Lincoln Pharmaceuticals revenue is likely to grow by 10% in FY21: Mahendra Patel, MD

Mahendra Patel, Managing Director, Lincoln Pharmaceuticals Ltd, talks about the Q3FY21 numbers, expected growth, international market performance, Vitamin C and M&A opportunities among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: You have posted good results in the third quarter but sequentially there is a drop in revenue and PAT. What was the reason? Also, provide your future outlook about the business?

A: Growth wise the company is doing well. Currently, we are in the last month of the last quarter. Looking at the total ER figures, this year, if we will look at the turnover - sales-wise - then there will be a 10% growth and sales will close around Rs 430 crore. Compared to the last year, it is a 10% growth and if looked the bottom line then there is a 20% growth. EPS stands around Rs 30-31 and if compared to the last year then there is a 20% growth in the profitability of the EPS. Recently, the company has also received improved ratings from ICRA and the rating is A+, which shows that the company is becoming financially strong. As far as growth is concerned, then we made an EU application and have received the EU registration due to which we have an order in our hands. We have got the first order from Canada, which means, we are starting the business in the developed countries. We have got approval for nearly 20-25 new products for the countries that we have. So, there will be a business addition to the same. Secondly, we are setting up a new plant of Cephalosporin at Chhatral, which is around 15-20 km away from the existing unit. The unit is likely to be started by the mid or the end of the next year. Therefore, its growth and turnover will have a contribution to it. Meanwhile, it seems that the company is moving well and is doing well. 

Q: You have decided to enter European markets. What kind of products will be launched in the European market and how much incremental revenue is expected from that market, immediately and over a period of time?

A: If we have a look at the revenue of the first year, then it will be around 10-15% only. But after completing the procedural process, we will be able to start the business. It will have more impact in the second year. Profitability wise there would be more than 20-30% than the existing profitability that we are getting at present. Area wise, we have selected includes two-three products of gastro and few products of WOG and we are entering there with these products. Products will be increased gradually. 

Q: During the last conversation you said you are looking forward to certain acquisitions particularly in the field of hormones. Please update us on it and what is the ticket size for the same?

A: Actually, parallel work is being done. On one hand, we are planning for a new plant for hormones in which we are thinking about going into it or making an acquisition. We are sitting with two options and our team is working on it. In the case of the hormones, we have taken a land parcel close to the existing unit, where we can also start a unit of hormones or optionally, talks are going on now, but it is not clear, and we can also acquire it. There will be clarity on it in the next one to one-and-a-half months because many points are covered in it. Then there will be a need to take approval from the country with which we are working. So, looking at that our technical team is working on that and maybe in the next interview, I will give you the right news and correct news. 

Q: Tell us about the way Vitamin C tablets performed in the last two quarters as we saw its consumption went up during the COVID period? Have the sales peaked out or is it still increasing?

A: Vitamin C has gradually turned into a necessary product in the lifestyle. By the way, it is also needed in the medicine as per the deficiency. But every family has a permanent requirement due to which there is no degrowth in its sales, in fact, it has been increasing by 2-7% every month. I can’t provide an exact figure to you as I don’t it in my hand or else I would have shared it with you. If seen on a majority basis the vitamin products are stable among the products that are medical products that were developed due to COVID.

Q: We have seen that you are increasing your stakes in the company from the open markets which stood at 33.4% as of December 2020. Have you bought any additional stakes and do you have plans to increase it further, if yes, what is its quantum?

A: Actually, we have increased the promoters’ stake by 4.8% this year from the market and as of today it stands at 37.20%, which was 32.40% earlier. So, we are increasing the promoters’ stakes gradually in the company by taking it from the market and the process will continue in the future as well.