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Result Highlights

* Revenue grew by 6% YoY mainly led by Indian market (+4.7% YoY), ROW (+76.5% YoY) and API (+38.1% YoY),  

* US declined by 18% YoY largely due to lower pricing for Sartans; US base now reset to quarterly US$55‐60mn from >US$70mn earlier upon Sartans erosion  

* Gross margin contracted by 271bps YoY to 75.4% which was offset by decrease in staff expenses translating into margin contraction of just 45bps YoY   and ~100bps qoq to 26.7%  

* R&D spend at the end of FY21 stands at 12.4% of sales.

Our view:

US business would have to navigate a difficult FY22 as base is now reset to US$55‐60mn vs US$75mn earlier; high base of Sartans would overshadow the ~15 launches expected in current fiscal. On FY22 base, expect growth to revive next fiscal as general injectables filings garner approval. We factor in 13%/25% rise in other expenses ex‐R&D to factor in operating expenses that would hit P&L in FY22/23. More than revenues, margin in FY22/23 would be a function of timing of costs taken into P&L.

Our margin assumption is ~24%/24.6%. Marginally tweak FY23 estimates and retain BUY based on 25x FY23 EPS. Why 25x for declining earnings over FY21‐23? Believe given the sharp earnings jump expected in FY24 (>50% over FY23), a multiple in line with at least other mid‐cap peers is justified to factor in some of the outsized growth. Key risk include delay in general injectables (FY22) and onco injectables (FY23) commercialization.

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