Poly Medicure Ltd
NSE:POLYMED
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 |
1 390.55
3 128.9
|
| 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.
This alert will be permanently deleted.
Poly Medicure Ltd
Earnings Call Analysis
Summary
Q2-2025
In Q2 FY '25, Poly Medicure reported impressive revenue growth of 23%, on track to meet its 22-24% annual guidance. The operating EBITDA margin improved to 28%, up from 25.82% the previous year, demonstrating a margin target increase of 100-150 basis points for the full year. Significant growth was noted in the renal business, expected to reach INR 150 crores for FY '25. Export business thrived, logging a 35% growth, particularly in Europe. They aim for $2-$3 million in the U.S. this year, with a long-term target of $15-$20 million. The company continues investing in new plants to double its renal capacity, fortifying its growth trajectory.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Poly Medicure Q2 FY '25 Earnings Conference Call hosted by ICICI Securities.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to [ Ms. Nisha Shetty ] from ICICI Securities Limited. Thank you, and over to you, ma'am.
Thank you, Falak. Good afternoon, everyone. On behalf of ICICI Securities, I would like to welcome you all on Q2 FY '25 Earnings Conference Call of Poly Medicure Limited.
Today on this call, we have with us the senior management team of the company, represented by Mr. Himanshu Baid, Managing Director; Mr. Naresh Vijayvergiya, CFO; and Mr. Avinash Chandra, Company Secretary. I would like to thank the management team of Poly Medicure for giving us this opportunity to host this call.
And with this, I will hand over the call to the management. Over to you, sir.
Thank you, Nisha. Thank you for hosting this call. A very good afternoon to everybody who is connected on the call. My pleasure to talk about the company's progress in the previous quarter and also discuss about the H1 results for the current financial year.
As you have seen, the company's revenue has grown in line with the -- in the guidance we had given in the beginning of the year. Guidance was between 22% and 24% for the whole year. So the H1 revenue, if you look at the standalone comparison, has grown by around 23%. So it's pretty much in line with what we had mentioned earlier.
Also, all the new plants which were commissioned last year, they have started functioning well. And the additional capacity, which was generated by the new plants, we're able to sell most of these products to customers in India and outside India.
And the margin also, we have seen a slight improvement in the margin. This was also as per the guidance given in the beginning of the year of 100 to 150 bps margin improvement during the year. And during the quarter under review, the Q2, we have seen EBITDA -- operating EBITDA margins almost touching 28% versus last year's Q2 margin of 25.82%. So we have seen an improvement, a significant improvement in the margin also. Even compared to previous quarter of Q1 of this current financial year, we have also seen some margin improvement from 27.5% to 28.06%.
On the PAT side also, there is a significant improvement for the second quarter '23/'24 and this quarter '24/'25, we have seen PAT increase from INR 59.21 crores to around INR 87.22 crores. So there's a significant increase in the PAT also comparatively as compared to the previous quarter.
And overall, if you look at H1 to H1 comparison, the revenue has increased from INR 625 crores to -- and these are all standalone revenues, to INR 770 crores. EBITDA has increased -- operational EBITDA has increased from INR 167 crores to INR 214 crores. EBITDA, including other income, has increased from INR 193 crores to INR 258 crores. And PAT has increased from INR 119 crores to INR 159 crores.
So in every parameter, we have improved from the previous quarter and previous year. And this is mainly because of the new expansion we have done launching of new products over last 12 to 24 months. All that has actually helped us to improve our revenue as well as the sales in the current financial year.
Though there were a lot of headwinds during the current financial year because of the current geopolitical situation in Europe and in Middle East, we had incidents of high freight costs during this quarter. Also, we have seen shortage of containers in key geographical areas. That also was one of the factors, which we're constantly monitoring.
And also, there was some fluctuation in the raw material prices because a lot of our raw material based on crude oil. So a little bit of fluctuation of that. But in spite of all these challenges, we were still able to do better compared to the previous year and even do a little bit better margin comparatively.
