Indoco Remedies Ltd.’s Q2 FY23 revenue was below our estimates on account of a weak performance (2% decline YoY) in the domestic formulation front. However, net earnings were in line led by a 200 basis points QoQ improvement in gross margins.
Company guidance on export formulations remains upbeat as they expect strong revenue growth and margin expansion in the segment. Certain limited competition launches should help export formulation performance.
They continue to build a pipeline around suspensions (injectable and ophthalmic) and extended release oral solids.
Indoco’s India business was impacted by lower anti-infective and respiratory sales due to a high base in Q2 FY22 (Covid sales). New product launches contributed 2.5% of domestic branded formulation sales during the quarter.
Over the full year FY23, they still expect to grow mid to high single digit in their domestic formulation business over FY22, which in our view is challenging.
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