Laurus Labs Ltd
NSE:LAURUSLABS
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
369.35
512.6
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Laurus Labs Ltd
You don't have any saved screeners yet
Good day, and welcome to the Q4 FY '22 Earnings Conference Call of Laurus Labs, hosted by Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Monish Shah from Antique Stock Broking. Thank you, and over to you, sir.
Thank you, [indiscernible]. Good morning, and a warm welcome to everyone to Laurus' 4Q FY '22 Results Conference Call. We thank the management for giving us the opportunity to host this call. Today, we have with us Dr. Satyanarayana Chava, Founder and CEO; Mr. V. V. Ravi Kumar, Executive Director and CFO; and Mr. Vivek Kumar from the Investor Relations.
I would like to hand the call over to Dr. Satya for his opening comments. Thank you, and over to you, sir.
Thank you for joining us for our Q4 and Full Year FY '22 Results Conference Call. I hope and wish everyone and their family members, colleagues and friends are keeping safe and healthy during these challenging times. We are pleased to have this opportunity to update you on our progress and answer your questions.
During the last quarter, the industry faced some interim turbulence on the raw materials front and also availability and cost of solvency. Now with the recent geopolitical conflicts and reemergence of COVID cases in China and elsewhere are posing new challenges. The disruptions in the supply chain and logistics has further increased. We are trying to minimize any disruption to our commitments to customers by expanding of our critical supplier base. We're also tracking all of this and would stay as in and force course correction as we execute our companies.
Overall FY '22 operationally has been fairly resilient where we have stabilized down our sales and profitability was maintained closer to 30% despite headwinds in our ARV API business. We also believe that it was an important year where we witnessed -- invested significantly in capacity creation, strengthened our R&D capabilities, build new partnerships in CDMO, and steadily delivered on diversification of revenues, along with minimal supply chain impact. This was despite a lot of uncertainty and disruption in the business environment.
During the year, we also successfully poured into disruptive CAR-T technology by way of investing in the ImmunoACT for a substantial minority stake. This investment should significantly help in bringing innovative and more affordable medicines in this region. We continue to fortify our core to bring more resilience in our business operations to deliver long-term and sustainable growth and enhance strategic customer value proposition in the coming years. We remain affirmative on our aspirational sales target of $1 billion in FY '23, and this will be supported by several approvals anticipated and good progress we made in our multi-site capacity expansion across all divisions including CDMO.
Moving now to our financial results for full year FY '22. We achieved INR 4,936 crores, with a growth of 3%, whereas Q4, we achieved INR 1,425 crores against INR 1,412 crores in the corresponding quarter. Sequentially, we have substantially improved on our revenue numbers across major business verticals as guided in our Q3 call.
To begin, I would like to share key updates on our Formulation business. The formulation division reported revenues of INR 1,880 crores in FY '22 with 13% growth, whereas INR 491 crores for the quarter with an increase of 14%. The contribution from this division has improved during FY '22 to 38% when compared to 35% in the previous financial year.
Coming to LMIC ARV business, we started witnessing gradual stabilization in the demand from various [indiscernible] agencies versus our previous quarter performance, which was impacted due to starting at various channels. Dolutegravir-based regimen continues to remain preferred antiretroviral treatment and believe its use will also increase rapidly in second line as well as pediatric treatments, as the new standard of care. During Q4 we received a final approval for Lopinavir Ritonavir combination from the U.S. FDA, and we have launched that product recently. Additionally, we are awaiting a few more product approvals, which should drive growth in the coming quarters.
Laurus is fully integrated player in the ARV formulations and we do believe we have great ability to weather any pricing challenges in the coming quarters. Happy to share that Laurus has signed and will be part of MPP license for Pfizer's oral COVID drug Paxlovid, which will increase the broad access in LMIC markets.
Coming to the developing markets, we are observing stable market share for our products. We are not seeing any pricing pressure here. We continue to leverage our front-end presence in the U.S. market for the new product launches. We have filed one product during the quarter and a total of 4 ANDAs were filed during FY '22. Our overall filing number has improved versus FY '21, and we expect filing pace to pick up during the current financial year.
We have received 3 approvals during the quarter and totaled 5 approvals in FY '22. Cumulatively, we have a total of 31 ANDAs filed. Out of these, we have a total of 11 final approvals and 11 tentative approvals so far. In Canada, we have 11 product approvals, of which we have launched 5 products and we intend to launch 2 more products in the next few quarters. For the European markets, we have validated 2 products as part of our contract manufacturing partnership. We expect a significant upside in FY '23 from these products.