If you look at the current product sales mix in the current quarter, again, I think exports are close to 70%, and domestic business is close to around 30%. So we are maintaining the same range. And I think the whole year, we'll also maintain a similar range for exports and domestic business. The good news about the domestic business is if you look at the quarter under review, the second quarter, the export -- the domestic business has grown by around 22%. If you recall, in the previous quarter, we had only increase of 6%.
But as I had mentioned in the last call that we are focusing now more deeply on the domestic business. And because of the efforts we have done, domestic business is -- has grown actually in Q2 to Q2 comparison around 22%. And this is a big jump for us in terms of the efforts we have put in, in the domestic business. And this trend should continue in the coming quarters also.
So for the full year, we maintain our guidance of 20% plus growth for the domestic business. Export business definitely has grown by around 26% if you compare H1 to H1 numbers, and that continues to do well for the company.
In exports also, we have seen that Europe has done very well. We are logging a growth of around 35% in the export business -- in growth in export business in Europe. And a lot of the key markets are doing well for us, including U.K., France, Italy, Germany, Spain and Nordic countries, they are doing well for us right now. And we are adding new products. We are adding new clients also in this market. So all that is helping us to grow our business there.
When we look at the U.S. business, I think this year, we expect to clock anything between $2 million to $2 million -- $3 million revenue. This is the first year full year where we have FDA approvals, and the business has started rolling out in the U.S. We started getting repeat orders from our customers. So it's very heartening that the business is picking well. And then we may still maintain our guidance of $15 million to $20 million over 3, 4 years as we have been saying earlier.
So we are building up the business. We are absolutely as per the plan, which we have actually made for the company. And everything is going as per schedule. We don't see any changes in that schedule or plan of implementing revenue in U.S. market.
When you look at the renal business. The renal business has done well. We have seen a growth of around 40%, 45% in the first 6 months, and we maintain our guidance of 50% growth for the next 6 months also. So overall, from INR 90 crore number, we should be able to do between INR 140 crores to INR 150 crores of renal business in the current financial year. And we are very bullish about the business prospects because with the new Prime Minister Scheme or PMJAY where the reimbursement rates have increased for renal treatments from around INR 1,200 to INR 1,800, I think more and more patients are now able to take renal treatment. And it has actually become profitable for also for providers, which were actually earlier bleeding.
So with this change which -- and that's the big change, which has come in, in the payment by the government and a lot of state governments, as you've seen recent Haryana elections, government has announced also free dialysis for patients. So a lot of state governments are now moving to actively promote dialysis in the health care budgets.
And also, we are seeing the use of single-use dialysis is also changing because earlier when we started the business few years ago, there was a high reuse of the products. Almost close to 90% market was reused, and 10% was single use. But now we have seen in last -- after COVID, the trend is changing. Almost 30% to 35% market has moved to single-use, and 60% to 65% or maybe 65% to 70% is close to around multiple use. But in next 2, 3 years, as the trends are showing, I think the market will be become 50% single use and 50% multi-use. And that will also further increase the demand for dialysis products because once they are more single-use products, then the consumption will further increase.
And we are making adequate investments in the dialysis business in terms of our footprint in manufacturing, machine servicing, engineering space. So everything we are building up right now is infrastructure, which will help us to grow at a much faster pace in the next 4, 5 years. So after this initial struggles we had with the business, now the business is pretty much on track and on a high growth path.
And I think we don't see any reason that we will not gain more than 30% to 40% market share in the next 4 to 5 years in this business. And there is no competitor in India making these products. So we are the only company, which is manufacturing such products, and we have full technology backup. And we're also developing some new products in this area, which will also further benefit the patients and also help in reducing pain, which dialysis patients have to undergo for a longer treatment. So there's some new technology we are developing and that also products will be launched sometime early next year.
On the QIP front, the company in the previous quarter has raised additional funds around INR 1,000 crores, totaling 53,19,148 equity shares were issued at a price of INR 1,880. And after the QIP, the institutional shareholding has increased from pre-QIP level of 19.26% to around 23.58% post-QIP. And the split is pretty much even, almost half institutional holders are from India DIIs and half from FIIs.
