Piramal Pharma Limited Q1 FY2024 Earnings Conference Call Summary
Key Financial Highlights
• Revenue Growth: 18% year-on-year, reaching Rs. 1,749 crore.
• EBITDA: Improved to Rs. 171 crore, with a margin increase to 10%.
• Rights Issue: Conducting a rights issue to raise up to Rs. 1,050 crore at Rs. 81 per share.
Business Performance
• Indian Consumer Healthcare: Achieved 13% year-over-year growth; 15% increase in power brands.
• New Products: Launched 11 new products and three new SKUs.
• Debt Reduction: Focus on reducing debt through the rights issue, with promoters committed to full subscription.
Capital Expenditure and Interest Costs
• CAPEX Insights: Investments being made judiciously; maintenance CAPEX lower than depreciation.
• Interest Costs: Increased due to higher borrowings and rising interest rates; rights issue expected to help reduce debt.
CDMO Sector Insights
• Order Cycles: First half of the year slower due to longer cycle times; increased order inflows as clients resume commitments.
• Commercialization Timeline: Over 35 molecules in Phase-III expected to commercialize in 2-3 years.
Market Opportunities and Challenges
• Sevoflurane Market: Significant opportunity highlighted in the CHG business.
• Antibody Drug Conjugate (ADC) Market: Ongoing expansions to meet demand.
Management Responses
• Focus on Growth: Emphasis on both top-line and bottom-line performance; plans to improve debt-to-EBITDA ratio.
• Transparency Concerns: Management encouraged further inquiries for clarity on financial details.
Conclusion
• Positive Outlook: Management remains optimistic about maintaining momentum for the remainder of the financial year, with a focus on strategic growth and operational efficiency.

Announcement Details
• Date of call: February 9, 2023
• Key executives present:
• Nandini Piramal (Chairperson)
• Peter DeYoung (CEO)
• Vivek Valsaraj (CFO)
• Proposal approved for equity shares worth up to Rs. 1,050 crores, pending regulatory approvals.
• Transcript available on the company's website.
Financial Performance
• Q3 FY2023 Revenue Growth:
• 11% year-on-year growth, reaching Rs. 1,716 crores.
• Nine-month revenue: Rs. 4,918 crores.
• Segment Performance:
• CDMO business: 14% growth in Q3.
• Indian Consumer Healthcare: 37% growth in Q3.
• Challenges: Rising raw material and operational costs, but maintained zero OAI status.
Strategic Focus
• Emphasis on capturing demand, enhancing productivity, and ESG commitment.
• Plans to raise Rs. 1,050 crores to support growth in CDMO services, hospital generics, and consumer healthcare.
Operational Insights
• Growth Challenges: Slower growth in CDMO and hospital generics due to customer delays and supply constraints.
• Financial Metrics: Decline in EBITDA margins due to lower revenues and increased operational costs.
• Debt Management: Current net debt at Rs. 4,800 crores, with a commitment to reduce it.
Workforce and Capacity
• Training for newly operational production facility underway; commercialization has begun.
• In-Vitro labs and peptide Turbhe facility are operational.
Future Outlook
• Focus on improving operational efficiency and capturing future revenue opportunities.
• Plans for debt reduction and commercialization of Phase-3 molecules.
Q&A Highlights
• Capacity Utilization: Variability across facilities makes it challenging to provide a single number.
• Cost-Saving Measures: Operational improvements, procurement enhancements, and energy-saving initiatives discussed.
• Inorganic Growth: Interest in acquisitions acknowledged, but current valuations are high.
• Future EBITDA Margins: Strategic direction towards innovator-led initiatives rather than traditional generics.
Shareholder Engagement
• Nandini Piramal emphasized active shareholder involvement in strategy.
• Concerns raised about the impact of demerger on company value and performance.
Conclusion
• The call concluded with an invitation for follow-up questions, highlighting ongoing strategic initiatives and financial management efforts.