Poly Medicure Limited (NSE: POLYMED) Q2 2025 Earnings Call dated Oct. 29, 2024
Corporate Participants:
Himanshu Baid — Managing Director
Analysts:
Nisha Shetty — Analyst
Karan Khanna — Analyst
Girish Jain — Analyst
Zain Hussain — Analyst
Yash Gandhi — Analyst
Vihang Subramanian — Analyst
Naman Bagrecha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Poly Medicure Q2 FY ’25 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Nisha Shetty from ICICI Securities Limited. Thank you. And over to you, ma’am.
Nisha Shetty — Analyst
Thank you, Palak. Good afternoon, everyone. On behalf of ICICI Securities, I would like to welcome you all on Q2 FY ’25 earnings conference call of Poly Medicure Limited. Today on this call we have with us the Senior Management Team of the company represented by Mr. Himanshu Baid, Managing Director; Mr. Naresh Vijayvergiya, CFO; and Mr. Avinash Chandra, Company Secretary. I would like to thank the management team of Poly Medicure for giving us this opportunity to host this call.
And with this, I will hand over the call to the management. Over to you, sir.
Himanshu Baid — Managing Director
Thank you, Nisha. Thank you for hosting this call. A very good afternoon to everybody who is connected on the call. My pleasure to talk about the company’s progress in the previous quarter and also discuss about the H1 results for the current financial year. As you have seen, the company’s revenue has grown in line with the guidance we had given in the beginning of the year.
The guidance was between 22% and 24% for the whole year. So the H1 revenue, if you look at the stand-alone comparison has grown by around 23%. So it’s pretty much in line with what we had mentioned earlier. Also, all the new plants which were commissioned last year have started functioning well. And the additional capacity which was generated by these new plants, we’re able to sell most of these products to customers in India and outside India.
And the margin also we have seen a slight improvement in the margin. This was also as per the guidance given in the beginning of the year of 100 bps to 150 bps margin improvement during the year. And during the quarter under review, the Q2, we have seen EBITDA margin — operating EBITDA margins almost touching 28% versus last year’s Q2 margin of 25.82%. So we have seen an improvement, a significant improvement in the margin also. Compared to previous quarter of Q1 of this current financial year, we have also seen some margin improvement from 27.5% to 28.06%.
On the PAT side also, there is a significant improvement. For the second quarter ’23-’24 and this quarter ’24-’25, we have seen PAT increase from INR59.21 crores to around INR87.22 crores. So there’s a significant increase in the PAT also comparatively — as compared to the previous quarter.
And overall, if you look at H1 to H1 comparison, the revenue has increased from INR625 crores to — and these are all stand-alone revenues to INR770 crores. EBITDA has increased — operational EBITDA has increased from INR167 crores to INR214 crores. EBITDA including other income has increased from INR193 crores to INR258 crores, and PAT has increased from INR119 crore to INR159 crores.
So in every parameter, we have improved from the previous quarter and previous year. And this is mainly because of the new expansions we have done, launching of new products over the last 12 to 24 months. All that has actually helped us to improve our revenue as well as the sales in the current financial year.
Though there were a lot of headwinds during the current financial year because of the current geopolitical situation in Europe and in Middle East, we had incidence of high freight costs during this quarter. Also, we have seen shortage of containers in key geographical areas. That also was one of the factors which we were constantly monitoring. And also there was some fluctuation in the raw metal prices because a lot of our raw material is based on crude oil. So a little bit fluctuation was there. But in spite of all these challenges, we were still able to do better compared to the previous year and even do a little bit better margin comparatively.
If you look at the current product sales mix in the current quarter, again, I think exports are close to 70% and domestic business is close to around 30%. So we are maintaining the same range and I think for the whole year, we will also maintain a similar range for exports and domestic business. The good news about the domestic business is if you look at the quarter under review, the second quarter, the export — the domestic business has grown by around 22%.
If you recall, in the previous quarter we had only increase of 6%. But as I had mentioned in the last call that we are focusing now more deeply on the domestic business. And because of the efforts we have done, domestic business is — has grown actually in Q2 to Q2 comparison, around 22%. And this is a big jump for us in terms of the efforts we have put in, in the domestic business.
And this trend should continue in the coming quarters also. So for the full year, we maintain our guidance over 20% plus growth for the domestic business. Export business definitely has grown by around 26% if you compare H1 to H1 numbers. And that continues to do well for the company. In exports, also, we have seen that Europe has done very well.
