Granules India Limited · NSE:GRANULES
Granules India — Q3 FY2020 Earnings Presentation
35 slides from Granules India's earnings presentation, Jan 21, 2020
Slide 1: Cover letter to stock exchanges
G GRANULES REGISTERED OFFICE GRANULES INDIA LTD., 2nd Floor, 3rd Block, My Home Hub, Madhapur, Hyderabad - 500 081, Telangana, INDIA. Tel: +91 40 30660000, Fax: +91 40 23115145, mail@granulesindia.com, www.granulesindia.com CIN: L24110TG1991PLC012471 Dated January 21, 2020 To, National Stock Exchang
Slide 2: Earnings Presentation Q3FY20
Granules India Limited Earnings Presentation Q3FY20
Slide 3: Safe harbor
Safe harbor The Presentation is to provide the general background information about the Company’s activities as at the date of the Presentation. The information contained herein is for general information purposes only and based on estimates and should not be considered as a recommendation that any
Slide 4: Quarter at a Glance
Quarter at a Glance Continued growth across key geographies US up 36% and Europe up 47% YTD Strong improvement in Gross Margins ~755 bps yoy and ~208 bps qoq Strong EBITDA Margin Trajectory stood at ~23.2% in Q3FY20 after expensing out full R&D Focus on Building strong Product pipeline Momentum cont
Slide 5: Highlights of the Quarter
Highlights of the Quarter • US FDA has approved the ANDA filed by Granules India Limited for Loratadine Tablets USP, 10 mg (OTC). Approved • US FDA has approved the ANDA filed for APAP /Butalbetal Capsules USP,50/300 mg by Granules ANDAS pharmaceutical Inc. • US FDA has approved the ANDA filed for F
Slide 6: Agenda
Agenda Q3FY20 Key highlights Our Company Levers for Growth Robust Financials; goals Key Investment Highlights 5
Slide 7: Agenda
Agenda Q3FY20 Highlights Our Company Levers for Growth Robust Financials; goals Key Investment Highlights 6
Slide 8: Q3FY20 Financial Highlights
Q3FY20 Financial Highlights (₹ Mn) Gross Profit and Gross Margins 50.7% Revenue 3,569 43.2% 7,040 6,318 2,726 Q3FY19 Q3FY20 Q3FY19 Q3FY20 23.2% *EBITDA and EBITDA Margins 9.5% *PAT and PAT Margins 17.9% 640 1,133 1,632 9.1% 603 Q3FY19 Q3FY20 Q3FY19 Q3FY20 Note:- PAT after one time Exceptional item c
Slide 9: Key Highlights: Pre & Post R&D EBITDA
(₹ Mn) Key Highlights PRE & POST R&D EBITDA and EBITDA % • Revenue contribution was mainly on 1,860 an account of new launches 1,632 1,274 1,133 • Gross margin expanded due to 26.4% better product mix 17.9% 23.2% 20.2% • Adoption of strategy to charge full R&D spend from Q3FY20 Q3FY19 Q3FY20 Pre R&D
Slide 10: Continuous improvement on set financial goals
Continuous improvement on set financial goals (₹ Mn) Focus on reduction of debt, target ROCE target of 20%+, Free cash flow 1 1x net debt to EBITDA by FY22 2 generation Net Debt & Net debt-to-EBITDA (x) ROCE (%) FCF 9,082 2.4x 354 8,550 601 590 1.8x 8,265 21.7% 22.7% 7,888 1.6x 18.9% 17.0% 1.4x FY19
Slide 11: Geographical Mix
Increasing contribution from higher-margin FDs, generics, while remaining backward integrated in APIs (₹ Mn) Contribution from Europe is increased from 13% to 21% Finish Dosage segment grew 23% YOY 7,040 Segment Revenue 6,318 Geographical Mix 3,726 6,318 7,040 3,277 3,794 3,094 1,491 1,316 1,034 1,0
Slide 12: ANDAs Portfolio & Pipeline
ANDAs Portfolio & Pipeline (As on 31st Dec 2019) 20 19 39 ANDAs ANDAs Portfolio ANDAs Rx OTC 39 28 20 19 16 12 11 8 3 Approved ANDAs Pending ANDAs Total Filings is mainly on limited competition, some extended releases and controlled substances
Slide 13: Agenda