As of September 2024, the institutional shareholding post-QIP now has increased to around 24.21%. And major new investors, which were part of the QIP were Lighthouse Fund, SBI Mutual Fund, Abrdn, Nomura, White Oak, ICICI Life, Quant, Morgan Stanley. So a lot of new investors have actually joined and a lot of insurance companies, Kotak Life, Max Life, Tata AI have also been allotted shares under the new QIP.
The QIP proceeds will be used over the next 2 years. And it's mainly the new CapEx for new plants. So the company is setting up 3 new facilities, additional facilities, one in Haryana, Rajasthan, and Uttarakhand. And all these facilities will come live in sometimes middle to end of 2026. And we are focusing on 3 core business areas. One would be, of course, renal dialysis business. Second would be cardiology, and third one will be critical care.
So under all these 3 therapeutic areas, we will be expanding capacity and capability to cater to domestic as well as international demand. Out of the QIP proceeds, INR 500 crores is for new CapEx. INR 200 crores -- INR 250 crores will be for general corporate purposes to fund the working capital requirements in the next few years, and acquisitions, we have earmarked INR 250 crores for that. And also, the company has around INR 250 crores of cash surplus, which would be also deployed in these 3 areas.
Also, current -- in the current 6 months, company has done a CapEx of already INR 150 crores. For the whole year, we have planned around INR 250 crores CapEx. But as it looks like, we were able to speed this up. And all this CapEx has been done from internal accruals. So no QIP money has been used so far for this. All this CapEx has come from internal accruals. And with in -- for the balance 6 months, we also will spend another INR 100 crores to INR 125 crores more for the current -- in the current plants where you will be adding more machines and more capacity in the current plants.
So with this new CapEx, and I think with this new -- all 3 big plants, which we are going to set up in the next 2 years, we will have sufficient capability and capacity to look at new opportunities in the medical device industry.
Already, we see some tailwinds coming to India because of now some changes in the U.S. tariffs against Chinese products. And I think in the next 1 or 2 years, we also see good opportunities in the CDMO sector, where contract design manufacturing will be a good opportunity to work with large companies. So I think the infrastructure we are creating will be also -- help us to create for such kind of opportunities, which should be coming to us in the next 1 to 2 years. So all these new tariffs are going to come in next -- I think starting from October, they will be implemented in a phased manner in 1 year.
So I think we are also seeing some traction from U.S. where companies are interested to develop some additional products with us. So hopefully, in next 1 to 2 years, we will see also some new products being developed to cater to U.S. markets.
And also with global geopolitical situation changing, we also will see some more traction coming from Europe where more companies in Europe would be interested to look at India as a manufacturing option. So this is some update on the international business.
On the other hand, we have seen that next 6 months, again, we will stick to our guidance what we have given. So we should be able to hit that growth rate of 22% to 24%, which we have already given as a guidance. I think we are pretty much on track for that. We have -- in terms of salespeople, we have -- in the first 6 months, we have added 60-plus new sales associates in the company, which is absolutely in line with our plan to have 100-plus people in the current financial year. And out of these 60 people, 40 people have been hired in new verticals, critical care and cardiology. So these verticals have just started. So we are on the verge of launching a lot of new products in these new 2 verticals. Some products have been launched already. Some are in the pipeline. So a lot of work has been done right now.
We are also going to work very closely with certain clinical research organizations to help us do clinical evaluation of our high-end Class III devices. So that is another area we'll focus on in the next 6 months to 1 year. So that we will have enough data to fast track our regulatory approvals in developed markets. So we are already working on that.
On the PLI scheme, of course, the first PLI for new products as we were 1 year late. So we were not able to get the traction because 1 year, we missed the cycle, and because of that, we are not able to get any incentives of that. But on the PLI 2, the company will receive around INR 1.4 crores of incentive in quarter 3, which has not been -- which has recently come in October to us. So that is for the previous year, which has been coming to us in this current quarter.
And so we are hopeful that under PLI 2, we'll continue to get some incentives from the government. PLI 1, we may not get any incentive though we have requested the government to extend the scheme by another 1 to 2 years because of COVID. During COVID, that was very hard to set up plants and scale up capacities. So we're not sure about it. But anyway, for us, it's more important that -- to build a traction in the business. And renal business continues to do well. So probably with or without PLI, it doesn't matter for us right now.