We are logging a growth of around 35% in the export business — in growth in export business in Europe. And a lot of the key markets are doing well for us including U.K., France, Italy, Germany, Spain and Nordic countries. They are doing well for us right now. And we are adding new products where we are adding new clients also in this market. So all that is helping us to grow our business there.
When we look at the U.S. business, I think this year we expect to clock anything between $2 million to $3 million revenue. This is the first year full year where we’ll have FDA approvals and the business has started rolling out in the U.S. We’ve started getting repeat orders from our customers. So it’s very heartening that the business has — is picking well and we still maintain our guidance of $15 million to $20 million over three, four years as we have been saying earlier. So we are building up the business. We are absolutely as per the plan which we have actually made for the company and everything is going as per schedule. We don’t see any changes in that schedule or plan of implementing a revenue in U.S. market.
When we look at the renal business, the renal business has done well. We have seen a growth of around 40%, 45% in first six months and we maintain our guidance over 50% growth for the next six months also. So overall from a INR90 crore number, we should be able to do between INR140 crores to INR150 crores of renal business in the current financial year.
And we are very bullish about the business prospects because with the new Prime Minister scheme PM-JAY where the reimbursement rates have increased for renal treatments from around INR1,200 to INR1,800. I think more and more patients are now able to take renal treatment and it’s actually become profitable for — also for providers which were actually earlier bleeding. So with this change which — and that big change which has come in, in the payment by the government and a lot of state government, if you’ve seen recent Haryana elections, government is allowing also free dialysis for patients. So a lot of state governments are now moving to actively promote dialysis in their healthcare budgets.
And also we are seeing the use of — single-use dialysis is also changing. Because earlier when we started the business few years ago, there was a high reuse of the products. Almost close to 90% market was reused and 10% was single use. But now we have seen in last — after COVID, the trend is changing. Almost 30% to 35% market has moved to single use and 60% to 65% — maybe 65% to 70% is close to around multiple use. But in next two, three years as the trends are showing, I think the market will become 50% single-use and 50% multi-use and that will also further increase the demand for dialysis products. Because once they are more single-use products then the consumption will further increase.
And we are making adequate investments in the dialysis business in terms of our footprint in manufacturing, machine servicing, engineering, surface. So everything we are building up right now as infrastructure which will help us to grow at a much faster pace in next four, five years. So after the initial struggles we had with the business, now the business is pretty much on track and on a high growth path. And I think we don’t see any reason that we will not gain more than 30% to 40% market share in the next four to five years in this business.
And there is no competitor in India making these products. So we are the only company which is manufacturing such products and we have full technology back up and we are also developing some new products in this area which will also further benefit the patients and also help in reducing pain which dialysis patients have to undergo for a longer treatment. So there are some new technology we are developing and that also products will be launched sometime early next year.
On the QIP front, the company in the previous quarter has raised additional funds around INR1,000 crores. Totally 53,19,148 equity shares were issued at the price of INR1,880. And after the QIP, the institutional shareholding has increased from pre-QIP level of 19.26% to around 23.58% post-QIP. And the split is pretty much even. Almost half institutional holders are from India, DIIs, and half are FIIs.
As of September 2024, the institutional shareholding post-QIP now has increased to around 24.21%. And major new investors which were part of the QIP were Lighthouse Fund, SBI Mutual Fund, Aberdeen, Nomura, WhiteOak, ICICI Life, Quant, Morgan Stanley. So a lot of new investors have actually joined and a lot of insurance companies, Kotak Life, Max Life, Tata AIA have also been allotted shares under the new QIP.
The QIP proceeds will be used over next two years and it’s mainly for new capex for new plants. So the company is setting up three new facilities — additional facilities, one in Haryana, Rajasthan, Uttarakhand. And all these facilities will come live in sometime middle to end of 2026. And we are focusing on three core business areas. One would be, of course, renal dialysis business, second would be cardiology and third one would be critical care.
So under all these three therapeutic areas, we will be expanding capacity and capability to cater to domestic as well as international demand. Out of the QIP proceeds, INR500 crores is for new capex, INR200 crore — INR250 crores will be for general corporate purposes to fund the working capital requirements in next few years. And acquisitions, we have earmarked to INR50 crores for that. And also company has around INR250 crores of cash surplus which would be also deployed in these three areas.
