Morepen Labs Q3 revenue up by 29 per cent with 14 per cent jump in Profit Before Tax

Morepen Laboratories has reported 29 per cent growth in its Q3 FY’22 quarterly revenues at Rs 399.19 crores. It has recorded 14 per cent growth in its quarterly Profit Before Tax (consolidated) at Rs 27.14 crores, for the quarter ended 31st December, 2021, whereas, for nine months’ period, revenue growth of 30 per cent and profit (before tax) growth of 59 per cent at Rs 1185.67 crores and Rs 112.53 crores respectively, were recorded, the company notified via a statement.

The statement also said that the revenue growth in the quarterly revenues was backed by a substantial jump of 41 per cent in the API business at Rs 232.95 crores, followed by OTC and formulation business at Rs 26.80 crores and Rs 42.08 crores, which grew by 46 per cent and 23 per cent respectively. Further, Q3’FY22, diagnostic devices revenues at Rs 93.66 crores grew by seven per cent on Q-o-Q basis, whereas, a revenue growth of 56 per cent was recorded for nine months’ period ending 31st December, 2021, at Rs 350.71 crores.

In addition, the statement mentioned that the EBITDA growth of 30 per cent, over nine months’ period ending 31st December, 2021, has been recorded at Rs 125.12 crores, while for Q3 FY’22, the company recorded seven per cent Q-o-Q EBITDA growth, at Rs 34.81 crores. However, Q3 FY’22 cash profits at Rs 34.06 crores are up by nine per cent. EBIDTA margins are down by 180 bps from 10.52 per cent to 8.72 per cent on account of growth in lower margin domestic API business and increased marketing spend across all business streams.

Profit Before Tax (PBT) for Q3 FY’22 at Rs 27.14 crores has gone up by 14 per cent on Q-o-Q basis while PBT for nine months at Rs 112.53 crores has moved strongly to 59 per cent. The profit margin before tax is down by 87 bps from 7.67 per cent Q3’FY21 to 6.80 per cent in Q3’FY22. Profit After Tax (PAT) for Q3’FY22 at Rs 21.52 crores is down up by 10 per cent on Q-o-Q basis, while PAT for nine months at Rs 89.36 crores is up by 27 per cent. The profit margin before tax is down by 19 bps from 7.73 per cent 9M’FY21 to 7.54 per cent in 9M ’FY22, added the statement.

Besides, the Board of Directors of the company has also approved the allotment of Compulsorily Convertible Preference Shares (CCPS), subject to approval by the shareholders and regulators, to the banks, financial institutions and others in place of Optionally Convertible Preference shares (OCPS) and Cumulative Redeemable Preference Shares (CRPS) of Rs 114.65 crores held by them as part of the company’s loan restructuring programme in the year 2007 under Corporate Debt Restructuring (CDR) mechanism. The new preference shares shall be converted into equity shares as per the SEBI formula within a maximum period of 18 months from the allotment date. The company is planning to speed up the process and is expected to complete the whole process within three months subject to regulatory approvals, said the statement.

Sushil Suri, Chairman and Managing Director, stated in the statement, “Business is growing exponentially in all the segments and the company needs to put up additional capacities to serve the customers faster and also capture additional market share. We are working to augment the existing capital base to fund the upcoming growth.”

He further added, “The conversion of bank’s preference shares, outstanding for many years, into equity capital, is a big milestone, and we are thankful to all the banks for granting their approval. This was the last leg of the CDR process and the company will have no outstanding liability in terms of unredeemed preference capital.”

According to the statement, API export business has grown up by 41 per cent pushing API revenue contribution, in the consolidated sales revenue from 54 per cent to 59 per cent, on Q-o-Q basis. The share of export business in Q3 FY’22 sales revenues, has risen up to 68 per cent as against 60 per cent in the immediately preceding quarter.

The US FDA approval for its anti-allergy drug Fexofenadine Hydrochloride during the current quarter, will open the gates for higher revenues in the coming years. The company has tied-up for regular supplies of Fexofenadine to one of its top US customers, with which the company has long-standing relations lasting over two decades. Because of increased demand, Q3’FY22 Fexofenadine revenue has recorded revenue growth of 147 per cent on Q-o-Q basis and revenues are expected to show an uptrend in the coming fiscal post the US FDA approval, the statement noted.

After patent expiry of Dapagliflozin in 2020, there is growth in its sales revenue, which has registered a revenue growth of 723 per cent in nine months’ period ending 31st December, 2021. The company is also supplying R&D quantities of Sitagliptin, which is going off patent in the coming months, and it is expected to add to the company’s revenues from the next financial year onwards. The company has a strong pipeline of new molecules which are going off-patent in the next four-to-five years, as per the statement.

Point of Care (POC) medical devices business at Rs 350.71 crores registered a growth of 56 per cent in the nine months ended 31st December, 2021 on strength of 68 per cent revenue growth in blood gluco business at Rs 232.33 crores and 64 per cent revenue growth in blood pressure monitor revenue at Rs 76.25 crores. Blood glucose monitor business registered 16 per cent revenue growth in Q3 FY’22 on a large base built over the last many years which has recorded a CAGR of 41 per cent in the last four years, while blood pressure monitor grew by 39 per cent. During this period, 1.72 million glucometers were installed, making to date glucometer installation to 6.75 million. During this nine-month period, 64 million blood gluco strips have been sold, making a total gluco measuring strips supply of 850 million strips till date. Towards glucometer’s installation and gluco strips sales, a CAGR of 41 per cent has been recorded during the last four year, informed the statement.

It also said that the medical devices business is being moved into a 100 per cent owned subsidiary, Morepen Device, as approved by shareholders on the Annual General Meeting on 28th September, 2021, and will be operated as an independent company while the revenues will be consolidated in the parent company.

Dr Morepen business with Q3 FY’22 revenues of Rs 26.80 crores has registered a robust growth of 46 per cent on Q-o-Q basis. OTC range of products with Q3 revenues of Rs 13.91 crores have recorded 58 per cent growth on Q-o-Q basis. For Q3 and nine months ending 31st December, 2021, online revenues, at Rs 4.87 crores and Rs 10.89 crores, respectively, are up by 449 per cent and 245 per cent respectively, against corresponding periods last year. The share of online sales, in Q3 FY’22 revenues, have gone up to 18 per cent from five per cent in the corresponding quarter last year, whereas on a nine-month basis, the growth was 14 per cent, the statement stated.

Revenues (consolidated) for the nine months ending 31st December, 2021, rose by 30 per cent at Rs 1185.67 crores. The net Profit After Tax (PAT) for the aforesaid period moved up to Rs 89.36 crores from Rs 70.33 crores in 9M FY’21, registering a growth of 27 per cent against the corresponding period of the previous financial year, concluded the statement.