear. On the working capital, if you can help us understand what has led to such sharp improvement and is it more sustainable in nature from that perspective?
Arvind Agrawal
Yeah. I think as you must have seen, the Branded Generics business has gone up substantially and — whereas USA is not growing much. So in Branded Generics the number of days is very, very low compared to US. So that’s why you are seeing this improvement, which is coming in there.
Yogesh Agrawal
And there has been some improvement in the collections from the US business. So I think a combination of these.
Pankaj
That’s good. So probably from an overall receivable and inventory days, it can be assumed, are there some deviations, this probably could be sustainable now because we won’t be growing US as aggressively as we were thinking earlier? So this would be more a presentation [Phonetic] of the steady-state nature of the business?
Arvind Agrawal
Absolutely correct. Absolutely correct. Agreed. Agreed.
Pankaj
So the cash flow generation could be quite strong as you move ahead as well?
Arvind Agrawal
Yeah.
Pankaj
Thank you. All the best. Thank you.
Arvind Agrawal
Thank you. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Vishal Manchanda from Systematix. Please go ahead.
Vishal Manchanda
Good evening and thanks for the opportunity. In India, in the cardiac and the pain segment, can you share the growth of the covered market and Ajanta Pharma’s growth?
Rajesh Agrawal
So the covered market — you want it for Q2 or MAT?
Vishal Manchanda
Q2.
Rajesh Agrawal
For Q2, we have substantially outpaced the covered market growth in the cardiac. We are at 16% whereas versus the covered market is at 8%. So as I said, this — now in Q2, the Met XL impact, the price reduction that has happened in the year before last, has also almost gone away, except for a month maybe. So the growth rates have bounced back. And similarly, in ophthalmology, we are growing substantially faster than the covered market growth. And so is the case in derma and pain, all the four segments.
Vishal Manchanda
Okay, okay. And would this new product launch the larger driver for the growth?
Rajesh Agrawal
No, it’s almost at par with the industry, maybe slightly better. For the industry, the growth being contributed by new brand launches is 2.7%, whereas for Ajanta it is 3.1%. So it is better than the industry, but almost in the same range. It’s mostly the volumes.
Vishal Manchanda
Okay. And just one final one. In the core markets, within the emerging markets, by how much would you be outpacing the market growth?
Rajesh Agrawal
In the emerging markets, in the sense, Asia, we have done well. I think — so market wise, as we said, we don’t have the — we don’t share the breakup of individual markets. But in the region-wise, you have seen the figures already in Asia and the Branded Generics as well as in Africa Branded Generics, we have done substantially better than our own last year performances as well as compared to the industry growth — industry growth rates.
Vishal Manchanda
Okay. That is all. Thank you.
Arvind Agrawal
Thank you.
Operator
Thank you. The next question is from the line of Chandragupta an individual investor. Please go ahead.
Chandragupta
Yeah. Am I audible?
Rajesh Agrawal
Yes, you are audible.
Chandragupta
Okay. Yeah. Thanks for this opportunity. Sir, my question is about this Janaushadhi generic stores that government is very aggressively pushing for. So how do you view the challenge from Janaushadhi and what strategy do you have to counter it?
Rajesh Agrawal
Yes, you are right. The government is very active on the Janaushadhi front and they would like to increase the number of stores outlets of Janaushadhi. The way we look at it is that is in a way complementing or serving the underserved market.
And there is no competitive strategy or there is no competition against Janaushadhi in itself. So in that sense, it’s bringing in a lot of unused or kind of underserved market into the pharma market. So that’s all that is there, honestly.
But if you look at the overall retail against, let’s say, lakhs and lakhs of current chemists, Janaushadhi is still less than 15,000 stores. So in that sense, it’s not the most significant challenge as such for the industry.
Chandragupta
So they are not gaining market share at the cost of branded products, is that what you are saying?
Rajesh Agrawal
Hard to say that because, as I said, the composition of the entire retail market, again, 7 lakh to 8 lakh chemists versus 15,000 Janaushadhi stores, so we don’t have a quantification from any third-party agency. But my guess is that’s not the biggest issue or they’re not gaining as much as one may think on a larger scale.
Chandragupta
Okay. Okay. Okay. Yeah, one final thing. How much is our NLEM portfolio now currently?
Rajesh Agrawal
12% is the coverage. So our — 12% of our sale is covered under NLEM price restrictions.
