Morepen Laboratories Ltd

- Morepen Laboratories has planned a capex of INR 125 crores specifically for the API business in the next 2-3 years, which they intend to fund primarily through debt due to already high equity levels. - For the medical devices division, there is an additional capex requirement of INR 50 to INR 75 crores, funded through internal cash flows. - The company is continuously expanding capacities in API and formulations, with recent capacity expansions done in the last quarter. - A new R&D center has been developed, and a formulation export facility is expected to be operational within the next 18 months. - The company is focused on slow and steady growth, investing in regulatory capabilities, capacity, machinery, and talent to sustain long-term growth. - Plans include expanding the frontend sales team and growing the formulation business alongside API and medical devices.

- Expectation of double-digit growth in sales/revenue over the next two quarters and next financial year (FY 24-25). - FY 2023-24 expected to improve significantly from last year; FY 24-25 to show even better performance. - Growth drivers include API business, medical devices (fast-growing), and finished dosage/formulations (steady growth with expansion efforts). - API segment CAGR around 20%, current revenues INR415 crores with plans to add new products and expand capacity. - Medical devices segment showing 41% revenue growth and expected to grow faster. - Formulation business growing steadily, currently stable at INR100 crores, with plans to expand to INR200-300 crores before market listing. - Overall CAGR target of 15%-20% in the medium term. - Emphasis on slow and steady growth with EBITDA margins expected to reach double digits next financial year.

- Company expects double-digit growth in revenue in the next one to two years, driven by improvements across all business segments including API, medical devices, and formulations. - EBITDA margins targeted to reach double digits (around 10-12%) in the next financial year, improving gradually from current levels (~8%). - Profit before tax and profit after tax have shown strong growth recently: PBT up 29% and PAT up 34% quarter-on-quarter; 61% and 67% respectively on half-year basis. - Formulation business currently impacting margins but expected to stabilize and contribute positively to bottom line from next year onwards. - Employee costs increasing but overall expenses under control, supporting margin improvement. - Earnings per share (EPS) expected to improve as operational efficiencies and revenue growth stabilize; better bottom line expected in the next two years. - Growth will be steady and sustainable, avoiding aggressive fast moves, with focus on capacity expansion and diversified revenue streams.

- The company has a product pipeline valued at approximately $67 billion in the formulation market. - Despite market discounts, the residual market size is expected to be around $6-7 billion. - Morepen aims to capture about 10% market share in these products, which could translate to $500-$600 million in revenues in the coming years. - Currently, 41 products are live; 7-8 are regularly sold, about 30 are new, with some 20 products in the pipeline. - Market share for existing products is strong: e.g., Loratadine at 70% and Montelukast at 48%. - Most products in the pipeline expire post-2025, aligning with business expansion plans. - The company is working on expanding its frontend sales teams and capacity to support growth. - Orders and sales volumes are expected to improve as capacity expands and market conditions stabilize.

- Morepen Laboratories plans a capex of INR 125 crores for the API business. - To fund this capex, the company is considering raising funds either through debt or equity. - The preference is to raise funds through debt since their equity is already very high. - No new borrowing has been done in the past 25 years; capex so far was funded from internal cash flows. - Future funding plans indicate funding capex through debt rather than equity to maintain capital structure.