Also in the current six months company has done a capex of already INR150 crores. For the whole year, we had planned around INR250 crores capex but as it looks like we were able to speed this up and all these capex has been done from internal accruals. So no QIP money has been used so far for this. All these capex has come from internal accruals. And for the balance six months, we also will spend another INR100 crores to INR125 crores more for the current — in the current plants where we will be adding more machines and more capacity in the current plants.
So with this new capex and I think with this new all the three big plants which we are going to set up in next two years, we will have sufficient capability and capacity to look at new opportunities in the medical device industry. Already we see some tailwinds coming to India because of now some changes in the U.S. tariffs against Chinese products. And I think in next one or two years we also see good opportunities in the CDMO sector where contract design manufacturing will be a good opportunity to work with large companies. So I think the infrastructure we are creating will be also help us to create for such kind of opportunities which should be coming to us in next one to two years.
So all these new tariffs are going to come next — I think starting from October, they will be implemented in a phased manner in one year. So I think we are also seeing some traction from U.S. where companies are interested to develop some additional products with us. So hopefully in the next one to two years, we will see also some new products being developed to cater to U.S. markets. And also with global geopolitical situation changing, we also will see some more traction coming from Europe where more companies in Europe would be interested to look at India as a manufacturing option. So this is some update on the international business.
On the other hand, we have seen that next six months, again, we will stick to our guidance what we have given. So we should be able to hit that growth rate of 22% to 24% which we have already given as a guidance. I think we are pretty much on track for that. We have — in terms of salespeople, we have — in first six months, we have added 60 plus new sales associates in the company which is absolutely in line with our plan to add 100 plus people in the current financial year.
And out of this 60 people, 40 people have been hired in new verticals, critical care and cardiology. So these verticals have just started. So we are on the verge of launching a lot of new products in these new two verticals. Some products have been launched already, some are in the pipeline. So a lot of work has been done right now.
We are also going to work very closely with certain clinical research organizations to help us do clinical evaluation of our high-end Class III devices. So that was another area we will focus on in next six months to one year so that we will have enough data to fast-track our regulatory approvals in developed markets. So we are already working on that.
And the PLI scheme, of course, the first PLI for renal products as we were one year late so we were not able to get the traction because one year we missed the cycle and because of that we are not able to get any incentives of that. But on the PLI 2, the company will receive around INR1.4 crores of incentive in quarter three which has not been — which is recently, come in October to us. So that is for the previous year which has been coming to us in this current quarter.
And so we are hopeful that under PLI 2, we’ll continue to get some incentives from the government. PLI 1 we may not get any incentives though we have requested the government to extend the scheme by another one to two years because of COVID. During COVID time, it was very hard to set up plants and scale up capacity. So we are not sure about it. But anyway, for us, it’s more important that — to build a traction in the business.
And renal business continues to do well. So probably with or without PLI, it doesn’t matter for us right now. And we are very hopeful that, that 50% growth in next few years will continue to come for renal business. And this is mainly for domestic market. So — and maybe by FY ’26, we will also start exploring the global export markets for renal products. So that will further help us to strengthen our position in this category.
So these are some of the updates from my side and I’ll be happy to answer more questions. Whoever is on the call, please feel free to ask questions about the company. And Nisha, over to you again.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Karan Khanna from Ambit Capital. Please go ahead, sir.
Karan Khanna
Yes, hi. Thanks for the opportunity and congratulations Mr. Baid on another strong quarter.
Himanshu Baid
Thank you, Karan. Yes.
Karan Khanna
Yes. My first question is on the exports business in particular Europe which continues to grow at about 25% plus for the company. What’s driving that and how do you see exports growth over next few years and then what’s the kind of visibility that you have from your distributors and customers in that market? And similarly on the U.S. business, are there any updates on further FDA approvals and how was the feedback for the shipment that you completed via GPOs? And how do you see the distribution evolving here?
Himanshu Baid
So I’ll first answer, Karan, with Europe. So Europe, I think we have a great traction in Europe market and I think we have a long-term visibility because most of the businesses we contract in Europe they are long-term basically over — spread over three to five years. So — and a lot of these businesses are new businesses which we have got into in last few years. So we have a great visibility in Europe. So Europe will continue to outperform the growth — general growth of the company. So we expect Europe to grow in the range of 30% to 35% in the next coming couple of years also.
