Glenmark Life Sciences Limited Q4 FY22 Earnings Conference Call Summary

Key highlights from Glenmark Life Sciences Limited (GLS) Q4 FY22 Earnings Concall

Q&A Highlights:

• Neha Manpuria of Bank of America asked if GLS is seeing any issues relative to sourcing of raw materials due to lockdown in China. Yasir Rawjee MD said that the crisis is unlikely to impact the company unless it stretches for 2 months. GLS is looking at mitigating the situation through shipments from other ports.

• Neha Manpuria from Bank of America also asked that on the margins, does the company see incremental drift in margins in the next two quarters. Yasir Rawjee MD said that GLS has already built in and factored in some of the increases. GLS expects to continue to maintain margins at similar levels of 3Q and 4Q.

• Neha Manpuria  of Bank of America also asked if GLS is on track with the capex timelines and when can the backward integration be seen. Yasir Rawjee MD answered that BI will come in Sept., which is the one at Ankleshwar, while Dahej will come sooner, probably Phase 1 in July.

• Shyam Srinivasan with Goldman Sachs asked about the quantitative guidance on the revenue growth for FY23.  Yasir Rawjee MD said that the company considers between 12-14% growth on an overall basis.

• Vikas Sharda from NTAsset asked about margins and incrementally how the cost pressure is on the raw material side and other expenses. Yasir Rawjee MD said the only big question mark today for GLS is about gas prices. The company added that if the gas prices continue to rise, there could be some impact in 1H23.

• Tushar Manudhane from Motilal Oswal asked about the EBITDA margins for CDMO and API business. Bhavesh Pujara CFO answered that the company doesn’t quantify it. But directionally the margins for CDMO are considerably higher than the margins in generic business.

• Rahul G of Abakkus Asset Manager asked that in FY22, of the INR2,100 crore of topline, including CDMO, how much of that will be COVID or COVID related ancillary products. Bhavesh Pujara CFO replied that about 7% was the contribution in FY21 and in FY22 it was less than 5%.

• Rupesh Tatiya from Intelsense Capital enquired that what kind of margin expansion GLS expects in 2-3 years from backward integration in Ankleshwar. Yasir Rawjee MD replied that the company expects margin expansion to the tune of 80-100 bps. In terms of ROCE, it will help GLS maintain or increase the ROCE levels.

• Saion Mukherjee with Nomura asked about the factor of price increase, volume of existing products and new launches in the 12-14% growth. Yasir Rawjee MD replied that it’s a mix of price and volume, but largely coming from volume.

•  Saion Mukherjee with Nomura asked about the sale to Glenmark for 4Q22 and FY22. Yasir Rawjee MD said that for 4Q22 it could be around 36-37% and full year would be around 39-40%.