Agenda Q3FY20 Highlights Our Company Levers for Growth Robust Financials; goals Key Investment Highlights 12
Slide 14: Fast growing, integrated pharmaceutical company
Fast growing, integrated pharmaceutical company Core US Multi APIs/ Business Generics Oncology ✓ Focus on volume based products ✓ Fully integrated ✓ Auxiliary growth engine such as Paracetamol, infrastructure including Metformin HCl, Ibuprofen, R&D, manufacturing and ✓ Multi-product and multi- Guaif
Slide 15: A vertically-integrated, fast-growing pharmaceutical company
A vertically-integrated, fast-growing pharmaceutical company APIs PFIs FDs Sales & Marketing World’s largest Inhouse Active Multiple Finished Dosage B2B: Work with strategic partners who sell Pharmaceutical Pharmaceutical Ingredients (FDs) forms comprising the finished dosages to end customers formu
Slide 16: Granules at a glance
Granules at a glance Building Blocks Installed Capacity Regulatory Approvals Business Divisions Global Reach Large scale of operations 36,560 TPA of API USFDA, EDQM, EU GMP, Core business 60+ countries Operational efficiencies COFEPRIS, WHO GMP, US generics 250+ customers 290 KL capacity of API TGA,
Slide 17: Our Global footprint
Our Global footprint; with presence in over 50 countries Granules Europe Ltd Granules USA Inc 100% 100% subsidiary for subsidiary for EUROPE front-end front-end marketing in USA marketing in Europe the US Granules Pharmaceuticals Inc 100% subsidiary focused on advanced formulation development , with
Slide 18: Agenda
Agenda Q3FY20 Highlights Our Company Levers for Growth Robust Financials; goals Key Investment Highlights 17
Slide 19: Core Business
Core Business An Overview Growth Drivers ❑ Presence across the entire pharmaceutical manufacturing value chain from API to finished dosages Expanded to 7 molecules: Fexofenadine & Cetirizine 1 added to the existing core portfolio in FY20 ❑ Large-scale manufacturing enables not only to sustain compet
Slide 20: Economies of scale driving profitability
Economies of scale driving profitability Empowering business sustainability through….. Volume play with large On-time In full (OTIF), Progressively invested Leverage economies of batches results in reduction in testing in expanding capacities scale lower testing costs & costs and quality lower batch
Slide 21: US Generics: Granules Pharmaceuticals Inc.
US Generics: Granules Pharmaceuticals Inc. Gained traction with a first to generic product; ❑ Fully integrated infrastructure from R&D, manufacturing 1 Methergine in June 2014. Set up a front ends sales and marketing division and launched 5 products under to sales and marketing enabling “Make in Ame
Slide 22: US Generics: GUSA
US Generics: GUSA ❑ B2B: Marketing & Distribution arm for API’s, PFIs and FDs (Rx & OTC) from GIL ❑ B2C: Granules Consumer Health; our front end division for private label OTC products ❑ Incorporated in 2003 to set up a sales and marketing arm for real time communication with customers ❑ Set up to m
Slide 23: Multi APIs/Oncology
Multi APIs/Oncology ❑ Two Multi-product and multi-stage manufacturing facilities in Vizag Multi-product API and oncology manufacturing facility; ❑ Facility 1: Directly relates to our core 1 integrated API-to-FD facility for oncology business with ~15 APIs, fully commercialized and profitable Infrast
Slide 24: Joint Venture Divestments
Joint Venture Divestments Granules Omnichem Granules Biocause Investment sold to JV partner Investment sold to JV partner for for INR 1,098.5 Mn INR 1,116.2 Mn ❑ Entered in 2012 ❑ Entered in 2007 ❑ INR 500 mn: Book value of ❑ INR 1,436.5 Mn: Book value of investment as on 30 June 2019 investment as
