SMS Pharmaceuticals Limited, a Hyderabad based diversified and fully integrated pharmaceutical company, with interests in Active Pharmaceutical Ingredients (API) and Intermediates announced Q2FY 23 revenue of Rs. 159.4 crore, down 9% YoY whereas gross profit is down 46% to reach Rs. 44.1 crore. Meanwhile, for Q2 & H1 FY23 revenue for the API segment stood at Rs. 159.1 crores and Rs. 222.5 crores, respectively. Q2 & H1 FY23 API segment contributed approximately 99.8% and 99.6% to the consolidated revenue, respectively.

Within the API segment, ~20% of the revenues came from the domestic market and ~80% from the exports market (including deemed exports) for Q2FY23.

Commenting on the results, P. Vamsi Krishna, Executive Director – SMS Pharmaceuticals Limited said, “The company’s operational as well financial performance improved significantly on a sequential basis. This was mainly driven by accelerated demand for non-ARV products, especially from the recently launched anti-diabetic segment. This clearly shows the company’s successful shift from anti- ARV products to other product segments. The company turned EBITDA positive during the quarter due to a favourable product mix. However, suppressed API pricing, high-cost inventory and negative operating leverage impacted the EBITDA margins to some extent. The company has de-stocked almost the entire high cost inventory in Q2FY23. The pressure on input costs has also lowered during Q2FY23 and price stabilization of input costs should further aid the margin expansion, going forward.

SMS Pharmaceuticals is focussing on adding more non-ARV products to the basket. Over the past few months, there has been a tectonic shift in market dynamics for ARV products due to which the company’s capacities remained underutilized, which ultimately impacted the profitability. We firmly believe that the prices have bottomed out and we remain optimistic about pricing as well as volume uptick going forward.

The company is also witnessing healthy demand for Ibuprofen which has been recently commercialised at the Vizag facility. The company is gaining market share on month on month basis in domestic as well as exports markets. The company has also received the CEP approval for Ibuprofen which will enable the company to export Ibuprofen to the European markets.

SMS Pharmaceuticals has successfully recouped the lost ground in Q2FY23 and remains confident of returning into the growth trajectory along with sustainable profitability led by a pick-up in non-ARV products, continued investment in process improvement, geographic expansion and new product launches.”