Supriya Lifescience Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Supriya Lifescience Ltd (SUPRIYA) Q4 FY22 Earnings Concall

Management Update:

• SUPRIYA said that going forward the company’s focus would be on improving its infrastructure, which includes debottlenecking of its capacity and developing new manufacturing blocks.

Q&A Highlights:

• Naresh Vaswani of Sameeksha Capital asked about the reason for drop in gross margin YoY and QonQ. Ashish Nayak CFO said one of the reason is that the margins in the semi-regulated markets are lower as compared to that in the regulated markets. And also recovery from expenses takes time.

• Naresh Vaswani of Sameeksha Capital also asked about the blended capacity utilization of 47%. Shireesh Ambhaikar CEO replied that talking about the capacity utilization of D Block right now, it is almost at the same level as the older blocks.

• Ashwin Agarwal from Akash Ganga asked about the revenue and profitability outlook. Ashish Nayak CFO replied that on the revenue and profitability front historically, over the last 4-5 years, SUPRIYA has grown at a CAGR of 24%. SUPRIYA is confident at growing at the same pace going ahead. On the profitability front, SUPRIYA will be maintaining healthy EBITDA margins going forward.

• Kenil Mehta with Omkara Capital asked about the reason for increase in other current assets, which led to decrease in CSO. Ashish Nayak CFO said other current assets increased due to it primarily comprising of advances to suppliers amounting to 169.85 million. Additionally, 139.34 million is towards the advance for new plot.

• Kenil Mehta with Omkara Capital also asked about the driver of increase in other financial liabilities.  Ashish Nayak CFO replied that as on March ’22, it was 274 million, as against 234 million in FY21, which primarily comprises of advances from customers amounting to 178.31 million.

• Mani Saini asked about the CDMO space and what the company is doing to grow in this segment. Shireesh Ambhaikar CEO replied that on the CMO/CDMO business, the company is working on 5 active projects. Out of these two have progressed to the extent that the customers have approved the quality. The other 3 projects are at a stage where development work is in progress.

• Tushar Bohra of Invexa Capital asked about specific products in the regulated markets that will come up over the next 12-15 months. Ashish Nayak CFO said that in terms of therapies. SUPRIYA is strong in the cough, cold and allergy segment. So there is one product which has significant potential. This is just starting to contribute. Over the next 8-12 months SUPRIYA could see a positive impact of this product.

• Viraj Parekh from JMP Capital enquired about the capacity utilization of D Block during 4Q22. Ashish Nayak CFO answered that currently SUPRIYA is working at almost peak capacity as far as the D Block is concerned of 60-65% currently for April. By next 3 months expect to reach the peak capacity of 75-78%.