Shilpa Medicare rallies after robust Q4 results

Shilpa Medicare surged 10.16% to Rs 452 after the drug maker's consolidated net profit surged 277% to Rs 29.55 crore on a 63.7% jump in net sales to Rs 340.60 crore in Q4 FY22 over Q4 FY21.

Profit before tax (PBT) soared 452.4% to Rs 46.40 crore in Q4 FY22 over Q4 FY21. EBITDA surged 139% to Rs 79.2 crore in Q4 FY22 from Rs 33.1 crore registered in Q4 FY21. EBITDA margin improved to 23% in Q4 FY22 from 15% in Q4 FY21.

Total expenses were up by 47.1% year on year to Rs 267.99 crore in the quarter ended 31 March 2022. The cost of raw materials increased 50.7% year on year to Rs 94.38 crore in Q4 FY22.

On full year basis, the pharma company reported a 59% decline in net profit to Rs 60.66 crore despite of a 27.1% rise in net sales to Rs 1,145.52 crore in the financial year ended 31 March 2022 over the financial year ended 31 March 2021.

Commenting on the performance, Vishnukant Bhutada, managing director of Shilpa Medicare said, The healthy momentum of sales continues to build on the back of growth in commercially launched products in key markets. The Formulations segment is recording traction in ex-US markets including across the EU, India and RoW. We have an attractive portfolio of products lined up for launch that will support this growth. The declining share of CRAMS will proportionately support margin momentum through expansion in product sales."

Commenting on unlocking value, Bhutada said, I am pleased to announce that the Board has agreed to initiate IPO process of Shilpa Pharma Lifesciences to unlock value of the API business and provide the requisite impetus for its growth. Additional costs towards the remedial measures for the formulations plant are impacting the margins.

He lastly added, The prevailing inflationary trends are proving to be a challenge and our effort has been to improve efficiencies in the operation in order to mitigate them. Additional costs towards the remedial measures for the Formulations plant are impacting the margins. As the product mix improves in favour of the Formulation business and thenewer initiatives of API segment, we shall see a strong underlying build up in the profile of margins going forward. We are moving ahead with plans for biologicals with 3 products at clinical phase and tapping a very attractive segment in the market, with limited competition andgood potential to grow. The Company is prioritizing development of world-class, new products in multiple segments, which upon launch is likely to result in a superiorbusiness and earnings profile.

The company's board recommended a dividend of Rs 1.10 per equity share for the financial year ended 31 March 2022.

Shilpa Medicare is a global brand in manufacturing and supplying of affordable API and formulation globally in different regulated markets.

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