Poly Medicure Ltd - Poised for Robust Growth; Result Update Q3FY15 ::Edelweiss, report

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Poly Medicure Ltd. (POLYMED) Q3FY15 Revenues and PAT surpassed our estimates. Key positives were: (1) strong growth in both exports (up ~18% YoY) and domestic markets (up ~29% YoY) and (2) EBITDA growth of 31% YoY at INR 22 cr and EBITDA margins came in line with our estimate of 23% (21% in Q3FY14 and 24.8% in Q2FY15) despite negative cross currency impact during the quarter. We continue to believe that the long-term outlook for POLYMED remains pretty buoyant on the back of multiple factors like ageing population, change in disease profile, rise in income levels and socio-economic inclusion of rural and the deprived. We expect POLYMED to sustain its historical growth trajectory with PAT CAGR of ~22% and RoCE of 30% plus over FY15-17E.

Sales growth in line, domestic growth robust

POLYMED reported in line Q3FY15 sales growth of 21% YoY and 2% QoQ, led by strong growth in both exports (up 18% YoY) and domestic market (up 29% YoY). POLYMED’s revenue from domestic market has been growing at robust pace as company has increased focus on domestic markets. Revenue mix (Export-import) from domestic markets has increased from 70:30 in FY13 to 68:32 Q3FY15. Domestic medical disposable market is expanding at a healthy pace growing at 17% CAGR, with the market valued at USD 0.8bn. 

EBIDTA margins healthy despite cross currency headwinds

EBITDA grew by 31% YoY to INR 22 cr and EBITDA margins came in at 22.8% came inline with our estimates (21% in Q3FY14 and 24.8% in Q2FY15). EBITDA margins were negatively impacted by 200bps due to cross currency impact during the quarter. The company is continuously improving efficiency in its older plants at Faridabad and Haridwar through automation which we believe could lead to margin improvement going forward. Also, contained forex losses will lead to margin improvement over the next couple of years. For the full year FY15, we expect EBITDA margins to remain steady at 23%. PAT for the quarter was ahead of our estimates at INR 12 cr, up 31% YoY. 

New Jaipur facility ramp up to drive growth in FY16

The company expanded its capacity with better product mix at Jaipur, which is expected to be commissioned by Q1FY16, as company has received regulatory clearances and trial production has been successful. The new Jaipur facility has capacity of 100 mn pieces/year of various disposable devices and will drive incremental growth in FY16.

LINK
https://www.edelweiss.in/research/Poly-Medicure-Ltd--Poised-for-Robust-Growth;-Result-Update-Q3FY15/10005552.html