On the U.S. business side, I think we have already — as I had mentioned on the call, we have already got our second, third orders from the U.S. So I think the feedback is great and I think we are moving ahead with that. All the products we have launched in the U.S. market we have given a guidance for $2 million to $3 million for the first year where we will be selling at least four to five products in the U.S.
And we are still waiting for FDA approvals to come and hopefully early next year we should have — we should get few more approvals. That’s what we’re expecting in first quarter of the next calendar year. And once we have the approvals, we’ll start building businesses for those products also.
Karan Khanna
Sure. My second question is on your expansion plans to set up four new plants. What are the timelines for commissioning these and likely capex for the same and what kind of peak revenue potential do you anticipate once these plants are online?
Himanshu Baid
So we have put an outlay of INR500 crores for these three new facilities. This is part of the QIP fundraise. And these facilities should be live by — from mid to end of 2026. And land has been acquired for all the three facilities, Haridwar, Jaipur and Faridabad. So these are in the existing areas we currently operate. So these are adjacent facilities. Some are nearby, some are adjacent. So this helps us to leverage our current infrastructure and expand quickly with new products.
Karan Khanna
Sure. And lastly on your new divisions such as cardiology and critical care, what kind of further investments do you anticipate? And similarly on scale, what kind of scale do you anticipate for both these divisions over the next three to five years?
Himanshu Baid
So I think cardiology is a big business going forward, intervention cardiology. Though there are too many players in the market but what we have seen is mostly it’s import driven, especially on the consumable side. We are not talking about stents here but mainly on the consumable side. And I think that is the area we are targeting right now.
And POLYMED because of its manufacturing expertise, so we are able to bring some new products in the market which are locally manufactured, Make in India products and that will actually drive that market. So I think in next three to five years, I think maybe let’s say by 2030 we should be able to look at INR300 crore to INR400 crore revenue also from cardiology business.
Karan Khanna
Great. Thank you, Himanshu, and Happy Diwali to the entire team.
Himanshu Baid
Thank you so much, Karan. Appreciate it.
Operator
Thank you, sir. The next question is from the line of Girish Jain from KJMC Finserv Group. Please go ahead, sir.
Girish Jain
Hello, and congratulations on a very good set of numbers, Himanshu ji.
Himanshu Baid
Thank you, Girish ji. Thank you.
Girish Jain
My question was relating to the capex which we had done earlier. I think four plants were to be operational. Am I — is it correct to assume that all the four plants are now operational? And can you give a guidance of what kind of capacity utilization we are running at the new ones?
Himanshu Baid
So all the new four plants are operational and most of the plants probably should be working at around 50% capacity. We are still doing a lot of capex in these plants. As you see the first INR150 crores which we have spent in the first six months all that capex has catered to existing plants only. The new plants and the existing plants.
So a lot of automation is being added. And some of you have already visited plants, have seen that how much amount we spend on automation. And automation becomes very critical to our business because quality is the most important part in our products and we can only achieve through automation. And that is already happening.
And I think when we look at the revenue side, I think as you are already aware that if you spend INR1 in capex, we see a revenue around INR1.2 to INR1.3. And that has been actually the guidance by us. And also that’s more or less the industry standard also.
Girish Jain
Okay. So with the new capex now which is being planned with the QIP money which we have raised, when you mentioned that it might be operational by end of financial year ’26. So what will be the increase in the capacity like in terms of percentages?
Himanshu Baid
See, basically what we are doing is we are going to expand capacity in three core business areas. One is renal dialysis where we will double our capacity from the current level where we operate and what we have in pipeline right now. A lot of capacity also comes during this year. So from where we end this year, we’ll almost double our capacity in next two years because as we are growing at 50% in this business.
And similarly, we will be also expanding some new products in cardiology. So there also will — because the market — we have just started selling some products. The division has just been launched and if you see renal is a five year old division and almost we’ll be ending at INR150 crores. So now we see a big ramp-up happening. So initial part is — the regulatory part is slightly slower but as we move on we will see the ramp-up happening faster.
So a lot of new products will be added in the cardiology and critical care. And critical care is more driven towards oncology segment, the cancer care. So we have a lot of products which we are making in Italy today. A lot of these products will be shifted to India and also scaled up in future. So we are already looking at expanding that area of business where still India is around 80%, 90% import dependent.
Girish Jain
Okay. And last question going forward, let’s say the next three to four years, do you see any change in the product mix between infusion, cardio, renal and critical care?