In Europe, we have a basket of 8 approved products, of which we have already launched 3 products, and we'll be launching more products based on the market opportunity. Based on our healthy product pipeline progress, we continue to invest in FDF infrastructure. Our brownfield expansion at Unit 2 is progressing as per our expectations and is expected to add significant capacity to our FDF operations taking the capacity to 10 billion units.
Currently, the brownfield expansion is under qualification and will be ready for commercial use before June '22. On the R&D front, we continue to allocate critical resources and invest in portfolio with product specific approach, not the market-specific approach based on the complexity and scale economies. Additionally, we're implementing steps to bring more robustness in our overall product development processes. Besides this, we are happy to share that we should be ready to commercialize our sterile R&D unit during this quarter. This is being set up at to [ ICICI Knowledge Park, Shameerpet ].
Overall, R&D spending to sales for this quarter and full year was at 4% of our revenues. We have a total of 62 products in R&D pipeline, either under development or under validation with an addressable market size of [indiscernible]. I would like to share the status of our filings. 31 ANDAs in the U.S., 11 dossiers filed in Europe, 17 in Canada, 9 with WHO, [ 12 ] dossiers in South Africa, and 7 in India apart from 19 products filed in various ROW markets.
Of the 31 ANDAs filed in U.S., we have 15 Para IV filings and 10 first-to-file opportunities, having a sizable market opportunity. As our approach remains product-specific not market specific. During the quarter, we have successfully completed EMA inspections for our Unit 2 and brownfield expansion also was inspected by the European [indiscernible].
When we move to give you updates on the generic API, we want to update you on the antiviral ARV front. ARV business during the quarter saw improvement in procurement and sales to our generic companies have grown sequentially by 47% to almost INR 300 crores. For the full year FY '22, the business reported negative growth of 1/3, almost 33% due to high base effect. While overall demand environment stays softer, we remain optimistic about further recovery in the coming quarters.
We continue to maintain a leading market share in the product line what we sell and also expect to increase our developed market [indiscernible]. We are also happy to share that onco-API reported INR 72 crores sales during the quarter, reflecting growth of 16%. Laurus Labs have one of the largest high potent API capacities in India and we are partly adding new capacities during the next 12 months. We also had a lot of capacity in the previous 12 months as well.
Our aim is to strengthen global leadership in some of the existing products by focusing on high potent molecules and increase our market share. In other APIs, other than ARVs in onco, we have achieved INR 171 crore sales during the quarter. This was supported by new contracted supplies. For FY '22, while our growth was muted, we believe this segment should return to healthy growth trajectory in FY '23. During the quarter 4, we have filed 2 DMFs, both non-ARV, taking the total number of DMFs to 73 to date and we filed 12 DMFs in FY '22, which is maximum DMFs filed during the financial year in company's history.
We also initiated validation of few APIs and expect to see good growth in FY '23 and '24. We continue to have higher order book visibility in this segment and accordingly, we're adding manufacturing capacities to capture this opportunity. When it comes to CDMO business, this business has maintained its solid growth momentum and delivered robust growth and we doubled our revenues from -- by almost 100% to INR 360 crores in the Q4. For FY '22, CDMO business grew very strong over 75% year-on-year.
We continue to pursue several active projects in the late-stage clinical programs and commercial supplies ongoing for our core products. On our multiyear supply contract we executed in quarter 2 FY '22, the CapEx work is on fast track. Additionally, our proposed greenfield investment to set up a dedicated R&D center at our CDMO division at Genome Valley, Hyderabad and 3 manufacturing units in Vizag under Laurus Synthesis is progressing as per our expectations. New sites for this division will have the capabilities to handle steroids, hormones, high potent molecules apart from large-scale products.
The last one, the revenues have improved over 40% quarter-on-quarter to INR 35 crores, mainly led by new capacities getting operational. For the full year FY '22, the sales were INR 100 crores, which is a very significant growth of almost 70% compared to pre-acquisition annualized run-rate of INR 58 crores as we bought more operational synergies and added more capacities to this division. We're also gradually ramping up on the 180,000 liter fermentation capacity with our large-scale partners. We scheduled expansion at R1 including new R&D block and installing balancing equipment to enhance capacity at [indiscernible] . This expansion will be completed before September 2022.
We're also in the process of acquiring extra land to further expand our manufacturing capabilities to offer CMO services for recombinant proteins. Our focus on ESG, quality and regulatory compliance to drive sustainable growth and further accelerate efficiency and pipeline opportunity remains our top priority. This will add our journey towards our vision and strengthen our core values.
With that, I would like to hand it over to Ravi to share financial highlights.
Thank you, Dr. Satya, and very warm welcome to everyone on our quarter 4 and full year FY '22 earnings call.
