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Highlights from the Quarter (Q3 FY24)

Consolidated sales for the quarter were at Rs.81.7 cr, recording a growth of about 6.8%/11.3% yoy/qoq respectively. Approvals from DCGI (Drug Controller General of India) for Bioavailability & Bioequivalence (BA-BE) studies have picked up pace, which is reflected in strong qoq growth. Pharma companies are shifting their focus to developing large molecules, with 64% of global approvals being large molecules. The company is building the capabilities for the testing of large molecules and is confident of getting business from the new customers. Electronic testing is witnessing strong traction and the company will add one more chamber in the new facility in the next 6-8 months, which should enhance its capacity. Vimta is likely to spend Rs.4-5.5 cr for the additional EMI/EMC chamber. The majority of EMI/EMC business comes from defence component manufacturers based in Hyderabad. Testing of defence equipment is expected to pick up as there is a mandate to source components from the domestic market to up to 50%, which should drive electronic testing going forward. Apart from defence components, the company also tests communication systems used in the railways, aircraft and drones used in agriculture and military purposes.

Following is the guidance given by the company:

1) Sales to reach Rs.500 cr by FY26, aided by capacity expansion in FY24.

2) Capacity expansion to be completed by mid-March 2024.

3) EBITDA margins are expected to improve with an increase in the top line.

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