Himanshu Baid
See, I think we have not extrapolated that data Girish ji, but I think — see, infusion still will remain our core business because that is where we have a global excellence on that product category. So that will continue to be our core business. But as new businesses pick up, for example, renal by let’s say next five years will constitute around roughly, let’s say around 10% to 15% of the business. Today, it may be only 5% to 6%.
Girish Jain
Okay.
Himanshu Baid
So similarly cardiology, which is probably only maybe — there are no numbers for cardiology right now, but maybe in next five years we will see it to growing to around 5% to 7%. So all this will keep on evolving, basically.
Girish Jain
Okay. Thank you so much and all the best.
Himanshu Baid
Thank you, Girish ji. And Happy Diwali to you, sir.
Girish Jain
To all of you over there. Thank you.
Operator
Thank you, sir. The next question is from the line of Zain Hussain from Dolat Capital. Please go ahead.
Zain Hussain
Hello. Am I audible?
Himanshu Baid
Yes, please.
Zain Hussain
Yes, thank you sir for the opportunity and congratulations with a great set of numbers. I have three questions. It’s regarding domestic business guidance. We have given for 20%, 22% but we are — in H1, we are already running at 11% as an average. So do you think to change the Indian items, domestic items, or you wish to maintain it?
Himanshu Baid
No, we — I’ve already said in the initial part of the call that we will do around 20% and that — because currently we have H1 to H1 growth of 13%. In the first quarter, it was only 6%. So in fact we are now growing faster now already. And as you know, the private market is growing faster for us and government business is kind of where we are exiting part of that government business. So that’s the reason first quarter numbers were in screwed. But overall, if you see a private market trajectory, we are growing 75%, 25% in that category. [Speech Overlap] but for the whole year, definitely we are maintaining a guidance of 20% plus.
Zain Hussain
Okay, sir. And sir, renal care sales phase in Q2 as well as in H1 was? If you can share the number, renal sales.
Himanshu Baid
No. So we have not shared any numbers. What we have shared is that we have seen a growth of around 40%, 45% in renal care business in the first six months.
Zain Hussain
Okay, sir. And you have told that 500 dialysis machines to be installed by the end of this year. So it is maintained, the guidance?
Himanshu Baid
Yes. So total installation base will go over 500 machines by end of this year. And — in particularly, this year, we should be able to sell between 350 to 400 machines in this particular — 350 machines. So the earlier base of 150 plus 350 this year we will be able to cross our installation with 500 machines.
Zain Hussain
Okay, sir. And sir, infusion therapy contribution in domestic as well as in export?
Himanshu Baid
Absolutely. So it is close to around 65%.
Zain Hussain
Okay. And domestic?
Himanshu Baid
Same concentration.
Zain Hussain
Okay. And sir, export has also grown very well. So what are the sectors driven this export business?
Himanshu Baid
Could you repeat that question, sir, again?
Zain Hussain
The export business growth sectors? It is driven by?
Himanshu Baid
It’s driven by infusion business because that is where we have global excellence on that product category. And we have a lot of products which are innovative, we have patented products and that is driving that growth in that segment.
Zain Hussain
Okay, sir. And sir, guidance for EBITDA margin. Could we maintain our margin guidance?
Himanshu Baid
Yes. So if you see, in the beginning of the year, we had given a guidance of around 100 bps to 150 bps improvement in the margin. And I think you already have seen the results and I think that is being reflected in the results also now.
Zain Hussain
Okay, sir. And sir, last question, working capital days is?
Himanshu Baid
That is around close to 100 days right now.
Zain Hussain
Okay, sir. Thank you.
Himanshu Baid
Thank you.
Zain Hussain
Thanks a lot.
Operator
Thank you, sir. [Operator Instructions] The next question is from the line of Yash from Stallion Asset. Please go ahead, sir.
Yash Gandhi
Hi. Thank you for the opportunity. So I just want to understand that since you’ve kept INR250 crores out of your QIP money for acquisitions, what are the new products or new sort of areas that you can pivot to with this amount of money?
Himanshu Baid
See, basically INR250 crore is just an amount from the QIP part. But company also has internal cash and internal cash generation and we are not limiting ourselves to INR250 crores. So we are looking at opportunities adjacent to current product areas. For example, in anything cardiology or anything in oncology space or anything in critical care, so any new product areas. There are thousands of products in this space. We do only few, maybe 20, 30 products.