And we are very hopeful that, that 50% growth in next few years will continue to come for renal business. And this is mainly for domestic market. So -- and maybe by FY '26, we will also start exploring the global export markets for renal products. So that will further help us to strengthen our position in this category.
So these are some of the updates from my side, and I'm happy to answer more questions. Whoever is on the call, please feel free to ask questions about the company. And Nisha, over to you again.
[Operator Instructions] The first question is from the line of Karan Khanna from AMBIT Capital.
Congratulations, Mr. Baid, on another strong quarter. Himanshu, my first question is on the exports business in particular, Europe, which continues to grow at about 25% plus for the company. What's driving that? And how do you see exports' growth over the next few years? And then what's the kind of visibility that you have from your distributors and customers in that market?
And similarly, on the U.S. business, are there any updates on further FDA approvals? And how is the feedback for the shipment that you completed via GPOs? And how do you see the distribution evolving here?
So I'll first answer, Karan, with Europe. So Europe, I think we have a great traction in Europe market. And I think we have a long-term visibility because most of the businesses we contract in Europe, they are long term basically over -- spread over 3 to 5 years. So -- and a lot of these businesses are new businesses, which we have got into in the last few years. So we have a great visibility in Europe. So Europe will continue to outperform the growth -- general growth of the company. So we expect Europe to grow in the range of 30% to 35% in the next coming couple of years also.
On the U.S. business side, I think we have already -- as I mentioned on the call, we have already got our second, third orders from the U.S. So I think the feedback is great, and I think we are moving ahead with that. All the products we have launched in the U.S. market, we have given a guidance for $2 million to $3 million for the first year where we'll be selling at least 4 to 5 products in the U.S. And we are still waiting for FDA approvals to come. And hopefully, early next year, we should have -- we should get a few more approvals. That's what we're expecting in first quarter of the next calendar year. And once we have the approval, we will start building businesses for those products also. On the...
Sure. My second question is on your expansion plans to set up 4 new plants. What are the timelines for commissioning these and likely CapEx for the same? And what kind of peak revenue potential do you anticipate once these plants are online?
So we have put an outlay of INR 500 crores for these 3 new facilities, which is part of the QIP fund raise. And this facility should be live by -- live from mid- to end of 2026. And land has been acquired for all the 3 facilities, Haridwar, Jaipur and Faridabad. So these are in the existing areas we currently operate. So these are adjacent facilities, some are nearby, some are adjacent. So this helps us to leverage our current infrastructure and expand quickly with new products.
Sure. And lastly, on your new divisions such as cardiology and critical care, what kind of further investments do you anticipate? And similarly on scale, what kind of scale do you anticipate for both these divisions over the next 3 to 5 years?
So I think the cardiology is a big business going forward in intervention cardiology. So there are too many players in the market but what we have seen is mostly import-driven, especially on the consumable side. We're not talking about stents here and mainly on the consumable side. And I think that is the area we are targeting right now and Poly Med because of its manufacturing expertise. So we are able to bring some new products in the market, which are locally manufactured, Make In India products, and that will actually drive that market.
So I think in the next 3 to 5 years, I think maybe in, let's say, by 2030, we should be able to look at INR 300 crores to INR 400 crores revenue also from cardiology business.
The next question is from the line of Girish Jain from KJMC Finserv Group.
Congratulations on a very good set of numbers, Himanshuji.
Thank you, Girishji. Thank you.
My question was relating to the CapEx, which we had done earlier. I think 4 plants were to be operational. Am I -- is it correct to assume that all the 4 plants are now operational? And can you give a guidance of what kind of capacity utilization we are running at, the new ones?
So all the new 4 plants are operational, and most of the plants probably should be working around 50% capacity. We are still doing a lot of CapEx in this plant. As you see the first INR 150 crores, which we have spent in the first 6 months, all that CapEx has catered to existing plants only, the new plants and the existing plants. So a lot of automation is being added. And some of you have already visited plants, have seen that how much amount we have spent on automation.
And automation becomes very critical to our business because quality is the most important part in our products and we can only achieve through automation. And that is already happening. And I think when we look at the revenue side, I think as you are already aware that if you spend rupee in CapEx, we see a revenue of around INR 1.2 to INR 1.3. And that's been actually the guidance for -- by us. And also that's more or less the industry standard also.
