Release Date: February 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Poly Medicure Ltd (BOM:531768, Financial) reported a significant revenue growth of 24.9% in Q3 FY25 compared to the previous year.
- The company's return on capital employed (ROCE) is strong at 23.9%, indicating efficient use of capital.
- Net cash available is substantial at approximately 1,074 crores, providing a solid financial foundation for future investments.
- The company has expanded its workforce, adding 64 new employees in sales, particularly in the cardiology and critical care divisions.
- Poly Medicure Ltd (BOM:531768) received the CII Industrial Innovation Awards 2024 and the CII International Intellectual Property Awards 2024, highlighting its commitment to innovation.
Negative Points
- The company faces challenges in the dialysis business, with installation targets not being met as expected.
- Gross margins have seen a decline, attributed to changes in revenue mix, which could impact profitability.
- The company has minimal hedging on foreign exchange, which could expose it to currency fluctuations.
- The new product lines in cardiology and critical care are still in early stages and may take 2-3 years to significantly impact revenue.
- There is uncertainty regarding the impact of potential US tariffs on Chinese and Mexican exports, which could affect market dynamics.
Q & A Highlights
Q: Can you provide more details about the drug-eluting stent market and how your product compares to competitors?
A: We have just entered the market with a US-approved stent. Our competitive edge lies in manufacturing everything in-house, including the balloon, which most companies import. Our stent offers superior maneuverability, but it will take time to complete clinical trials and fully commercialize the product. We are confident in our approach but cannot provide a revenue timeline yet. - Managing Director
Q: How will the dialysis machine business impact your margin profile in the future?
A: The dialysis business is relatively new, about five years old, compared to our 25-year-old infusion business. As we ramp up capacity and sell more products, operational costs will decrease, improving margins. We aim to achieve PLI (Production Linked Incentive) benefits by FY26, which will further contribute to margins. - Managing Director
Q: Can you clarify the strategy behind entering the stent market, given it's under price control?
A: The price control is at the upper end of the segment, not the lower end. There's a significant margin between the ex-factory price and the finished product price. The average stent price in India is around ₹10,000 to ₹12,000, while the price control is at ₹40,000. We operate below the ceiling price, ensuring a healthy margin. - Managing Director
Q: What is the growth trajectory for the renal business, and what market share do you aim to achieve?
A: We expect the renal business to grow faster in the coming years as we replace imported products. The government has increased reimbursement rates for dialysis, and standalone dialysis clinics are now allowed, boosting demand. We aim to capture 20-25% market share by 2030. - Managing Director
Q: How do you view the potential impact of US tariffs on Chinese and Mexican exports?
A: These are essential products, and US hospitals cannot run out of them. Tariffs may increase costs for patients or hospitals but won't stop purchases. We don't foresee a risk of dumping in other markets, as consumption levels remain constant. - Managing Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