So what other areas? So we are looking at adjacent areas in this therapeutic area. And whatever — and we are looking at technology basically because currently what we need is a technology and a regulatory care and so that we can fast-track those projects and — otherwise once we do it on organic basis, that is going to take a long time. Because typically time frame is three to five years. So that is one of the reasons that we are looking at some acquisition opportunity. And as and when we have something, we will definitely announce that.
Yash Gandhi
Right. And so I just want to understand that apart from Europe, what could be potentially more fast-growing sort of regions for you? Would it be like Middle East or South East Asia or have you sort of explored some of the countries there where you can potentially have the same kind of growth that you’re seeing in Europe?
Himanshu Baid
No, I think if you look at the global landscape, around 35% global market is U.S. in terms of value and then followed by around 25% in Europe. So — and then I think India is only 2%, 3% today. But again, being our presence in India and we have been present for a long time now, we have a bigger market share in India compared to other global markets. So I think for us, these three geographies will continue to be the key market for us as we go along next three to five years.
Yash Gandhi
Got it. Thank you.
Operator
Thank you, sir. [Operator Instructions] The next question is from the line of Zain Hussain from Dolat Capital. Please go ahead, sir.
Zain Hussain
Thank you for the follow-up question, sir. Sir, guidance for gross margin if you can give?
Himanshu Baid
See, gross margin — we normally give guidance to EBITDA margin. I don’t have those numbers. But typically we operate between 60% to 65% gross margin.
Zain Hussain
Okay, sir. And the capex guidance of INR100 crores INR120 crores in next six months will be from internal accrual or QIP?
Himanshu Baid
Internal accruals. These are mainly capex happening in the existing plants. Some of course will — also capex will be directed towards the new facilities as we start building them up. But the majority will come from internal accruals and some of the QIP money will be also partially on the INR500 crore book. Major QIP utilization will start sometime early next year.
Zain Hussain
Okay. Thank you.
Operator
Thank you, sir. The next question is from the line of Vihang Subramanian from Zaaba Capital. Please go ahead, sir.
Vihang Subramanian
Yes. Hi. Congratulations on a good quarter and thank you for taking my question. Just one question from my side. In some of your remarks initially, you mentioned that you’re seeing a lot of traction from U.S. customers due to potential tariffs, right? So could you talk about what are the tariffs currently on our products as well as similar Chinese products in U.S. and Europe? And if we see an increase in tariffs after the U.S. election, do you expect to get more competitive versus China?
Himanshu Baid
So it’s a great question, Vihang. So let’s first talk about the tariff on the current tariffs. The current tariffs are zero from India right now. So when we export to Europe, there’s zero tariff. And Europe is not going to change any tariffs. And Europe is our major market. Today more than one-third revenue comes from Europe — or one-third. One-third is Indian, one-third is rest of the world. So U.S. is also not very significant. You know the numbers already.
And currently the U.S. tariff is zero. But even if U.S. gives — puts a reciprocal tariff which we are hearing from Mr. Trump’s speeches, I don’t know who is going to come, but let’s assume that he’s going to come. So India has a tariff of around 10% on medical devices. So the reciprocal tariff can be only 10% in my view. Number one.
Number two, current tariffs on Chinese products range from 25% to 50%. So there will be — still be a big gap. And I think the most important thing is the global supply chain with this current uncertainty and what is environment, I think is going to shift a little bit to India and I think medtech space also.
And I think that change should come in next let’s say two years to five years. So — but — and we are building a — most of the tariffs become effective now till January 2026. So in this period, I think if we can catch hold of some good companies and products, I think that is the target we are trying to set up for ourselves.
Vihang Subramanian
Understood. And just in regards to the acquisition that — the potential acquisition that you may look at, are there any particular products or any particular kind of therapies that you are eying or at this point, it’s more open?
Himanshu Baid
So we are very clear that we want to stay adjacent to what we are doing. So we will only do something which we are currently operating in, whether it’s cardiology or critical care or oncology or in renal space. Anything around adjacent to these therapies we are going to do it. So we are not going to go out of our therapeutic competence.
Vihang Subramanian
Understood. And just last one on the margin side. I think it seems like we have been trending a bit ahead of our guidance. So would you look to revise this at some point because it seems like our export revenue salience is driving margins higher, right? So any thoughts on that?
