Viewcube
Vitality in vitals
Key messages
Revenue to grow 8-10% (in rupee terms) this fiscal, compared with ~9% last fiscal
- Price hikes across therapy segments to drive domestic growth; volume to remain moderate
- Pricing pressure in the US to gradually abate; demand from semi-regulated markets to recover after the decline last fiscal
- Bulk drug exports to grow ~8% in rupee terms as companies look to reduce supply chain risks
Production-linked incentive (PLI) scheme to bolster domestic availability of active pharmaceutical ingredients (APIs), formulations
- The PLI scheme and bulk drug parks to strengthen the domestic API industry and reduce dependency on China by 15-20%
- Opportunities in the formulations segment to enhance research and development (R&D) spend and capital expenditure (capex)
Emerging opportunities in overseas markets to aid industry growth in the long term
- Launch of new products and entry into low-competition products to offset the impact of pricing pressure in the US
- Diversification into other regulated markets and pharmerging markets to support growth in exports
- Focus on customised synthesis and API supply to branded products to boost bulk drug exports
Operating profitability to improve by 50-100 basis points this fiscal after years of moderation; seen stabilising at 21.0-21.5%
- Decline in raw material and freight costs, along with new product introductions, to enhance profitability
- Abating pricing pressure on generics in the US to also have a positive impact
Credit quality to remain stable because of strong balance sheets
- Working capital cycle to shorten with inventory holding returning to the pre-pandemic level
- Moderate organic capex with marginal uptick because of capex under the PLI scheme to keep debt metrics healthy
- Healthy liquidity and strong balance sheets to support potential acquisitions
Analytica