Strides Arcolab has announced its second quarter results. It has reported a consolidated net profit at Rs 40 crore which is an 85% growth over the previous year. The company saw its revenues at Rs 430 crore, a quantum jump of 35%.
Arun Kumar, group CEO & vice chairman, Strides Arcolab, in an interview with CNBC-TV18’s Latha Venkatesh and Reema Tendulkar spoke about the results and his outlook for the company.
Below is a verbatim transcript. Also watch the accompanying video.
Q: Can you take us through the highlights of this quarter because we only have your topline and bottomline numbers. How did the margins pan out and the Rs 19 crore that you are referring to year ago, deducts an extraordinary inflow, because the reported PAT was Rs 44 crore?
A: There is a mix up between the standalone and the consolidated numbers. Consolidated sales were Rs 430 crore, that’s a 35% growth compared to last year. EBITDA grew at 108% to Rs 88 crore and a profit after tax is Rs 40 crore which is an 85% growth over the previous year. EPS accretion is over 60% and that’s on the consolidated basis.
Q: Can you give us the standalone as well?
A: The standalone revenues for India were Rs 135 crore and PAT was at Rs 10 crore. The standalone is not comparable as we did a restructuring of our businesses to specialties in sterile. The standalone is from a boarding standpoint. The consolidated numbers will truly reflect the performance of the company.
Q: Could you walk us through how the specialties division and the pharma division have done in terms of revenue and margin picture?
A: Specialties continue to have a very solid growth. In the quarter we had a significant growth where that growth has increased from Rs 81 crore in the last year to Rs 126 crore. That is a 55% growth in specialty. Pharmaceuticals grew from Rs 237 crore to Rs 303 crore, that’s a 28% growth.
Combined both these divisions grew on an average of 35%. EBITDA growth in specialties far out beats our guidance. We continue to have a year-to-date EBITDA in our specialties business and 36% was our EBITDA for the quarter.
Q: Earlier, you had indicated a guidance of about 35% to 37% growth in terms of your revenue for the entire calendar year. Would you like to up that given the numbers are looking good for the first three quarters?
A: We would like to stay with our revenue guidance because obviously the exchange rate has a dampening impact. When we issued our guidance, on the dollar terms definitely we will reach the high end of our guidance.
What is more satisfying for Strides is that our EBITDA margins are far superior than the high-end of our guidance. We believe there is merit to up our EBITDA guidance but on the revenue considering the dollar scenario we would like to retain those numbers.
Q: What did you report in Q3 and what would your EBITDA margin guidance be?
A: For the first three quarters EBITDA is Rs 304-305 crore against the guidance of Rs 370 crore for the whole year. We are already a little ahead of that from a run rate standpoint. For the fourth quarter, traditionally, it is a very strong quarter for Strides so that should be good. On a dollar term that’s very strong. We are at about 3 percentage points more than our guidance in terms of EBITDA which is what the company’s key focus is.
Q: By way of margins, I think you had guided something around 20%, are you likely to keep the margins at 20%?
A: Yes, in fact currently our YTD is a lot more than 20%, its 23%.
Q: So you would be able to operate for the full year as well?
A: Yes.
Q: Can you give us an update in your partnership with Pfizer?
A: Our press release today reports a total licensing income from all partners including Pfizer. We have already received about Rs 265 crore of licensing income from various partners.
What is more heartening is that we would have product launches in the fourth quarter. So we have a first product going to Pfizer in Q4 which is very important for Strides. We expect the new sites to be inspected and approved soon when the ramp up happens. From our existing sites we have three product launches in Q4 for the US market to Pfizer.
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