Himanshu Baid
No, I think, Vihang, more important is it is good that we are trending higher but I think we would like to stay in the range. And I think whether in the top of the range or on the bottom of the range, but at least we want to be in the range. And I think — see, we don’t know what’s going to happen in next six months in the global geopolitical situation. So it’s good to be prudent and stay prudent. So if we have done well, I think we should compliment ourselves.
But we don’t know about the future. But I think if we can — the company has the capacity to absorb any future shock. Even though this first six months were very difficult in terms of global supply chain because freight rate started increasing, the shipment transit times kept on increasing. So in spite of all these challenges, we’re able to still make some small improvements in our margins. So I think let’s continue with that. I think maybe another quarter, we’ll see what is going to happen.
Vihang Subramanian
Understood, sir. Yes, that makes a lot of sense. Yes, that’s it from my side. Good luck and wish you and the team a very Happy Diwali.
Himanshu Baid
Thank you, Vihang. Same to you and everybody in Zaaba Capital.
Operator
Thank you, sir. [Operator Instructions] The next question is from the line of Naman Bagrecha from IIFL Securities. Please go ahead, sir.
Naman Bagrecha
Hello. Can you hear me?
Himanshu Baid
Yes, Naman, I can hear you. Please go ahead.
Naman Bagrecha
Thanks for the opportunity. Sir, just some clarifications on the India business part. You highlighted that the first half of this year we’ve grown at around 13%, right? So that means that to achieve let’s say a 20% kind of growth on a full year basis we’ll be growing at around 30% at least for the next two quarters Y-o-Y or let’s say first half growing at around 30 — second half growing at around 30%. Is my understanding correct? I mean and…
Himanshu Baid
You’re absolutely correct. And I think these are the numbers we have with us. So we are pretty certain because we have the build-up, the capacities have gone up and let’s say in quarter two we were able to see a 22% growth compared to quarter one which was only 6% basically. So we are seeing these changes already in the customer profile in the demand side and renal business is already growing at 50%, which will be almost INR150 crores and this will become almost close to around 25% to 28% of our total business. So — in India at least. So we are pretty confident on getting those numbers.
Naman Bagrecha
Okay. And as you said on the renal business, so renal business, I mean if I back calculate we actually have grown at around 50%, 51% in second quarter and the asking rate would be closer to around 60% plus if you look at INR145 crore of business.
Himanshu Baid
Yes. So the reason we are able to do it because we have added a lot of new capacity in renal business and most of this capacity is coming live between October and November.
Naman Bagrecha
Okay. So basically this month and…
Himanshu Baid
Yes. So currently we are short of products right now. We can’t supply enough.
Naman Bagrecha
Okay. And lastly on the export business, if we exclude your — the subsidiaries, I mean we have seen a fantastic growth of let’s say around what 28%, 30%. Is my understanding correct?
Himanshu Baid
That’s correct. Around 27%, 28%. You’re right. That’s correct.
Naman Bagrecha
27%, 28%. So for the full year, would you want to revise the guidance or this would not be achievable? I mean let’s say you guided for around, let’s say 25%, right, for the full year.
Himanshu Baid
So we have guided for the full year total overall growth of around 22% to 24%. And with India doing around close to 20%, with a weighted average of 30% on India business, and then export business around 70%, weighted average of around 25% to 27%. So I think — typically we have to also look into facts that what is going to happen in next six months. So it is good to give a muted guidance and if you do better is always good. So people not like to revise margin, let’s say, guidance at the end of second quarter. I think after end of third quarter we’ll be more prudent to revise guidances.
Naman Bagrecha
Okay. And one more on — if I may. The earlier participant also highlighted that because of higher export business we have seen that 50 bps quarter-on-quarter improvement in margins. So given that our export business will be, let’s say going faster than the domestic business. Do we expect the margins to be slightly better? I mean probably achieving, let’s say 28% on 4Q exit?
Himanshu Baid
See, the target was to improve by 100 bps, 150 bps and it also depends on the product mix every quarter. But I think we are pretty much on the line but again, it’s a lot of very uncertain situations in the geopolitical world. We don’t know where oil is going to hit. Is it going to impact raw material prices or what is going to happen to supply chain, the current situation? So it’s good that we have done better in one quarter. So even if we do bad in other quarter, we’ll be able to normalize it.
