Sequent scientific conference call was today at 8:45 am
"Sequent is Execution focused company. It is more of a Rahul David than Viru bhai."
Here are the key takeaways 😃
"Sequent is Execution focused company. It is more of a Rahul David than Viru bhai."
Here are the key takeaways 😃
Business overview
- Host of initiatives taken by company to take itself to the next orbit.
- Revenue growth was driven by API and formulation business
- There were some problems in growth in Europe due to second wave.
- Business in India a doubled in last 9 months
- Host of initiatives taken by company to take itself to the next orbit.
- Revenue growth was driven by API and formulation business
- There were some problems in growth in Europe due to second wave.
- Business in India a doubled in last 9 months
- Overall on 9 months European business grew by 2%
- Highest growth was seen in Latin America market.
- API business has driven the overall growth
- Company has completed the de-bottle necking of the existing project
- Highest growth was seen in Latin America market.
- API business has driven the overall growth
- Company has completed the de-bottle necking of the existing project
- Company restructured its balance sheet by reducing its debt
- ROCE reaching 20%
- Hired PWC for consulting on reduction of costs and to identify the next phase of growth
- ROCE reaching 20%
- Hired PWC for consulting on reduction of costs and to identify the next phase of growth
- Recognized as the IHS Markit animal health for 2 years in succession.
- Cashflow generation remains robust and company expects to be net debt free in next 15 to 18 months
- Company's cashflow has been robust and it expects to be net debt free in 15-18 months
- Cashflow generation remains robust and company expects to be net debt free in next 15 to 18 months
- Company's cashflow has been robust and it expects to be net debt free in 15-18 months
- Average cost if borrowings is around 8%
- Business strategy to build the front end strength and make partnership with many other strong companies
- Business strategy to build the front end strength and make partnership with many other strong companies
Topline
- Company is not looking to revise guidance in medium terms
- The company aims to achieve mid teen growth in %
- API would be driving faster than the formulation
- Company is not looking to revise guidance in medium terms
- The company aims to achieve mid teen growth in %
- API would be driving faster than the formulation
Margins
- Margin improvement focus is towards expansion by 150 to 200 bps
- Pharma business includes frontloading of investments which facilitates margin expansion when company scales up.
- Company has expanded API business and businesses in Turkey & brazil
- Margin improvement focus is towards expansion by 150 to 200 bps
- Pharma business includes frontloading of investments which facilitates margin expansion when company scales up.
- Company has expanded API business and businesses in Turkey & brazil
- Company is halfway in margins if compared to Zoetis.
- Indian business is reaching an inflection point.
- Animal health doesn't see any price fluctuations compared to human pharma, the company has less power to increase the prices.
- Indian business is reaching an inflection point.
- Animal health doesn't see any price fluctuations compared to human pharma, the company has less power to increase the prices.
- Half of the growth has come from by taking over the Zoetis portfolio in India.
- Zoetis arrangement is only for India. Company is not expecting very high margin from it.
- Zoetis arrangement is only for India. Company is not expecting very high margin from it.
Covid Second Wave
- Second wave of lockdown in Europe have been difficult. There are many operational difficulties which resulted in slow down in Q3
- Europe is the most competitive among other areas.
- Growth this year has been slower but historically the rate has been 6%
- Second wave of lockdown in Europe have been difficult. There are many operational difficulties which resulted in slow down in Q3
- Europe is the most competitive among other areas.
- Growth this year has been slower but historically the rate has been 6%
Turkey
- It's a difficult market to understand but for the company it has been a star performing area
- Country has taken some corrective action towards currency fluctuations
- Company has taken borrowings in home currency of the country.
- It's a difficult market to understand but for the company it has been a star performing area
- Country has taken some corrective action towards currency fluctuations
- Company has taken borrowings in home currency of the country.
API
- Company stays in track on delivering 20% growth on API side.
- The commercialization of API in USA is still in process.
- Company has many good performers in the portfolio rather than few exceptional performers.
- Company stays in track on delivering 20% growth on API side.
- The commercialization of API in USA is still in process.
- Company has many good performers in the portfolio rather than few exceptional performers.
Brazil
- Company has bought licenses in order to reduce the time in commercialization because registration in Brazil takes upto 5 years
- Buying license gives company the right to manufacture.
- Injectibles will have better margins than oral.
- Company has bought licenses in order to reduce the time in commercialization because registration in Brazil takes upto 5 years
- Buying license gives company the right to manufacture.
- Injectibles will have better margins than oral.
China
- Its not an easy market to understand.
- Company will take expertise from carliyle group.
- Its not an easy market to understand.
- Company will take expertise from carliyle group.
Bird flu
- Company is not dependent on any single animal thus it would not affect the company much but the company is being cautious.
- Company is not dependent on any single animal thus it would not affect the company much but the company is being cautious.
Emerging markets
- Growth has declined a bit. There is a slowdown in collections thus company is focusing only on secured payment business.
- Growth has declined a bit. There is a slowdown in collections thus company is focusing only on secured payment business.
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