The total income from operations INR 4,936 crores as against -- with a 3% growth. And the quarter is about INR 1,425 crores against INR 1,412 crores reporting in a similar number for the both corresponding quarters. But of course, sequentially, we have grown as we indicated in the quarter 3. Gross margin improved to full year at around 56%. But of course, with quarter 4, the gross margin is slightly lower side because of the solvent price increased substantially in the quarter 3 that we got affected or consumed in quarter 4 and the selling price decreased from the ARV supplies. And of course the product mix also will matter.
Our EBITDA is for the quarter 4 at INR 398 crores, is around 28% margin. For the full year, INR 1,436 crores with 29%. We have indicated that 30% is our expected gross margin. It is close to what we have guided. Our diluted EPS for the quarter is 4.3 and 15.4 for the full year basis. Our ROCE is at 26.3%, and CapEx [indiscernible] for cash flow, we have done about INR 950 crore CapEx in the full year. This is well within the 2-year guidance. Rest of the CapEx will be incurred in the -- this current fiscal FY '23 fiscal. We also would like to update that most of the investment across key projects on track. And of course, we need -- we have provided more details in our investor presentation, you can refer to that.
We remain on course to strengthen our position as a cost effective integrated pharma player and we are investing in backward integration efforts and making intermediates, creating further API and FDF capacities in the non-ARV [indiscernible]. And of course, you're all aware that we are in a most difficult challenging times, not only on the war side, but also from the COVID trend in the China side. We are trying to gear up by using all the techniques to -- not to have any production losses.
With this, I would request the moderator to open the lines for Q&A. Thank you.
[Operator Instructions] The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services.
Sir, just on the selling prices of ARV, if you could just throw some light in terms of how much -- on a relative basis over the past 6 months, how much the prices have fallen? And what has triggered this price?
The FY '22 ARV sales for most companies who are in the ARV space were significantly lower. And everybody has significant inventory that led to the price decrease, both in APIs as well as the formulations. I can't give you a specific number, but the API prices and ARV prices both were down, I would say, around 10%, I would say. I can't give you a specific number, but around 10%.
Sure, sure. That helps. That helps. But with this inventory now getting normalizing, there's no or rather limited scope of these prices recovering. So whatever 10% fall, that is not -- will probably continue going forward.
I see some improvement will come from softening of the raw material prices and solvent prices. But we don't foresee the API prices and the [indiscernible] going up. I think this could be the new pace. So we haven't seen any significant price drops from FY '20, '21, remained constant. FY '22 was the year where we saw a drop. But I don't think FY '23 will have further drops. I think this is going to the new base. And we don't see -- we have seen from Q3 to Q4 and also Q1, we have order books. And the prices are at a new base right now. We don't expect prices will go down further.
Got it. And just on your INR 1 billion target for FY '23. So broadly, will it be like spread out across 4 quarters? Or you see more in second half FY '23. Can you throw some color on it?
I think it has to be spread out. I can't give you a very specific number, but it will be evenly spread out. Yes.
Understood. And just lastly, with this INR 1 billion in FY '23, like how much of it could build up on FY '24 as well? Or is there any business which will be only restricted to FY '23 out of this $1 billion.
We see a lot of opportunities, not just in FY '23, but FY '24 as well. As we build capacities, we are adding a lot of customers, a lot of -- approvals are expected. I don't see there will be any one-off in FY '23 for us to reach our target. Yes.
The next question is from the line of Harith Ahamed from Spark Capital Advisors.
My first question is on Laurus Bio. So the INR 35 crores revenue for the quarter, so very impressive ramp-up there. Trying to understand how much of the 180-kiloliter capacities are being used now? So what is the utilization of the new capacity that you've added as of the fourth quarter. And then slightly from a long-term perspective, from biotech ingredients that we are making now and as we aspire to do fermentation-based drugs and maybe therapeutic proteins in the future, the current capacities that we have at Laurus Bio, will those capacities -- can we use those capacities for these, the future products that we would be manufacturing at Laurus Bio. And how long will that journey be as we transition from the current set of products, which are largely enzymes to drugs and therapeutic proteins?
I'll answer the question in maybe 3 parts. One is our 180,000 liter capacity is fully operational in Q4. And we are taking up some debottlenecking exercise to add more downstream capacity so that we can utilize our fermentation as much better than what we're doing today. So new capacity, fermentation capacity, will only come by end of 2024 -- FY '24. So significant growth in revenues at Bio can come only in '25. Despite probably some growth will come because if you debottlenecking of R1 and R2. That is one. And second, in the current plan, the medium term until 2025, FY '25, we have no plans to go into therapeutic proteins. So most of our capacity utilization currently and until FY '25 will be only in the food proteins, recombinant food proteins. So we are still having a strategy, internal discussions when and how we will enter into therapeutic proteins.