Okay. So with this new CapEx now, which is being planned with the QIP money which we have raised, and you mentioned that it might be operational by end of financial year '26. So what will be the increase in the capacity like in terms of percentages?
See, basically, what we are doing is we are going to expand capacity in 3 core business areas. One is renal dialysis, where we will double our capacity from our current level where we operate. And what we have in pipeline right now, a lot of capacity also comes during this year. So from where we end this year, we'll almost double our capacity in the next 2 years because as we are growing at 50% in this business. And similarly, we will be also expanding some new products in cardiology. So there also we will because the market -- we have just started selling some products. The division has just been launched. And if you see renal is a 5-year-old division and almost -- we'll be ending around INR 150 crores.
So now we see a big ramp-up happening. So initial part is -- the regulatory part is slightly slower. But as we move on, we will see the ramp-up happening faster. So a lot of new products will be added in the cardiology and critical care. And critical care is more driven towards oncology segment, cancer care. So we have a lot of products which we are making in Italy today. A lot of these products will be shifted to India and also scaled up in future. So we are already looking at expanding that area of business where still India is around 80%, 90% import dependent.
Okay. And last question. Going forward, let's say, in the next 3 to 4 years, do you see any change in the product mix between infusion, cardio, renal and critical care?
See, I think we have not extrapolated that data, Girishji. But I think the infusion still will remain our core business. So that is where we have a global excellence on that product category. So that will continue to be our core business. But as new businesses pick up, for example, renal by, let's say, next 5 years, will constitute around roughly, let's say, around 10% to 15% of our business. Today, it may be only 5% to 6%.
Okay.
So similarly, cardiology, which is probably only maybe -- I mean there are no numbers for cardiology right now. But maybe in the next 5 years, we will see it growing to around 5% to 7%. So all this will keep on evolving basically.
The next question is from the line of Zain Hussain from Dolat Capital.
Hello? Am I audible?
Yes, yes, please.
Congratulations for a great set of numbers. I have 3 questions. It's regarding domestic business guidance, you have given for only 20%, 22%, and -- but we're in H1, we are already running at 11% as an average. So do you tend to change the India guidance, domestic guidance or you wish to maintain that?
No, no, we've -- I've already said in initial part of the call that we will do around 20%. And then that -- because currently, we have done an H1 to H1 growth of 13%. In the first quarter, it was only 6%. So in fact, we are not growing faster now already. And as you know, the private market is growing faster for us, and government business is kind of where we are exiting part of the government business. So that's the reason first quarter numbers were a little skewed. But overall, if you see a private market trajectory, we are growing 75%, 25% in that category, [ also the ] global business where we saw but for the whole year, definitely we are maintaining our guidance of 20% plus.
Okay, sir. And sir, renal care sales in Q2 as well as in H1 was?
Say again?
[indiscernible] shared number, renal sales.
So we have not shared any numbers. What we have shared is that we have seen a growth of around 40%, 45% in renal care business in the first 6 months.
Okay, sir. And we are told that 500 dialysis machines to be installed by the end of this year. So it is maintained around 500?
Yes. So total installation base will go over 500 machines by end of this year. And particularly this year, we should be able to sell between 350 to 400 machines in this particular, 350 machines. So the earlier base of 150, plus 350 this year, we will be able to cross our installation base of 500 machines.
Okay, sir. And sir, infusion category contribution in domestic as well as in export?
Absolutely. So it is close to around 65%.
Okay. And domestic?
Same, same, same contribution.
Okay. And sir, export has also grown very well. So what are factors driving this export business?
Could you repeat that question, sir, again?
The export business, growth factors, it is driven by?
It's driven by infusion business because that is where we have global excellence on that product category. And then we have a lot of products, which are innovative. We have patented products and that is driving that growth in that segment.
Okay, sir. And sir, guidance for EBITDA margin, do we maintain our margin guidance?
Yes. So if you see in the beginning of the year, we gave a guidance of around 100 to 150 bps improvement in the margin. And I think you already have seen the results, and I think that's being reflected in the results also.