Chandragupta
Okay. 12% of the total revenue you mean, right?
Arvind Agrawal
No, no. 12% of India business.
Rajesh Agrawal
Yeah, India business.
Chandragupta
Oh, okay, India. Okay. Okay. Okay, that’s all from my side. Thanks a lot.
Arvind Agrawal
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Foram Parekh from BOB Capital. Please go ahead.
Foram Parekh
Thank you for the opportunity again. Sir, I just wanted to ask with three, four growth drivers, you alluded to one of the participants, may we assume that EBITDA margin going forward maybe one, two years down the line we can surpass 30% like other domestic-focused companies like Torrent?
Yogesh Agrawal
So Foram, normally, we don’t give the guidance for the future years. We restrict our guidance to the current year, which is in the operation. Having said that, it’s all going well. We have said in the past also. There is a possibility to expand the EBITDA margin. As you rightly said, if all those things play out and the cost structures are put in control, there is definitely a possibility to expand the EBITDA margin. So how much and all, I think once we finalize the business plan for the next year, that is the time where we are in a better position to share the guidance there for the next year.
Foram Parekh
Okay. And sir, my second question is on the trade generics side. So could you please elaborate like, how is the segment shaping out? Yeah and what — I mean at what percentage is this segment growing? And what are the drivers for the growth?
Rajesh Agrawal
Primarily, segment is recording a fair bit of growth. Again, we don’t have the industry — pharma industry does not have a detailed breakup of it. It’s not so closely tracked by any of the third-party independent agencies. So that’s a restriction or a constraint there, let’s just say that. But as we understand on a broader level, the growth rates are pretty healthy. And what is driving the growth is the same usual margin expansion that is there for the trade and the channel. That is the only growth driver for — of course, many companies are much more active in the trade generics of late. So that is another factor that is playing out.
Foram Parekh
Okay. And what would be our contribution to the trade generic portfolio?
Rajesh Agrawal
Our contribution is — in terms of percentage, it will be domestic 11%.
Foram Parekh
Okay. And do we envisage to take it somewhere further or it would be hovering around the same level?
Rajesh Agrawal
I think more or less, it should be around the same level because we are also posting good growth on the pharma business side. And with generic — trade generic also growing and pharma business also growing, I think to answer your question, overall, at a composition level, it should be around 10% to 12%. So I don’t see that mix changing significantly in the next one or two years.
Foram Parekh
Okay. Got that. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Shrikant Akolkar from Nuvama. Please go ahead.
Shrikant Akolkar
Hi. Thank you so much for the opportunity. Just two questions. Question number one is on the domestic side. We had discussed some time back about the gaps in the portfolio. So where we are in the foraying some other therapies? That is question number one.
And question number two will be, if you can comment on the emerging market MR productivity? Thank you so much.
Rajesh Agrawal
So on the domestic, you wanted to know on the newer specialties?
Shrikant Akolkar
Yeah.
Rajesh Agrawal
You are not very audible. Can you come again, Shrikant?
Shrikant Akolkar
Yeah, yeah. Sure. So there was a discussion that there are portfolio gaps in our therapies.
Rajesh Agrawal
Correct. Correct.
Shrikant Akolkar
Yeah. So where we are in entering in new therapies?
Rajesh Agrawal
As I said, the evaluation — we are at an advanced stage of deciding as to how and what will be the go-to-market strategy. So we are at an advanced stage for the new specialties.
In the current specialties, we are addressing the gap areas wherever we don’t have the coverage or if we already have the coverage, but the segments are very large, it can definitely have newer brands with new innovative products coming in. So that is how we are trying to play it out.
Shrikant Akolkar
Just slightly pressing here, if you can share, if possible of course, the therapy that we are thinking about entering at some point of time?
Rajesh Agrawal
It will be too early. I would rather talk about it once we have made up firm plans. It will be too early and it would not be a wise thing to do at this stage.
Shrikant Akolkar
Understood. And on the MR productivity trend in the emerging market?
Yogesh Agrawal
So the productivity is around 7.5 lakhs approximately.
Shrikant Akolkar
Understood. Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Yogesh Agrawal for closing comments.
Yogesh Agrawal
Thank you, everyone, for joining this call. I wish everyone a very, very happy Diwali. In case if there are any further questions that remain unanswered today, please reach out to our Investor Relations. Thank you. Happy Diwali to you, again.
Arvind Agrawal
Thank you.
Operator
[Operator Closing Remarks]