Okay, okay. And then the same fermenters, including the 1 million capacity that we are adding, can the same fermenters be used for drugs like statins or therapeutic proteins when we enter those businesses? Or those are totally different types of reactors that's needed for those kind of products?
The 1 million-liter large fermentation capacity, what we're creating is for CMO of food proteins. The fermenters for other pharmaceutical intermediates is under discussion with our Bio team at Bangalore. And that capacity has to be created separately to this food protein capacity.
That's helpful. Understood, that point. Second question is on the CDMO segment. And we have talked about 3 new facilities, which can potentially start supplies from FY '25. So how much of an increase we are seeing in our CDMO capacity? So what kind of an increase from the current capacities will happen for the CDMO business when these 3 new facilities come on stream?
Currently, the capacity is shared between the CDMO and generic API space. So as we are seeing a lot of opportunities. We are creating dedicated capacities for CDMO. The [indiscernible] what we're getting for CDMO will be close to start with 500 cubic meter, maybe 600 cubic meter, right. And then we have the ability to add more capacity brownfield because the land parts what we're using for the new greenfield facilities is big.
So the current 7,000 kiloliter capacity that we're talking about is overlapping between APIs and CDMO. That's the way to think about it?
Yes, you're right. The 700 -- 7,000 cubic meter capacity is shared between the divisions. And whatever new capacity greenfield will create -- we are creating is exclusive to the CDMO division.
Okay. Okay. And then last one with your permission. When I look at the balance sheet, there's a sharp increase in other current liabilities and I'm trying to understand what has led to this. And operating cash flows appear to have benefited from this. So is there something that you can call out here?
I think the other current liabilities because of the higher purchases in the quarter 4. So we need to gear up for the higher revenues in FY '23.
Okay. Okay. Yes, I'll maybe take it offline. That's all from me.
[Operator Instructions] The next question is from the line of Tarang from Old Bridge Capital.
Just a couple of questions from me. One, so the $1 billion target in the current financial year, what is driving the confidence for this? I mean, are there some products that are maybe approaching expiry or some one-off opportunities in the U.S.? That's number one. And number two, just a bookkeeping question on contract manufacturing revenues in the Formulations business and how much was ARV as a percentage of total business for FY '22?
As you've seen in FY '22, our ARV API business is 25%, and synthesis business is close to 20%. In FY '23, we expect to -- the divisions will grow, but the percentages broadly will remain similar. What it means, that means we have opportunities to grow API business back to healthy growth. Formulations in U.S., we have a few big launches ahead of us. And we are expecting approvals for 2 products in Europe where our partner, we already signed a big contract manufacturing. So the growth is evenly spread between API, Formulations and CDMO. And Bio will also grow, but that is not going to be a significant portion of overall revenue base.
Okay. And how much do you say ARV Formulations plus API as a percentage of FY '22 revenues?
ARV APIs and formulations are close to -- 55% of our revenues came from ARV.
The next question is from the line of Krish Mehta from Enam Holdings.
So the first one was just a clarification on the previous question on the ARV versus non-ARV business. This 55% share of ARV business is the total ARV in the entire revenue stream? Or is it just for API FTF?
APIs -- ARV APIs contributed only 25% in FY '22. See, in FY '16, the year before we went to public, the ARV API contributed 82% of revenue and it was down to 25%. The ARV revenues and API revenues in FY '16 were INR 1,450 crores. In FY '22, ARV APIs revenues were INR 1,250 crores. So while we remain almost constant on the revenue terms, but the percentage terms went down from 82% to 25%. That is the kind of diversification in the company went through the last 6 years, whereas our revenues from Formulations are 0 in FY '16, but in FY '22, we had 38% revenue coming from Formulations. So our Formulation revenues in FY '16 was INR 20 crores. And we did almost to -- almost INR [indiscernible] crores in FY '22. CDMO revenues were about INR 100 crores, and we went up to INR 917 crores in FY '22. That is the kind of diversification, what we were talking earlier, and we will continue to put efforts to diversify the business further by FY '25. As we mentioned by FY '25, our ARV sales, both the APIs and Formulation put together should be maybe 1/3 of our revenues, not 55% as in FY '22.
Okay. And my next question was on the Synthesis business. So given the $1 billion target on your previous statement on -- you see the mix remaining broadly similar. So do you see the change in margins with the $1 billion target coming through like a CDMO business or would you guide your margins towards being similar to what we've seen in the last 2, 3 years?
I think it will be very similar. We don't want to give more precise details, but it will be very similar.
The next question is from the line of [indiscernible].
