Advanced Enzyme Technologies slips 12% on disappointing Q2 results

The specialty biotech company's Ebitda declined 17 per cent annually to Rs 42 crore, while margins contracted 346 bps to 29 per cent during the quarter

Advanced Enzyme Technologies shares slipped 12 per cent to Rs 428 on the BSE in Monday’s intra-day trade in an otherwise firm market after the company reported a disappointing set of numbers for the second quarter ended September 2024 (Q2FY25).  The specialty biotech company's consolidated profit after tax declined by 5 per cent to Rs 33.4 crore, due to weak operational performance. Advanced Enzyme, with global leadership in the manufacturing of enzymes & Probiotics, had reported a profit of Rs 35.2 crore in Q2FY24.

 

At 11:18 AM, the Advanced Enzyme stock was trading 11.5 per cent lower at Rs 429.65, as compared to 0.72 per cent rise in the BSE Sensex. It had hit a 52-week high of Rs 571.15 on September 16, 2024.

 

 

The company’s revenues declined 7 per cent year-on-year (YoY) to Rs 146 crore, pulled down by a 6 per cent de-growth in Human Nutrition and 31 per cent de-growth in Bio processing income.  On the other hand, Animal Nutrition and Specialised manufacturing registered a growth of 5 per cent and 17 per cent, respectively.

 

Earnings before interest, tax, depreciation, and amortisation (Ebitda) for the quarter was down 17 per cent YoY at  Rs 42 crore despite 107 bps GPM expansion (77.6 per cent) due to higher employee expenses. Ebitda margins contracted 346 bps to 29 per cent during the quarter.

 

Geography wise (residing in all segments), US sales (39 per cent of the revenues) increased by 21 per cent YoY, while there was a de-growth of 35 per cent in Europe, 25 per cent in Asia (ex-India) and 49 per cent in the rest of the world. India sales (48 per cent of revenues) also declined 15 per cent, ICICI Securities said.  The brokerage firm, in its result note for the company, said it will wait for management commentary to ascertain whether the slowdown was attributable to delayed shipment due to Red Sea crisis (likely possibility) or any other reason. The results are trending below the management guidance of double-digit growth, it added.

 

Meanwhile, on FY25 outlook, Advanced Enzymes said the company is constantly working towards improving and strengthening its business model, and will continue to focus on all three divisions - human nutrition, animal nutrition and bio-processing including developing, adding and launching more products in the target market of probiotics.  The company is further confident that its existing capacities and capital investments would serve well to expand its enzymes and probiotics business.

 

Enzymes and probiotics are essential for maintaining a healthy gut microbiome, which has been linked to various health benefits, such as improved skin health and weight loss. The use of enzyme has seen an uptick in various industries, including food and beverages, pharmaceuticals and textiles. Similarly, the demand for probiotics has increased due to the rising awareness about gut health and lifestyle diseases. 

 

The growing disposable income and changing dietary patterns of Indian consumers are expected to fuel the demand for functional foods and dietary supplements that contain enzymes and probiotics in the coming years. Therefore, the Indian market for enzymes and probiotics is expected to experience substantial growth in the foreseeable future, the company said in its FY24 annual report.