Piramal Enterprises Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from Piramal Enterprises Ltd (PEL) Q1 FY23 Earnings Concall

Management Update:

• PEL said that it’s on track to completion of de-merger and the listing of Piramal Pharma by 3Q23.

Q&A Highlights:

• Tushar Manudhane from Motilal Oswal asked about the overall pharma revenue guidance for FY23-24. Jairam Sridharan MD replied that considering the overall volatility in the situation and having some execution issues, PEL is in the process of revisiting the numbers.

• Tushar Manudhane from Motilal Oswal also enquired about the new API plant in Canada, what asset turn can be expected from these facilities. Jairam Sridharan MD said the investment done in the CDMO facility in Canada has given about 35% additional capacity and it has about 1.8 billion tablet capacity at Pithampur. So PEL expects to adequately utilize these capacities in the next couple of years.

• Prakash Agarwal from Axis Capital asked about the issues faced by PEL in CDMO. Jairam Sridharan MD replied that there are few issues. One is the significant attrition at the overseas site. Being able to get the talent, fill the vacancies and training them takes some time. Second was the change in pacing by customers.

• Prakash Agarwal from Axis Capital enquired about the status of Desflurane US FDA approval. Jairam Sridharan MD answered that as of now the status remains the same. It has not been approved yet, while the product has been launched in the other markets.

• Prasheel Shah with CapGrow Capital asked about the company focus three years down the line. Jairam Sridharan MD answered that the anchor products are going to be housing and MSME lending, particularly, secured MSME lending. Of this, housing might be little under 50% at the overall FS level and MSME to be a little under a quarter of the book. And the other 3-4 form factors will be little over 20% of the book.

• Vivek Agarwal with Citigroup asked about the capex investment plans in over a couple of years. Jairam Sridharan MD said that the investment plan for FY23 and FY24 is about $200 million per annum. In the mid-term, investments will be stepped up to create capacity. So overall $400 million capex for the next couple of years.

• Vivek Agarwal of Citigroup asked about the number of new product introduction in the injectable space for FY23, 24. Jairam Sridharan MD replied that PEL has indicated a pipeline of 40 products at various stages.

• Vivek Agarwal with Citigroup also enquired about the reason for revenue in CDMO space relatively huge in 2H. Jairam Sridharan MD clarified that it depends on the overall pacing of the customer’s requirements. And the time period required to being able to deliver.

• Vivek Ramakrishnan from DSP Mutual asked that on the financial services if acquisition is a real possibility. Jairam Sridharan MD replied that the micro-finance business is no longer in experimental mode and PEL is going to make further investments in that business. PEL added that it is open to M&A in these spaces.

• Piran Engineer from CLSA enquired that on the POCI book, how much of it is retail vs. wholesale. Jairam Sridharan answered that POCI book is all retail, and there is no wholesale.