Congratulations for the numbers. I just wanted to know how are we seeing on the forecasting proportion mix for API in the next upcoming year, towards API and other -- ARV and other ongoing stuff.
Our onco APIs, when our revenue base was small, it used to be about 8%. Now also, it is about 6% of the revenues in FY '22 despite the big base. We have non ARV non-onco were very low in FY '16, 4% of revenues came from non-ARV, non-onco. That went up to 10% in FY '22. So that also shows some diversification. We have validated about 12 DMFs filed in FY '22. That was the highest in our history. And majority -- not majority. All of those were -- except one, all of those were non-ARVs. So we see opportunities for us to do more non-ARV, non-onco revenues from FY '24 onwards. So we believe we have reached significant optimum level in both APIs and Formulation and ARVs. And our growth predominantly will come from non-ARV both in API as well as in the Formulation space.
So it's fair to say that it will be equally proportioned in the coming quarters or year?
So I couldn't get your question. Can you repeat? .
Is it fair to say that the proportion will be almost equally or -- I mean, focus will be more towards the non-onco and non-ARV?
Yes. In the coming quarters and the years, we expect the revenue contribution as a percentage wise will come down from ARV, while we maintain the same quantum of business both in API and Formulations for ARV. Yes.
Okay. And my second question is, in the presentation I saw that we are trying to maintain the leadership pipeline in the API segment. So what could be the market share as a whole in U.S., Europe as such? .
It's -- maybe we can take this question off-line. We can't give you the specific product share in U.S. We haven't lost any market share and we haven't seen any pricing pressure in our products what we are selling in Europe and U.S.
Okay. And then sir, a small question, sir, and [indiscernible] . We are seeing a revenue growth to be seasonal in the Q4 or FY -- for like for 3 years. So do we say that the business is seasonality? Or is it just because the growth of Synthesis is higher in this quarter?
Typically, for the last several years, our Q4 Synthesis revenues were higher because of the bulky shipments happened in the Q4 to [indiscernible] the production demand our partners. But they're not significant other than that.
Okay. That's it from my side. Congratulations again.
The next question is from the line of Jeevan Patwa from [ Sahasrar PMS ].
Congratulations, sir. This is a wonderful set of numbers. I just want to understand, like earlier, we were saying that we have $1 billion aspirational target and then we received a large order from global life sciences company, and then we then basically in one your interviews you said $1 billion is not an aspirational target and you know we will achieve it. So I just want to understand what this order earlier -- the part of your aspirational target or this order has come over and above the target that we were basically thinking of?
See, this relationship with the new partner is already there, we've got the additional orders from that partner. It's not that we have added a new customer just during the last financial year. And so we were talking about this aspiration number almost a year back -- 2 years back actually, not during the year. But this is the goal we kept and we are adding products, we are adding capacity. Ultimately, we need 2 things to achieve any targets. One is do we have capacity? The answer is yes. Do you have products? Answer is yes. Do we have the market? I think yes. Because of these 3 things and we have prepared well, so now we are confident to reach our target.
Okay. Okay. And secondly, the CDMO, so this quarter the CDMO sales has been very, very good. And I think this included only 1 month of supplier for the new order. So it looks like next year can be really pretty big impact for CDMO. How much you are expecting to close FY '23 for CDMO is it like...
We can't give you both details, but we can assure you that our focus and commitment, conviction on the CDMO business is giving results. And that's the reason we created a separate entity. We are creating separate facilities for the division. Because of the -- some long-term contracts that we have signed, some opportunities in front of us. So this division is worth watching for everyone, including us. So we are investing because of opportunities ahead of us.
The last question, sir. Is there any update on the immunoACT, I think started the human trials some 6 months back. So any time line when the results will be out?
We expect some results read out during this financial year, yes.
The next question is from the line of [indiscernible].
Congratulations for the large order from the global life sciences company. Just wanted to understand directionally like how -- what is the potential from this particular molecule? It could be a one-off, right? Like in the start of the call, you mentioned that after $1 million or could be any one-off in the $1 billion in FY '23. It seems like something like [indiscernible] could be a one-off? And what will be the potential for this molecule in this year itself?
Just I want to reiterate, our aspirational target, there is no one-off revenues considered just I want to reiterate. Yes.
Okay.
Well, we can't give you any specific details about the product quantities right now because of the confidentiality issues. We can't give you more details.
But also potentially, like I see like Pfizer has mentioned that they are going to do $22 billion of [indiscernible] and even if you consider [indiscernible].
Sorry to interrupt, but your voice is not good, sir. if you can speak closer.
