SMS Pharmaceuticals Limited reports robust Q3FY24 operational performance

SMS Pharmaceuticals Limited (SMS Pharma) (NSE: SMSPHARMA; BSE:532815), a Hyderabad based diversified and fully integrated pharmaceutical company, with interests in Active Pharmaceutical Ingredients (API) and Intermediates announced its financial results for the quarter and nine months ended 31st December 2023.

Robust Revenue Growth:

Revenue: SMS Pharmaceuticals recorded a total revenue of Rs. 161.48 crores in Q3 FY24, marking a notable increase of 8.5% compared to Rs. 148.80 crores in the same quarter last year. Despite a slight decline from the previous quarter, where revenue stood at Rs. 166.64 crores, the company has sustained its growth momentum. For the nine months ended FY24, SMS Pharmaceuticals reported a substantial revenue of Rs. 463.47 crores, reflecting a robust year-on-year growth of 24.4%.

Impressive Profitability:

Gross Profit: The company's gross profit surged to Rs. 50.71 crores in Q3 FY24, representing a remarkable growth of 35.0% from Rs. 37.57 crores in Q3 FY23. This growth trajectory continued from the previous quarter, indicating sustained operational efficiency. For the nine-month period, SMS Pharmaceuticals reported a gross profit of Rs. 148.31 crores, marking a significant increase of 73.0% year-on-year.

EBITDA: SMS Pharmaceuticals witnessed a substantial improvement in its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) during Q3 FY24, with a figure of Rs. 29.00 crores. This represents a significant growth of 56.7% compared to Rs. 18.51 crores in Q3 FY23. The company's EBITDA for the nine-month period stood at Rs. 83.00 crores, reflecting a remarkable year-on-year growth of 161.7%.

Profit After Tax (PAT): SMS Pharmaceuticals reported a robust PAT of Rs. 11.48 crores in Q3 FY24, witnessing an impressive growth of 204.5% from Rs. 3.77 crores in Q3 FY23. Although there was a marginal decline from the previous quarter, where the PAT was Rs. 11.73 crores, the company has demonstrated strong profitability. For the nine months ended FY24, SMS Pharmaceuticals reported a PAT of Rs. 32.54 crores, compared to a loss of Rs. 10.57 crores in the same period last year.

API Segment Highlights

- Q3 & 9M FY24 revenue for the API segment stood at Rs. 160.3 crores and Rs. 456.1 crores respectively.

- Q3 & 9M FY24 API segment contributed approximately 99.3% and 98.4% to the consolidated revenue respectively.

- Within the API segment, ~12% of the revenues came from the domestic market and ~88% from the exports market (including deemed exports) for Q3FY24.

- Within the therapeutic areas, anti-retroviral (ARV) contributed ~33%, anti-diabetic contributed ~13%, anti-migraine ~13%, anti-ulcer ~8%, anti-epileptic ~1%, anti-erectile dysfunction ~7%, anti-inflammatory ~18% and the rest contributed around 6% to the total sales for Q3FY24.

Commenting on the results Mr. P. Vamsi Krishna, Executive Director - SMS Pharmaceuticals Limited said, "Sales volume growth, improved product mix, and new product introductions have been the primary drivers of our topline growth. Additionally, our operational profit margins have improved as a result of more efficient cost management. From 50-55% in the prior quarter, our capacity utilization climbed sequentially to around 65-70% in Q3FY24.

We have implemented extensive backward integration to lower our total costs and increase our profit margins, which has led to an improvement in gross margins. However there has been price erosion, for otherwise the profitability margins would have been even better.

We have seen a significant increase in the sales volume of several of our products when compared to previous quarters. With the noticeable increase in sales volume, we are now starting to see the benefits of operating leverage.

As we have been mentioning for the past few quarters, our ibuprofen product has seen improved performance sequentially. It is gaining significant traction in the market, with approvals received from both the USA and Europe. We have already begun commercial supplies in several of these regulated countries. We have also witnessed a positive trend in the price realizations for ibuprofen. The ARV segment is also performing admirably. Our anti-diabetic product of Sitagliptin is also gaining momentum in terms of volume. Our other therapeutic categories are thriving, with a steady influx of new customers.

The company is poised to capitalize on the capex it had undertaken, with further ramping up ibuprofen production in the coming quarters. We are positive about future outlook, as we continue to expand our presence in the ibuprofen market. Two of our major segments of anti-diabetic & ARV will also experience sustainable growth, as we expect strong volumes in the upcoming quarters for both segments. This growth will get further impetus by our new product offerings.

In the upcoming fiscal year, our goal is to file at least 10 DMFs (Drug Master Files) in the United States. With the increase in our R&D spend, we can expect a significant rise in the number of new product launches. Consequently, we will continue to aggressively push new products and continuously seek to attract new customers. In the next fiscal year, we anticipate achieving growth in the mid-teens, accompanied by a slight enhancement in operating margins.

The Board of Directors has given their approval for a fund-raising initiative through the issuance of convertible equity warrants on a preferential basis to the Promoter Group. The warrants will be priced at Rs. 127 per warrant, aggregating to Rs. 114.30 crore. 55% of the funds raised will be allocated towards capex, 35% towards working capital, and the remaining 10% for general corporate use. We will reveal the detailed capex plans in the near future."

Shares of SMS Pharmaceuticals Limited was last trading in BSE at Rs. 146.30 as compared to the previous close of Rs. 130.80. The total number of shares traded during the day was 468741 in over 8694 trades.

The stock hit an intraday high of Rs. 152.35 and intraday low of 134.35. The net turnover during the day was Rs. 67734179.00.

Source : Equity Bulls

Keywords

SMSPharmaceuticals INE812G01025 Q3FY24 9MFY24 ResultUpdate