Companies
Piramal to focus on brownfield expansion, cut debt before acquisitions
Summary
- The company's net debt to Ebitda ratio as of 31 March 2024 was 2.9 times, lower from 5.6 times at the start of the financial year, as the company cut its debt to ₹3,932 crore from ₹4,781 crore at the end of FY23.
New Delhi: Piramal Pharma Ltd (PPL), part of the Piramal Group, aims to press ahead with its strategy to grow organically, without actively looking for acquisition opportunities, as the company is keen on first paring its debt, chairperson Nandini Piramal said.
The company plans to invest more than ₹700 crore ($85 million) in brownfield expansion through FY25. This capital expenditure (capex), she revealed, will mostly be assigned towards the contract development and manufacturing organisation (CDMO) segment of the company.
Upholding focus
“The plan for the next year will be to uphold our continued focus on revenue growth, brownfield organic expansion, Ebitda and net debt to Ebitda ratio improvement. And so, for this, the capex will remain the same as last year at around $85 million," Piramal told Mint in an interview. “We plan to finance this through internal accruals only and the bulk of this capex will be attributed towards the CDMO business of the company, which will be a mix of maintenance capex as well as some debottlenecking things."
Also read | Piramal Pharma revenue up 14% at ₹1,959 crore in Q3
Although the core focus remains on organic growth, the company will consider any accretive acquisition opportunities if they come along. But the priority before any acquisition remains on reducing the net debt ratios of the company, and so it remains cautious.
The company's net debt to Ebitda ratio as of 31 March 2024 was 2.9 times, lower from 5.6 times at the start of the financial year, as the company cut its debt to ₹3,932 crore from ₹4,781 crore at the end of FY23.
Refinancing plan
“The company has plans to refinance its debt, but the process remains only in the planning stages, and it would be too early to comment on its current details," she added.
The company earlier had raised ₹1,050 crore through a rights issue, primarily used for debt repayment. It has managed to cut its net debt by ₹958 crore since March 2023.
Also read | Piramal Alternatives invests ₹110 cr in Biodeal Pharmaceuticals
The Mumbai-based pharma company reported a 102% y-o-y increase in its net profit to ₹101 crore in January-March on the back of strong revenue growth in the CDMO business. The company posted a Q4 revenue of ₹2,552 crore, an 18% y-o-y rise, of which ₹1,649 crore came from the CDMO business. The segment saw a revenue growth of 29%.
For the full fiscal year ended 31 March, the company reported a profit of ₹18 crore, from a loss of ₹186 crore in FY23, on a revenue of ₹8,171 crore.
“The focus remains to do good in all three business segments through FY25; overall we expect early teen growth through the fiscal. The CDMO business will probably witness faster growth than the overall business as our focus remains on growing our on-patent and innovation-related work," she added.
Monitoring funding
The company continues to monitor the biotech funding space, which has in recent quartes seen an improvement and would further boost its CDMO business.
Also read | Piramal Pharma to invest ₹1,000 cr for expansion: Nandini Piramal
India remains a major contender to be a gainer of the CDMO transition to the eastern hemisphere in the next two decades. The country is the third-largest pharmaceutical producer globally by volume and houses many FDA, WHO, and EDQM-compliant facilities.
According to the Indian Brand Equity Foundation (IBEF), India has over 3,000 pharmaceutical companies and more than 10,500 manufacturing plants, with more than 500 API producers accounting for 8% of the global output.
India-based research firm Mordor Intelligence estimates the India CMO market size to reach $44.63 billion by 2029, from $22.51 billion in 2024, growing at a CAGR of 14.67% during the period.