Sure. Sorry, just thinking that Pfizer has mentioned that in its presentation that they're going to do $22 billion of l Paxlovid sales in CY '22. If you consider 3% to 4% of our total opportunity size for us. [indiscernible] direction that is it $100 million opportunity is much bigger.
Unfortunately, we can't give any details on our contract product, our pricing and the quantum of the order also. See, we will give what we can give and what we're supposed to give.
Okay. Fair point, sir.
The next question is from the line of Hussain Kagzi from Ambit Asset Management.
My first question was with regards to CapEx. So I wanted to understand that with the huge cost inflation going on right now, so are we seeing that our cost of CapEx, what we had guided for, is -- are you seeing any inflation on that side? So that was my first question.
See, if you look at our several quarter investor calls, the one where we are increasing is our CapEx number. So we were giving lower guidance and increasing it because of the opportunities. So in the last year, we've been saying for 2 years, our revenue -- our CapEx will be between INR 1,500 crores to INR 1,700 crores. And now, for the next 2 years, we say which is between INR 2,000 crores to INR 2,500 crores. That is the kind of CapEx in there in front of us. That's for next -- FY '23 and FY '24. We may spend anywhere between INR 2,000 crores to INR 2,500 crores CapEx.
Okay. Okay. Understood. Understood. And sir, on CDMO side, just wanted to [indiscernible] I just wanted one clarification is that -- as far as my limited understanding goes, the [indiscernible] contracts, so our revenue is dependent on how the molecules progresses from one stage to the other and on the success of the molecule at the innovators end. So referring to the large contract that we signed that we announced at the end of Q2, so how is that structured as it doesn't include a manufacturing component as well for which we'll be supplying? Or has the molecule already been commercialized?
This is with regards to what we announced in Q2. The molecule is commercialized and we are supplying. So there is no uncertainty in that.
The next question is from the line of Ritesh Rathod from Nippon India Mutual Fund.
Yes, the CDMO contract, would we start contributing from 1Q FY '23 in a normalized way or it would slowly ramp up over FY '23?
Already supply started and we will supply as per the partner demand. We can't give you any more details on that.
But it would be -- it won't be like initial stage, it would be very low and then eventually second or third stage, you will supply the full quantity? It would be evenly spread out, right?
It will be spread out, yes.
Okay. Okay. And on the CapEx side, have you increased the guidance from what you were talking of last quarter?
Yes. We have increased our CapEx guidance by almost about INR 500 crores, INR 600 crores than what we are saying earlier because of the opportunities, what we are seeing, and we want to ready with capacities to take on those opportunities.
The next question is from the line of Naresh Suthar from SBI Life Insurance.
My question is again on margins. If I look at the gross margins -- this will be the new base for FY '23 and going forward? For quarter 4 margins [indiscernible]?
Quarter 4 margins were down when compared to the previous quarter of the corresponding quarter for multiple reasons. One is the challenges in solvent pricing, raw material pricing, logistics cost, product mix changes, energy and fuel costs, all those contributed to lower gross margins there.
So this will -- I mean, like you said, ARV, the price pressure, which is a new base. Given solvent prices, I don't know whether it is coming down. So that way, this should be the new base for our gross margin.
See, the ARV API sale and Formulation sale ARVs will remain -- we expect little growth, but mostly flattish. So as we increase our revenues from non-ARV, both APIs and Formulations, we expect these gross margins should slightly go up from the current base.
Okay. One more question. Can I say quarter-to-quarter, the CDMO business, the margin were similar to quarter 3? I'm not asking for actual numbers, but rationally, was the margin in that segment same versus last quarter? Quarter 3?
We can't give you segment-wise gross margins. But as I mentioned, from 52% gross margin in quarter 4, we'll put efforts to increase it further, but we can't give you more details beyond that. So it will go up, we don't expect margins to go down.
I have -- I mean, I asked this question because I just wanted to understand whether the raw material pressure was seen in CDMO business as well.
No, no.
The next question is from the line of Tushar Bohra from MK Ventures.
Congratulations to the management for a much improved set of numbers. First, sir, quick clarification first half. So our aspiration is for -- in addition to the revenue aspiration -- is the margin aspiration closer to 30%? That was mentioned earlier in the call, for FY '23?
We remain confident to achieve that kind of margins, yes.
Okay. Sure. Second, sir, the solvent pricing, have you been able to take on some price hikes to compensate or has the pricing started to stabilize or even moderate a bit? Any color on the overall raw material pricing as a whole for this quarter and the coming trend?
We expect the prices -- solvent prices and raw material prices will soften further. But currently, the weaker gross margin, what we reported in Q4 is because of several factors, including solvent prices and raw material prices. And we expect that will soften further, and we will improve our margins from the 52% higher, yes.
