Themis Medicare LtdQ3 FY22Pharmaceuticals & Biotechnology

Themis Medicare Ltd

Q3 FY22 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→The company expects similar growth rates in both formulations and API divisions, maintaining the revenue mix more or less stable.
→Both businesses—formulations (hospital segment) and API—are targeted for aggressive growth, with no fixed revenue split like 65:35; focus is on balanced expansion.
→API business is identified as a volume-building segment with plans for significant investments and capacity expansion to cater to global markets, fueled by the "China plus one" sourcing trend.
→Hospital business growth is driven by increasing health insurance penetration, rise in hospital/nursing home numbers across India, and expansion of product portfolio.
→Manufacturing capacity and marketing/distribution networks are deemed adequate for the aspired growth, with a CAGR target of around 35% and ~25% operating margin.
→New product launches, including complex generics and novel dosage forms, are expected annually, supporting future pipeline strength.
→The distribution network and sales personnel strength are expected to double in 2-3 years to fuel growth.

Margin guidance

Category 3

→Themis Medicare aspires to grow at a CAGR of 35% with 25% Operating Profit Margin (OPM) over the next 4-5 years (Page 9).
→Both hospital business (OpEx-driven) and API business (CapEx-driven) have significant growth potential and different funding needs (Page 14).
→The company is focusing aggressively on both formulations (hospital segment) and API divisions to capitalize on growth opportunities (Page 22).
→Recent COVID-related exceptional revenue dip is expected to stabilize, with a return to growth expected from Q3 FY23 onwards (Page 16).
→Operating margins remain robust, with EBITDA margins close to 50% for hospital and API businesses (Page 18).
→Increased R&D investment (Rs. 13 crores in H1 FY23) aims to strengthen the future product pipeline, supporting growth (Page 18).
→The strategic demerger of API into a subsidiary aims to unlock focused growth and investments for both business segments (Page 5).

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Fundraise plans

Yes

→There is no explicit mention of any current or immediate new fundraising through debt or equity in the provided document.
→However, it is mentioned that the API business will require significant investment (CapEx) for growth in the next few years.
→The API business is being demerged into a 100% owned subsidiary (Themis Lifestyle Private Limited) to enable focused growth.
→Funding for the API business growth may come through various mechanisms, but "debt" was corrected to "funds" for clarity by the management.
→No concrete plans for equity fundraising or debt issuance have been disclosed during the call.
→The focus currently is on operational focus and growth of both hospital (OpEx-driven) and API (CapEx-driven) businesses rather than explicit fundraising announcements.

Order book

The transcript provided does not explicitly mention the current or expected order book or pending orders for Themis Medicare Ltd. However, some relevant points related to business outlook can be inferred: - The company expects growth in both API and hospital (formulation) divisions without a significant mix change. - Focus on expanding hospital business including nursing homes across tier 2 and tier 3 cities. - Growing demand in API business due to global "China plus one" strategy and investments in capacity and R&D. - COVID-related spike in orders seen in previous year H1 but not continuing into current year. - Anticipates ramp-up in intensive care and anesthesia-related products and new product launches. - Expansion of distribution network and scaling marketing efforts are underway. Specific quantitative data on order book or pending orders is not disclosed in the provided pages.

Capex plans

Yes

→Current CapEx investments include:
→ - Upgrading injectable block at Haridwar facility to EU GMP compliance.
→ - Setting up a lipid-based products manufacturing line.
→ - Investment in R&D equipment at both API facilities (~Rs. 5 crores).
→ - Expansion of tablet manufacturing block in Haridwar per revised EU GMP guidelines.
→Future plans:
→ - Reinitiating Baroda finished dosage form facility project to leverage government benefits.
→ - Significant CapEx expected in API business over next 1-2 years to increase capacity and upgrade facilities for global market supply.
→Strategic moves:
→ - Demerger of API segment into 100% subsidiary Themis Lifestyle Pvt Ltd to separately focus and invest in API (CapEx-heavy) and hospital businesses (OpEx-heavy).
→ - Outsourcing medical devices while focusing internal manufacturing on complex products with high entry barriers.
→ - Building robust sales and marketing network across hospitals and nursing homes.

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