Aarti Drugs Limited announced that Q4 FY23 revenue stood at Rs.743.3 crores as against Rs. 697.2 crores, a growth of 7% YoY. For the quarter, PAT stood at Rs. 56.2 crores as against Rs. 55.3 crores YoY.  EBITDA stood at Rs. 94.4 crores as against Rs. 89 crores YoY.

For the Financial Year ended March 31, 2023, Aarti Drugs’ revenue stood at Rs. 2,718.2 crores as against Rs. 2,500 crores, a growth of 9% YoY. PAT stood at Rs.166.4 crores as against Rs.205 crores YoY. PAT margin (%) stood at 6.1%.

According to the release, domestic revenue grew approximately by 13% while exports grew by around 7% year-on- year for Q4FY23. Within the API business, the antibiotic therapeutic category contributed ~45%, anti-diabetic ~15%, anti-protozoal ~16%, anti-inflammatory ~13%, antifungal ~8% and the rest contributed ~3% to total API sales for Q4FY23.

Commenting on the results, Adhish Patil, Chief Financial Officer, Aarti Drugs Limited said, “We are pleased with our financial and operational performance FY23 amid a challenging business environment.

The company reported a good set of performance in Q4FY23, with a topline growth of 7% YoY. The company’s performance improved considerably on a sequential basis due to ease in the input costs, and efficient working capital management. On a sequential basis, the EBITDA margins improved by ~190 bps due to operating leverage driven by improved capacity utilization. The margins are expected to keep on improving on a sequential basis going forward with the upcoming foray into dermatology & backward integration in the second half of FY24 and stable input costs. We expect a mean reversion in the EBITDA margins by the end of FY24 and expect it to remain in the range of 14-16%. For FY23, the revenue grew by 9%, while the improvement in margins due to a healthy product mix was offset by inflationary pressure on input costs and subdued volume offtake due to high API costs. However, there is a good pickup in the volume offtake from January 2023 onwards which is expected to remain higher for the next few quarters.

The growth in API, as well as specialty chemicals, is expected to accelerate in FY24, driven by capacity addition, higher utilization of existing capacities and backward integration. Over the last 2-3 years, the company has undertaken multiple brownfield expansions and debottlenecking for the speciality chemicals business. As a result, the company expects the speciality chemicals revenue to increase by 50% by the second half of FY24. These niche product profile in this business are expected to improve the overall margin profile.

The company’s balance sheet continued to remain healthy with leverage remaining comfortably at 0.51x. The company recorded the highest ever monthly sales in the month of March 2023. As a result, the receivables as of 31st March 2023 have increased by some extent on a temporary basis.

Formulation segment revenue stood at Rs. 56.8 crores for the quarter. The formulation segment contributed 8% to the consolidated revenue for the quarter. The company will continue to invest in FY24 for capacity augmentation for exports. The company is focussing on filing the dossiers and getting approvals from various semi-regulated and regulated markets. The company has substantially increased the share of exports on a YoY basis. The share of exports is expected to improve further, going forward.

The capex for FY23 stood at Rs.164 crores and is expected to be in the range of Rs. 250-350 crores for FY24. The company has incurred a capex of ~ Rs. 315 crores in the last 2 years, mainly towards capacity expansion, backward integration and new product launches. Tarapur greenfield capex for Dermatology is expected to be completed by the end of Q2FY24. Tarapur specialty chemical capex is also expected to be completed well within the timeline by Q1FY24. The majority of the company’s Rs. 600 crore capex is expected to be completed by FY24. These initiatives are expected to reduce the costs along with expansion in the profit margins and the topline growth.

The Pharma API manufacturing industry is constantly evolving, and we are committed to staying ahead of the curve. In the upcoming year, we plan to continue expanding our capabilities and enhancing our offerings to meet the ever-changing needs of our customers. Recently we got two of our key products from anti-fungal and anti-diabetic therapy successfully audited by a regulatory body. One of our key goals for the upcoming year is to increase our production capacity, allowing us to better serve our growing customer base. We also plan to invest in new technologies and equipment that will help us streamline our processes and improve efficiency.”