Sir, you also mentioned specifically energy cost and logistics costs. Any color incrementally on those line items? And also if anything on the disruption emanating from China, if you can share your views on that.
The energy cost [indiscernible]. We don't expect that cost to be there for several quarters. So we will see that challenge for only Q1. Then onwards, we don't see any energy cost escalation. And the other factor is freight cost are higher for not just pharma business or any other business as well. And we have no visibility on how and when the logistics will be improved.
Okay. But it would be fair to say, sir, that specifically energy costs would have impacted maybe by at least 100 bps, maybe slightly more, on the margin front?
We can't quantify, Tushar. What Dr. Satya is talking about in the quarter 1 of FY '23 on energy cost, except with the [indiscernible] cost increase, which got impacted last year.
The energy cost is not going into the gross margin, below that. So our gross margin [indiscernible] raw material cost. So our energy costs will impact our EBITDA, but not our gross margin. Yes.
Right. So actually, sir, the overall gross margin, if you see year-on-year, the gross margin has actually been flattish only, but our overall EBITDA margins have come down. So certainly, these line items have got impacted, right?
Because of the scale effect.
Operational deleverage. If you look at what happened, our revenue numbers are similar numbers of last year. But you have an escalation of the cost -- those costs that has to be absorbed into the EBITDA. That is the reason you will find the difference on a yearly basis, Tushar.
Sure, sir. Second, on the strategy side. So one, if we could share more color on the sterile R&D. And also, when we had done this minority acquisition and the Immuno Act start-up, at that time, you had mentioned this as being only in sort of an investment. But our commentary in this con call has been that this is a significant foray for us. So is there a plan to consolidate the stake further in Immuno Act or maybe develop this line of business further?
I'll answer the first question in the sterile R&D space. So we wanted to -- in the sterile space, so we -- ours is the R&D first approach. So we're putting R&D center for our sterile. And then we have land to set up the manufacturing for sterile products. Coming back to Immuno Act, this is an investment, and we have no plans to consolidate. And certain part of our profits, we wanted to invest in technologies where we don't have expertise like this. And we continue to identify such opportunities. But that's not our core strength. So we -- our core strength is manufacturing and Immuno Act core strength is discovery. And so they will do [indiscernible] and we have no ideas to consolidate them or invest in similar lines.
Sorry to interrupt, but for any follow-up, may we request you to reach on the queue, please. The next question is from the line of [ Dipen Sheth from Buoyant Capital ].
Sir, I want to kind of raise this question about gross margin change over 3Q to 4Q. In an effort to understand, how much of that happened because of business mix change? How much of that was happening because of price erosion? And how much of that happened because of maybe a pull-up from the higher mix of the Synthesis business in the fourth quarter? Because I think the outstanding feature of the fourth quarter is that you've delivered more than INR 150 crores incremental quarterly revenues on the Synthesis business. Now normally, I would expect that, that's a very high gross margin business. I don't know the specifics of your business. But with this kind of a boost, if sequentially gross margins fell from 59% or 58.8% to 52%, despite a huge boost from the Synthesis business, there's something about the relative movement of margins across the 4 segments that we are missing here. So I think the Naresh did ask this question, but I'm not sure whether I could understand your response. How would you interpret this for us? That Synthesis goes up by -- from INR 207 crores to INR 360 crores sequentially. And there is a reasonably higher contribution from APIs as well, another INR 100 crores of incremental contribution. So was it that margins fell sharply in the API segment and the gross margins again? So how do you reconcile this for us?
In the generic, you have to consider both API, ARV API and ARV Formulations. Both we have been to a new base. So there's the price reduction in both API and Formulations happened. In non-ARVs, we haven't seen pricing pressure. As we increase our non-ARV revenues, not just Synthesis but also non-ARV APIs, non-ARV Formulation sales goes up. So our margin level will improve further. So we were at a new base in ARVs. And -- but the ARV price reduction is the major contributor to drop in gross margins. And then solvent prices. These are the 2 major reasons for drop in gross margins.
And would it not be fair on my part to expect a pull-up countervailing effect as it were from the Synthesis business ramp-up. Is that a fair assumption to make that Synthesis is a very good gross margin business and should have pulled up a little bit the overall gross margins in the quarter?
As we mentioned, the margins will move up because the revenue contribution from non-ARV business will go up, that is the reason we expect --from 52% we expect improvement. We can't give you how much will improve, but there will be improvement.
The next question is from the line of [ Surajit Pal from BOB Capital Markets ].
I have just one question about that CDMO business, where you have started supplying product, which has been commercialized as stated in the presentation. If you throw some light about your client's product in terms of therapeutic area, the market where it has been launched and how much sales we could expect in, say, next 2 to 3 years, and how many suppliers will be there along with you initial 2 to 3 years?