But that is not the case right now. But the important thing is that continuous improvement is required and we are doing it actually in terms of margins. And as the product mix keeps on changing, as we go more and deeper in, let’s say critical care, more deeper in cardiology, definitely we’ll able to have better margins in these products also in India also going forward as time progresses because currently, we are also in lot of in the initial investment phase in these businesses.
So like for example, you hired 40 new people, so 10% of the workforce is completely new for new businesses which are not contributing at the same run rate as the original businesses where other 370, 380 people are working. So gradually, we’ll see a ramp up. So definitely once the businesses get more and more, let’s say, deeper, we will definitely see margin improvement. Renal business is still not a great margin contributor but as we increase the volume substantially and definitely margin will keep on changing because the contribution margin will keep on increasing.
Naman Bagrecha
Got it. And…
Himanshu Baid
I think the idea in this business, I think it’s all about technology and volume and what you can do in terms of how you position yourself in the market. If you position in the lower spectrum then you get lower pricing. But if you start competing with large multinationals, then definitely you can improve your price points. And that is what we are trying to achieve right now. We are trying to replace the multinationals on the market in India, not replacing Indian companies in the market.
Naman Bagrecha
Got it. And just on the sales and marketing addition, the associate, just wanted to understand how does, let’s say, their productivity play out. I mean today let’s say we are — FY ’24, we were at around — I mean if I look at…
Himanshu Baid
INR200 [Phonetic] crores.
Naman Bagrecha
Sales per month for a rep close to around INR8.5 lakh…
Himanshu Baid
It’s INR1 [Phonetic] crore a year, basically. Typically INR1 crore.
Naman Bagrecha
INR1 crore a year. Yes, right. So the addition that you have done, so generally how much time do they take to achieve, let’s say, these kind of productivity?
Himanshu Baid
This is very hard question to answer because it depends on business to business, depends on the approval process from each hospital. And some businesses may take longer, some may take faster. So again, it’s something we have — we continuously juggle with in terms of balancing the people versus the revenue. And — but when you have new businesses to set up, let’s say two new businesses, then sometimes you have to compromise on that area and say, okay, I need people first so that they can go to hospitals and push the products.
So I think in that case, we are very careful in heading the headcount versus — but again, when we say end of this year we’ll have 500 people, but we’ll also see revenue almost touching INR500 crores in domestic business. So this is where somewhere we are in that zone. So we always keep that INR1 crore number in mind. So new versus old keeps on getting blended basically.
Naman Bagrecha
Okay. So on a blended basis, you’ll say that INR1 crore is — would be the…
Himanshu Baid
Yes, from that business where we are targeting on this. It’s on a blended basis because always you have new people coming in, going out. That is always the case.
Naman Bagrecha
So, sorry, I didn’t understand. So on a blended basis, you’ll target INR1 crore or to achieve…
Himanshu Baid
On a blended basis between new and old together. Yes, of course.
Naman Bagrecha
Okay. And what were — I mean you highlighted that total 100 associates to be added in FY ’25. Any other plans, let’s say for FY ’26 or on a steady state you would like to add [Speech Overlap].
Himanshu Baid
We continue to add that many people because the business is growing. We need to reach out to more hospitals. Today, we reach out to 8,000, 9,000 hospitals. We need to reach out to almost 20,000 hospitals in the country. So — in next three to five years. So we’ll have to almost double the headcount in let’s say next three to four years. Even if we continue with the 20% growth rate, the business is anyways double in next four years.
Naman Bagrecha
Yes.
Himanshu Baid
So we’ll have to continue to increase the headcount to reach more and more customers. And customer means the hospitals here today.
Naman Bagrecha
And just last front, what would be let’s say the blended capacity utilizations? You said 50% or — I mean, sorry…
Himanshu Baid
For the new plants and for the existing plants is already around 75% to 80%.
Naman Bagrecha
What would be the blended number, sir?
Himanshu Baid
Blended will be close to around 60%, 65%.
Naman Bagrecha
Okay. Thanks a lot. I will join back in the queue.
Operator
Thank you, sir. [Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to management for closing comments.
Himanshu Baid
Thank you everyone for great questions and I really appreciate the kind of deep study you have done for the business and for the company. Please continue to ask these probing questions. This will help us to do better every year, every quarter. And we also assure you that whatever guidance that we give you in the beginning of the year, we will try to hit those revenue numbers and profit numbers to ensure that the company is on track with the right performance parameters. Thank you again very much, all the participants, ICICI team, for hosting this call. Thank you again.
Operator
[Operator Closing Remarks]