Slide 25: Strong Production and Infrastructure Capabilities
Strong Production and Infrastructure Capabilities Value chain Facility location Installed capacity Approvals Bonthapally 34,560 TPA U.S. FDA, EDQM, WHO, COFEPRIS, INFARMED API Jeedimetla 4,800 TPA U.S. FDA, EDQM, COFEPRIS, WHO, CDCSO Vizag 290 KL U.S. FDA, KFDA, EU GMP, WHO GMP, EDQM Gagillapur 23,2
Slide 26: Core management team
Core management team C Krishna Prasad Mr Prasad’s journey as pharma entrepreneur began in 1984, when he set up a paracetamol API manufacturing facility that focused on capital and process efficiency. Pharmaceutical formulations intermediates (PFIs) as a cost efficient product for global Chairman and
Slide 27: Agenda
Agenda Q3FY20 Highlights Our Company Levers for Growth Robust Financials; goals Key Investment Highlights 26
Slide 28: Invested Capex to drive Revenue
Building on solid base; unlocking value underway (₹ Mn) EBITDA and EBITDA Margins Revenue: 3Y CAGR 18.3% 22,792 21.3% 20.8% 19,988 20.0% 16.8% 16,918 16.5% 14,353 Revenue 13,829 4,254 3,840 2,988 2,784 2,763 2016 2017 2018 2019 YTD 2016 2017 2018 2019 YTD 12.2% 11.4% 10.3% ~20% 3-year CAGR in revenu
Slide 29: Increasing contribution from higher-margin FDs, generics
Increasing contribution from higher-margin FDs, generics, while remaining backward integrated in APIs (₹ Mn) Higher revenue contribution coming from regulated market, which contributed 74% to total revenue 11,113 10,429 16,918 22,792 19,988 14,353 6,612 6,010 13,829 5,393 4,573 4,190 4,029 4,083 3,5
Slide 30: Growth led by high-volume molecules
Growth led by high-volume molecules (₹ Mn) 4,311 18,914 2,233 11,928 442 Total Revenue Addition FY17 Addition FY18 Addition FY19 Total Revenue Contribution FY16 Contribution FY19 High-volume based molecule business contribution Revenue contribution from 3,384 16,998 13,614 core molecules Total Contr
Slide 31: Completed capex cycle to unleash value
Completed capex cycle to unleash value (₹ Mn) Capex Funding details 2,733 14,729 2,160 Funded through ₹ Mn 1,607 8,230 QIP 3,000 ECB 5,500 Warrants (Promoters’ Pledge) 2,000 Total gross Change in Change in Change in Total gross block FY16 gross block gross block gross block block FY19 Internal Accru
Slide 32: Improving returns; focus on FCF generation
Improving returns; focus on FCF generation (₹ Mn) Net Debt & Net debt-to-EBITDA (x) Cash-to-Cash cycle (days) FCF 8,704 9,082 7,888 1,550 6,138 3.1x 117 119 2.4x 110 Mar'17 Mar'18 Mar'19 Dec'19 2.1x 103 1.4x -1,602 -382 Mar'17 Mar'18 Mar'19 Dec'19 -4,920 Mar'17 Mar'18 Mar'19 Dec'19 ROCE (%) ROE (%)
Slide 33: Agenda
Agenda Q3FY20 Highlights Our Company Levers for Growth Robust Financials; goals Key Investment Highlights 32
Slide 34: Key Investment Highlights
Key Investment Highlights Commercialization of Multi API/ Oncology block in Vizag Shift towards high margin Completed Capex; EBITDA business; in next 2-3 years improvement due to ~65% of revenues likely higher capacity utilization from FDs Balance Sheet strengthening continues Scale up of US generic
Slide 35: Thank you
Thank you Granules India Ltd Sandip Neogi (CFO) Floor 2 Block 3 My Home Hub Madhapur Granules India Ltd Hyderabad 500081 Sandip.Neogi@granulesindia.com CIN: L24110TG1991PLC012471 Voice: +91 40 30660000/30663600 Fax: +91 40 23115145/30663602 Richa Singh www.granulesindia.com Ernst & Young Investor Re