Orchid Pharma Q3 Results Review - Big Surprise On Margins: Systematix
Orchid Pharma reported a strong set of numbers both YoY and QoQ.
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Systematix Research Report
Orchid Pharma Ltd. reported stronger than expected Q3 FY24 revenues, which were up 10% QoQ and 38% YoY. Gross margins expanded by 456 basis points YoY and 627 bps QoQ, which aided Ebitda margin expansion of 749 bps YoY and 430 bps QoQ.
Orchid Pharma has stated that gross margins should be in the guided range (40% +/- 2%) and the current quarter had some extraordinary benefit from low cost inventory. During the quarter the company commissioned the new sterile block which led to higher operating expenses on a QoQ basis.
Employee costs and other expenses increased 9% and 24% respectively on a QoQ basis. As the sterile block utilisation expands over the next few quarters, we should see a favorable benefit from operating leverage. The company has added about 50% capacity on the base. The base business should continue to build on from current levels led by these new capacities (sterile and rejig of cephalosporin block) and potential contribution from royalties led by commercialization of new chemical entity molecule – Enmetazobactam in FY25 (U.S. and Europe).
We revise our forecasts on Orchid Pharma, as we revise our forecasts on Enmetazobactam (post recent positive recommendation received from EUCHMP).
The positive opinion removes uncertainty around the commercial sales from Enmetazobactam.
Orchid Pharma is also in active discussion with the Indian regulator for a waiver on clinical trial.
We currently do not assume a waiver and build a FY26 launch for Enmetazobactam in India. Based on our revised forecasts we arrive at a target price of Rs 960 and recommend at hold at current market price.
Click on the attachment to read the full report:
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.