Unfortunately, we can't give you any more details on that. Pricing our product, our quantities, we can't give you because of the confidentiality. See, that is one reason why people like -- as we maintain confidentially with our partners, products. So with generic, we have given enough details because we're able to give. In the CDMO, we can't give you any details. It is not our [indiscernible] so we are bound to confidentiality agreement. We were giving gross margins, price reductions, all possible facts in our generic business. We can't give you in our CDMO business.
I'm not asking you to tell the name of the product or the company or the things. But I need to understand or we need to understand, is that the kind of therapeutic area or the kind of -- a number of people who are supplying these API currently to him.
We don't know how many suppliers are there.
Generally, 2 to 3 suppliers will be there initial 3 years post launch. Is it a big product?
We don't know. We don't know.
Next question is from the line of Ranvir Singh from Sunidhi Securities.
Congrats for good set of numbers. Just on revenue aspiration $1 billion, just I wanted to understand and better perspective. So the growth in FY '23, we are talking about is more than over 50% on Y-on-Y. So that could be built on mostly on Synthesis business, API or Formulation. Can you give some indication?
See, one thing all of us need to understand, this company ever achieved 50% growth in revenues earlier. We have done that a couple of times. So even if you look at FY '20 to '21, we have grown more than 50%. And in FY -- actually, we have grown in FY '20. FY '12, FY '13, FY '14, our growth is more than 50%. That means we have the ability to create the base and then grow significantly. And you should believe that we have delivered multiple times earlier, and we will also deliver this time because of our capacity. What we have created because of the products, what we have because of the order book what we have, we will achieve those. So you're right, we have to grow more than 50% to achieve our target of $1 million. And we are fairly confident on achieving that.
So it is more towards formulation business?
All segments will grow. Formulation will grow. Except ARV APIs and some Formulation, all the rest of the divisions will have significant growth.
Okay. So for FY '24, can we see a growth over FY '23?
We can't comment right now. So maybe we can ask this question in Q4 FY '23. We'll be able to give you some answer.
Okay. And just on formulation side, what is our level of integration? How much business is integrated with our own API?
Except one ANDA where we are filed by using third-party API. All other ANDAs commercialized or under development [indiscernible] API. In fact, the one which we use third-party APIs, we don't have any market share.
Okay. Okay. And I see in the balance sheet...
Sorry to interrupt, but for any follow-up, may we request you to rejoin the queue please.
The next question is from the line of Alisha Mahawla from Envision Capital.
Just with respect to what the earlier participant was asking with respect to a $1 billion revenue target. So I do believe that we're expecting the 2 formulations that were to be launched in Europe to contribute. Is it possible to see? Are we expecting that in H2 or will we start seeing some of the contribution from H1? And what is the opportunity size we're targeting?
I can't give you the size of opportunity, but those products will be commercially launched in Q3.
In Q3. Okay. And apart from that, on the CDMO side also, apart in the one contract that did start some marginal contribution in Q4, the other one which we're doing the fast track CapEx, is that also expected to start contributing from '23? .
The capacity that we're adding currently is also about 15% API of capacity we're adding. But that will not contribute to revenue in FY '23. So this -- see, we have to grow in FY '24 as well, for which we need to create capacity. See, unless we create capacity, how the pharma company will grow? Either we have to do acquisitions or create capacity. Most of our growth is coming organically by creating capacities in-house. So we are putting capacities for our future growth.
I'm asking the multiyear contract that was signed in Q2.
Sorry. That, we are creating capacity and greenfield new site being created. That will be qualified, up next year. That is sometime Q2, Q3 next year will go commercially. Yes.
So we're seeing mid of '24?
Yes. Mid of calendar year in '23. That's what I mean. Yes.
Okay. Understood. And on the onco API side, so -- or rather on the non-ARV API side, do we have significant-- do we have capacity to continue to grow in that space also?
Yes. We have capacities. We are creating more capacity in high potent.
But that will come towards the end of '23, the new capacity in API?
Yes, yes.
Okay. So maybe you can just tell me what is the current utilization level in the API segment? .
Full. Actually, we're running optimum capacity.
Okay. So maybe on the non-ARV side, growth will come towards the end of the year once new capacity comes?
Yes, Yes.
Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to the management for their closing comments. Over to you, sir.
Thank you all of you, for giving outside in view what we're doing. And these questions will certainly improve our thinking and our strategy to create long-term [indiscernible] value. Thank you.
Thank you.
Thank you. Ladies and gentlemen, on behalf of Antique Stock Broking, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines. .