RENATA: 2QFY23 Earnings Update

·         Revenue decreased by 0.7% YoY. Pharmaceutical segment which constituted 85.9% of the revenue, posted 6.7% negative growth. Revenue from contract manufacturing increased by ~80.0%.

·         Cost of sales increased significantly by 21.4% YoY. Hence, gross profit margin fell from 47.8% in 2QFY22 to 36.2% 2QFY23. However, operating margin fell less than gross margin due to ~14.0% decrease in Administrative, selling, marketing and distribution expenses.

·         Finance cost increased by 367.0% YoY to BDT 540mn (Finance cost was only BDT 115mn in 2QFY22). Interest bearing loans has increased significantly to BDT 11.7bn in 2QFY23 which was BDT 5.6bn in 2QFY23. Effective tax rate was 15.1% in in the reporting period which is significantly lower than the corporate tax rate of 22.5%. Hence, NPAT margin decreased by 630bps (vs. 872bps decrease in operating margin).

Revenue (BDT mn)7,6297,57615,34715,947
Gross profit (BDT mn)3,6432,7397,3226,692
EBIT (BDT mn)1,9901,3163,8873,176
NPAT (BDT mn)1,3648792,7462,124
EPS (BDT)     11.89       7.66     23.94       18.52
BVPS (BDT)   235.85   261.65   235.85     261.65
Growth YoY    
Gross profit-0.2%-24.8%2.6%-8.6%
Gross profit47.8%36.2%47.7%42.0%