US, Europe account for 71% of Q1FY22 revenues for the company
Exports contribute ~89% of Q1FY22 sales
Forex gain of 19 crore in Q1FY22 has been made by the company
As per the management, Margins can be maintained on the back of backward integration, technology modernization, green chemistry and other efficiency measures.
Management has planned for six growth engines:
Established generics (market share of 60-70%; Growth guidance:10%)
Increasing capacity of existing generics (market share of 20-30%, target to get to 60-70% share)
Sartans APIs – Leverage the already developed key starting material for Sartans, which gives advantage on both cost and impurities
Contrast media – Entering other segments with innovators and anticipated contribution in two years
Two substance projects being fast tracked with long term contracts
New generics – The company has already developed large volume niche molecules whose patents are due to expire from FY23-25
The company is currently operating at 80% production capacity
Management guided for future growth of around 10-15%
Estimated tax for FY22 by the management: ~ below 25%
Divi’s capex to further augment capacities besides preparing for growing opportunities arising from China plus one factor (strategy to diversify into other countries along with China)
The company has been building capacities in a few more niche APIs as per the evolving demand scenario in the backdrop of ‘China opportunities
Strong R&D capabilities & India cost arbitrage along with IP adherence are some legacy strengths, which drive incremental assignments from MNCs as per the management
The company has earmarked an aggressive capex of 3700 crore [1800 crores (existing plans) + 400 crores (custom synthesis blocks) + 1500 crores (greenfield Kakinada plant crore], over and above 2000 crore spent in the last five years.
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