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Q3-FY23 Result Update

Poly Medicure reported upbeat results in Q3FY22, Its revenues came in at Rs.2,848 Mn up by 23.7% YoY and 4% QoQ led by strong demand across segments. The company’s EBITDA/PAT came in at Rs.7,101 Mn/Rs.5,000 Mn up by 39%/45% YoY respectively.

The company’s EBITDA margin in Q3FY23 came in at 24.9% vs 22.2% in Q3FY22 with a jump of 272bps YoY and 139 bps QoQ on account of moderating raw material prices and favourable product mix despite exports remaining muted in Q3FY23. Its PAT margin during the quarter stood at 17.6% vs 15% in the year-ago quarter showing an improvement of 257 bps YoY.

The company’s core business i.e,Infusion therapy continued to grow well both in domestic as well as export markets, domestic growth in Q3FY23 came in at 20%, Domestic vs Export share stood at 34% and 66% respectively. Infusion therapy constitutes almost 90% of exports and 70% of domestic sales. Renal business is showing a growth of 45% vs guidance of 60-70% owing to dumping of some products by China.

Poly Medicure has deployed Capex of around Rs.3,000 Mn over the last two years for the next two years it looks to taper down its Capex and guided for a Capex of around Rs.750- Rs.1,000 Mn in FY24-25

Overall, the company has guided a 20% growth in revenues for FY24 and a further improvement of 100-200 bps in its margins. It expects USFDA approval to come in 60-90 days for class-1,2 & 3 products and the management indicated that it is already in touch with some contractors for supply of these products in the US which is one of the largest market for its product categories.

We remain positive on the company considering its growing presence in fast-growing domestic market, favourable product mix, strong presence in the fast-growing medical disposable segment, entry into larger markets like USA and leading market share in key categories. We expect revenue/EBITDA/PAT growth of 21%/28%/28%. We maintain our BUY rating on the stock with a revised target price of ?1,060 per share.

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