Company Is Seeing Muted Performance In Paracetamol API: Granules India | CNBC TV18

Summary

Granules India's executive director, Priyanka Chigurupati, discusses the company's performance in Q4 FY25 and the outlook for FY26. Despite challenges like price erosion, demand issues in APIs and PFIs, and an FDA warning letter, the company achieved strong bottom-line growth. Priyanka highlights the focus on remediation activities, plans to resolve regulatory issues, and the opportunities in the peptide market, including the GLP-1 segment. She also touches on their capex plans for expansion and ongoing efforts to reduce debt, aiming for improved margins and long-term growth post-FY26.

Takeaways

• 😀 Q4 FI25 revenue growth was limited to around 2%, impacted by price erosion, demand issues in the API segment, and a warning letter for one of their Indian facilities.
• 😀 Despite challenges in Q4, Granules India saw a 24% increase in their bottom line, showing resilience in the overall financial performance.
• 😀 The company anticipates a positive outlook for Q1 FI26 and expects full production to resume after remediation efforts for their Indian facility in the next 1-2 quarters.
• 😀 Granules India faces headwinds in the parasol API market due to oversupply but remains optimistic as they focus on value-added products and business development.
• 😀 Paracetamol API prices have declined, but Granules sees an opportunity for stabilization as new players in the market struggle to meet supply demands.
• 😀 Granules India is tapping into the growing GLP1 market by acquiring Zen Chemicals, expanding into peptides with a focus on GLP1 APIs and finished dosages through partnerships.
• 😀 Granules India plans to resolve remediation issues at their Gagilapur plant within 1-2 quarters, with hopes for reinspection by the FDA in late 2025 or Q4 FI26.
• 😀 Beyond remediation, Granules has 11 launches pending in the US, which are expected to significantly contribute to future revenue growth once approved.
• 😀 The company is expanding its operations outside Gagilapur, with new business expected from the GLS facility in Genome Valley, which is already manufacturing for the US market.
• 😀 Granules India is planning a capex of around 600 crores in FI26, with a focus on expanding capacity for peptides, oncology, and other segments, while also reducing net debt.

Q & A

What were the key challenges faced by Granules India in Q4 FI25?

Granules India faced challenges such as price erosion, demand issues in the API and PFI segments, and a warning letter for one of their Indian facilities. Despite these, the company showed a 10% growth in topline and 24% growth in bottom-line.

How did Granules India perform in terms of revenue and margin during Q4 FI25?

Despite a slow quarter, Granules India managed to grow its topline by 10%, while the bottom line grew by 24%, showing strong margin performance.

What is Granules India’s outlook for Q1 FI26 and beyond?

Granules India expects to continue focusing on remediation activities for the next one or two quarters, aiming to return to full operational capacity. They also anticipate resolving the regulatory issues by Q4 fiscal year 2026.

How is Granules India addressing the impact of geopolitical tensions and rising crude prices on the API and PFI markets?

Granules India sees the current issue as a supply-demand imbalance. While they are doing well with their key products, they are facing some headwinds in the parasol API segment due to oversupply. However, they expect this to ease over time as they focus on value-added products.

How is Granules India capitalizing on the GLP1 market opportunity?

Granules India acquired Zen Chemicals, a Swiss CDMO, to expand into the peptide segment and GLP1 market. They are working on developing GLP1 APIs and finished dosages through partnerships to tap into the growing market, expected to reach USD 150 billion by 2030.

What progress has Granules India made in addressing the warning letter for the Gagilapur facility?

Granules India is in the final phase of remediation at the Gagilapur facility, with hopes to resolve the issue in one or two quarters. They expect the FDA to re-inspect the facility later this year, ideally by Q4 FI26.

What is Granules India's strategy for growth outside of the Gagilapur plant?

Granules India is expanding its Genome Valley facility and has plans for product launches in the US. Additionally, they are working on 11 product launches in the US, with a focus on high-value segments like oncology, ADHD, and peptides.

How does Granules India plan to fund its planned capital expenditure in FI26?

Granules India plans to allocate INR 600 crores for capex in FI26, with INR 200 crores earmarked for the Zen Chemicals acquisition. The company is focusing on expanding its facilities, including its peptide offerings and oncology pipeline.

What is the company’s strategy regarding revenue and margins for the upcoming years?

Granules India is focusing more on margin improvement rather than just revenue growth. They are shifting towards high-margin segments like oncology and peptides. Revenue growth is still a goal, but the emphasis will be on improving margins, especially with their current product portfolio.

When does Granules India expect to launch its first oncology product in the US?

Granules India plans to launch its first oncology product in the US by FI28, with some products potentially launching in FI27 depending on patent issues.