Okay, sir. And sir, last question, working capital days is?
That is around close to 100 days right now.
[Operator Instructions] The next question is from the line of Yash from Stallion Asset.
So I just wanted to understand that since you've kept INR 250 crores out of the QIP money for acquisitions, what are the new products or new sort of areas that you can pivot to with this amount of money?
See, basically INR 250 crore is just on -- amount on the QIP part. But the company also has internal cash and internal cash generation. And we are not limiting ourselves to INR 250 crores. So we are looking at opportunity adjacent to current product area. For example, anything in cardiology or anything in oncology space or anything in critical care. So any new product areas. There are thousands of products in this space. We do only a few, maybe 20, 30 products.
So what other areas. So we are looking at adjacent areas in these therapeutic areas. And then whatever -- and we are looking at technology basically. Because currently, what we need is a technology and regulatory clearance so that we can fast track those projects. And otherwise, once we do it on an organic basis, that is going to take a long time because typically, time frame is 3 to 5 years. So that is one of the reasons that we are looking at some acquisition opportunity. And as and when we have something, we'll definitely announce that.
Right, right. And sir, I just wanted to understand that apart from Europe, what could be potentially more fast-growing sort of regions for you? Would it be like Middle East or Southeast Asia? Or have you sort of explored some of the countries there where you can potentially have the same kind of growth that you're seeing in Europe?
No, I think if you look at the global landscape, around 35% global market in U.S. in terms of value and then followed by around 25% in Europe. So -- and then I think India is only 2%, 3% today. But again, being our presence in India, and we have been present for a long time now, we have a bigger market share in India compared to other global markets. So I think for us, these 3 geographies will continue to be the key market for us as we go along in the next 3 to 5 years.
[Operator Instructions] The next question is from the line of Zain Hussain from Dolat Capital.
Sir, guidance for gross margin, if you can give?
See, gross margin, we normally give guidance to EBITDA margin. I don't have those numbers. But typically, we operate between 60% to 65% gross margin.
Okay, sir. And the CapEx guidance of INR 100 crores to INR 120 crores in the next 6 months will be from internal accrual or QIP?
Internal accrual -- these are mainly CapEx happening in the existing plants. Some, of course, will also -- CapEx will be directed towards the new facility as we start building them up. But the majority will come from internal accruals, and some of the QIP money will be also partially on the INR 500 crore. But the major QIP utilization will start sometime early next year.
The next question is from the line of Vihang Subramanian from [ Java Capital ].
Congratulations on a good quarter. Just one question from my side. In some of your remarks initially, you mentioned that you're seeing a lot of traction from U.S. customers due to potential tariffs, right? So could you talk about what are the tariffs currently on our products as well as similar Chinese products in U.S. and Europe? And if we see an increase in tariffs after the U.S. election, do you expect to get more competitive versus China?
So it's a great question, Vihang. So let's first talk about the tariff, what are the current tariffs. So current tariffs are 0 from India right now. So when you export to Europe, there's 0 tariffs, and Europe is not going to change any tariffs. And Europe is our major market. Today, it is more 1/3 revenue comes from Europe or 1/3. 1/3 is India, and 1/3 is rest of the world. So U.S. is also not very significant. You know the numbers already. And currently, the U.S. tariff is 0.
But even if U.S. puts a reciprocal tariff, which we are hearing from Mr. Trump's speeches, I don't know who's going to come, but let's assume that he's going to come. So India has a tariff of around 10% on medical devices. So the reciprocal tariff can be only 10% in my view, number one. Number two, current tariffs on Chinese products range from 25% to 50%. So there will still be a big gap.
And I think the most important thing is the global supply chain with this current uncertainty and what is environment, I think it's going to shift a little bit to India and I think in medtech space also. And I think that change should come in next, let's say, 2 years to 5 years. So -- and we are building. Most of the tariffs become effective now till January 2026. So in this period, I think if we can catch hold of some good companies and products, I think that is the target we are trying to set up for ourselves.
Understood. And just in regards to the acquisition that -- the potential acquisition that you may look at, are there any particular products or any particular kind of therapies that you are trying or at this point, it's more open.
No, this is not very clear -- so we are very clear that we want to stay adjacent to what we are doing. So we'll only do something, which we are currently operating, whether it's cardiology or critical care or oncology or in renal space. Anything around adjacent to these therapies we're going to do. So we're not going to go out of our therapeutic competence.
Understood. Understood. And just last one on the margin side. I think it seems like we have been trending a bit ahead of our guidance. So would you look to revise this at some point? Because it seems like our export revenue salience is driving margins higher, right? So any thoughts on that?
No, I think we are -- more important is it is good that we are trending higher but I think we will like to stay in the range. And I think whether on the top of the range or on the bottom of the range, but at least we want to be in the range. And I think -- see, we don't know what's going to happen in the next 6 months in the global geopolitical situation. So it's good to be prudent and stay prudent. So if we have done well, I think we should compliment ourselves but we don't know about the future.
But I think if we can have -- the company has the capacity to absorb any future shocks even though this -- the first 6 months, very difficult in terms of global supply chain because freight rates started increasing, the shipment transit times kept on increasing. So in spite of all these challenges, we are able to still make some small improvement in our margins. So I think let's continue with that. I think maybe another quarter, we'll see what is going to happen.
[Operator Instructions] The next question is from the line of Naman Bagrecha from IIFL Securities.
Hello? Can you hear me?
Yes, Naman. I can hear you. Please go ahead.
Sir, just some clarification on the India business part. You highlighted that the first half of this year, we've grown at around 13%, right? So that means that to achieve, let's say, a 20% kind of growth on a full year basis, we will be growing at around 30% at least for the next 2 quarters Y-o-Y or, let's say, first half growing at around 30% -- second half growing at around 30%. Is my understanding correct? I mean and...
You're absolutely correct. And I think these are the numbers we have with us. So we are pretty certain because we have the buildup. The capacities have gone up. And then, let's say, in quarter 2, we were able to see a 22% growth compared to quarter 1, which was only 6% basically. So we are seeing these changes already in the customer profile in the demand side. And renal business is already growing at 50%, which would be almost INR 150 crores, and this will become almost close to around 25% to 28% of our total business, so -- in India, at least. So we are pretty confident on getting those numbers.
Okay. Okay. Okay. And as you said on the renal business, so renal business, I mean, if I back calculate, we actually have grown at around 50%, 51% in second quarter. And the asking rate would be closer to around 60-plus percent if you look at INR 145 crores of business.
Yes. So the reason we are able to do it because we have added a lot of new capacity in renal business. And most of that capacity is coming live between October and November.
Okay. So basically, this one time...
So currently, we are short of products right now. We can't supply enough.
Okay. Okay. Okay. And lastly, on the export business, if we exclude your these subsidiaries, I mean, you have seen a fantastic growth of, let's say, around what, 28%, 30%? Is my understanding correct?
That's correct. Around 27%, 28%. You're right. Absolutely.
27, 28%. So for the full year, would you want to revise the guidance or this would not be achievable? I mean let's say you guided for around, let's say, 25%, right, for the full year?
We have guided for the full year total overall growth of around 22% to 24% and with India doing around close to 20% with a weighted average of 30% on India business. And then export business, around 70%, weighted average of around 25% to 27%. So I think typically, we have to also look into fact that what is going to happen in the next 6 months. So it is good to give a muted guidance. And if you do better, it's always good. So we would not like to revise margin, let's say, guidance at the end of second quarter. I think after the end of third quarter, we'll be more prudent to revise guidance.
Okay. Okay. And one more on -- if I may. The earlier participant also highlighted that the -- because of higher export business, we've seen that 50 bps quarter-on-quarter improvement in margins. So given that our export business will be, let's say, growing faster than the domestic business. We expect the margins to be slightly better, I mean probably achieving, let's say, 28% on 4Q exit?
Well, the target was to improve by 100, 150 bps, and it also depends on the product mix every quarter. But I think we are pretty much online but again, it's a lot of very uncertain situations. In the geopolitical world, we don't know where oil is going to hit. Is it going to impact raw material prices or what is going to happen to supply chain in the current situation. So it's good that we have done better in 1 quarter. So even if we do bad in other quarter, we'll be able to normalize it. But that is not the case right now. But the important thing is that continuous improvement is required, and we are doing it actually in terms of margins.
And as the product mix keeps on changing, as we go more in deeper in, let's say, critical care, more deeper in cardiology, definitely we'll be able to have better margins in these products also in India also going forward as time progresses. Because currently, we are also in a lot of initial investment phase in these businesses. So like for example, we hired 40 new people. So 10% of the workforce is completely new for new businesses, which are not contributing at the same run rate as the original businesses where other 370, 380 people are working.
So gradually, we'll see a ramp time. So definitely, once the businesses get more and more, let's say, deeper, we will definitely see margin improvement. Renal business, it's still not a great margin contributor but as we increase the volumes substantially and definitely, margins will keep on changing because the contribution margin will keep on increasing.
Got it. Got it. Got it.
And I think the idea in this business, I think it's all about technology and volume and what you can do in terms of how you position yourself in the market. If you position in the lower spectrum, then you get lower pricing. But if you start competing with large multinationals, then definitely, you can improve your price points. And that is what we are trying to achieve right now. We are trying to replace the multinationals on the market in India, not replacing Indian companies in the market.
Got it. Got it. Got it. And just on the sales and marketing addition, the associates, just wanted to understand how does, let's say, their productivity play out? I mean today, let's say, we are -- in FY '24, we were at around, I mean if I look at...
INR 200 crores.
Sales per month for a rep close to around INR 8.5 lakh.
INR 1 crores a year basically, typically INR 1 crore.
INR 1 crore a year. Yes, right. So the addition that you have done, so generally, how much time do they take to achieve, let's say, this kind of productivity?
It's a very hard question to answer because it depends on business to business, depends on approval process on each hospital. And some businesses may take longer, some may take faster. So again, it's something we have -- we continuously juggle with in terms of balancing the people versus the revenue. And -- but when you have new businesses to set up, let's say, 2 new businesses, then sometimes you have to compromise on that area and say, okay, I need people first so that they can go to hospitals and push their products.
So I think in that case, we are very careful in heading the headcount versus -- but again, when we see end of this year, we'll have 500 people but we'll also see revenue almost touching INR 500 crores in domestic business. So this is where somewhere we are in that zone. So we always keep that INR 1 crore number in mind.
Okay. Okay.
So new versus old, we're keeps on getting blended basically.
Okay. Okay. Okay. So on a blended basis, you will say that INR 1 crore would be the...
Yes, from that business what we are targeting on this. It's on a blended basis because always we have new people coming in, going out, that is always the case.
So sorry, sorry, I didn't understand. So on a blended basis, you will target INR 1 crore or to achieve...
On a blended basis, but between this and all together, yes.
Okay. Okay. Okay. And what were -- I mean you highlighted that total 100 associates will be added in FY '25. Any other trends, let's say, for FY '26 or on a steady state, you would like to add 50, 100...
So we'll continue to add that many people because the business is growing, we need to reach out to more hospitals. Today, we reach out to 8,000, 9,000 hospitals. We need to reach out to almost 20,000 hospitals in the country, so -- in the next 3 to 5 years. So we'll have to almost double the headcount in, let's say, in the next 3 to 4 years.
Okay. Okay. Okay.
Even if we continue with the 20% growth rate, the business will anyways double in the next 4 years.
Yes. Yes.
We'll have to continue to increase the headcount to reach more and more customers, and customer means hospitals.
And just one last one. What would be, let's say, the blended capacity utilization? You said 50% or...
For the new plants and for the existing plants is already around 75% to 80%.
What would be the blended number, sir?
Blended would be close to around 60%, 65%.
[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to management for closing comments.
Thank you, everyone, for great questions. And I really appreciate the kind of deep study you have done for the business and for the company. Please continue to ask these probing questions. This will help us to do better every year, every quarter. And we hope -- we also assure you that whatever guidance we gave you in the beginning of the year, we will try to hit those revenue numbers and profit numbers to ensure that the company is on track with the right performance parameters.
Thank you again very much, all the participants, ICICI team for hosting this call. Thank you again.
Thank you, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and now you may disconnect your lines.