Poly Medicure Limited (POLYMED) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Polymedicure Limited Q1 and FI27 earning conference call. As a reminder, all participant lines will be in the listen-only mood and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Today on this call, we have with us the Senior Management Team of the company, represented by Mr. Himanshu Bhatt, the Managing Director, Mr. Rahul Gautam, President, Strategy and Corporate Development. I now hand the conference over to Mr. Himanshu Bhatt. Thank you. I'm over to you, sir.

Good evening, everyone, and I welcome you to our quarter one FY27 earnings call. I sincerely thank all of you for being here today. Before I come to numbers, I want to give you a glimpse of our strategic vision 2030, and we are calling this as a PolyMate 3.0. As you all know, PolyMate initiated operations in 1997 with an IPO of 2.65 crores, which we set up our first plant. In the next 25 years, we remain bootstrapped and slowly build our leadership in our core infusion therapy business by painstakingly building global quality products. During this period, business grew from zero to almost INR $7 billion in revenue. In 2021, Polymed started 2.0 journey, which we call the infection point in our history of the company. We did our first institutional fundraise, which resulted in multifold expansion of capacity. We also entered into high technology segments like cardiology, critical care, orthopedics. During this period, we also started an inorganic growth journey with acquisitions of PendroCare and CDF. Revenue during this period almost went up by 2.75 times to INR 1875 and FY26. Starting FY27, we have initiated Qualiment 3.0, a fail we are calling ascent. During this period, we set a goal to double our revenue by FY30 by unlocking value via organic and organic expansion, leveraging technology to scale high-complexity verticals globally and deepening direct customer access, especially in international markets. I believe we are at a point of time in our journey where growth should happen exponentially led by high technology, high margin segment. Given the strength of our balance sheet where we continue to have strong liquidity, we believe this audacious goal is truly achievable. I am really excited about this phase which I believe will truly make Qualimed a global bedtech MNC out of India. Our leadership front has, on the leadership front, we have already initiated actions to achieve our Parliament 3.0 vision. We have appointed Indranin Mukherjee as a CEO for India and APAC. Renato Roca as CEO for Brazil. Indoreen has joined the company on 1st June 2026. Renato has joined the company on 1st August 2026. They also brought in Abhivani Huda as the head of renal business in India to argument sales and also build a strong capability in this segment. I believe our leadership reinforcement will help us to put a strong position to deliver on our aspirations. Moving on to the financial performance of the company and Q1 financial results. On the financial performance side, let me start with the standalone performance, as this remains cool for our group. Standalone revenue for Q1 was 431 crores, up 12.6% with domestic at 146 crores, giving a growth of 16.2%, and international at 281.8 crores, giving a growth of 10%. Gross profit for Q1 was 71.5%, showing significant improvement due to better product mix and impact of price ads implemented in Q1 and inventory. I expect that our gross margin should continue to reflect on a historic margin trend of 68% to 69% in the near term. We have guided a channel EBITDA margin of 25% to 27% for FY27, but we have delivered 28%, 100% higher than the guided range. Absolute operating EBITDA was 120.8 crores, up from 18.8% on year-on-year basis. This was despite employee costs rising almost by 29%, driven by 35%, increase in minimum wages in Haryana. With effect on 1st April 2026, increase in net cost that was impacting increments for FY27. Now, on the consolidated picture, consolidated revenue was 525 crores, up 30.3%. Of that, 72.3 crores came from acquisition. So on organic basis, revenue was 453.1 crores, up 12.4%. Within international, Europe grew 43.8% to 187.3 crores, and importantly, it grew 17.6% organically reflecting improvement in the performance in the region. As you know, last year, Europe was a laggard, and this year, as we have added some customers, onboarded new customers, we were able to come back to our original growth, our planned growth of 70-18% as we had forecasted in the beginning of the year. Rest of the world grew at 30.3% on reported basis, but only 4.0% organically. The reason for low growth was 32% regrowth in the Middle East due to ongoing West Asia crisis. Customer demand in the region is intact, but given the current logistic and infrastructure bottlenecks, we are unable to meet that demand. We are hopeful that once the situation improves in the region, we will return to normalcy. Our auto book is pretty strong for Middle East, but currently we are unable to ship the products. Consolidated gross profit was 385.6 crores at a margin of 73.4% margin, up 495 basis points. The better margin profile of the newly acquired business is helping improve group's gross margin. Consolidated operating EBITDA was 126.7 crores, up 70.7%, at a margin of 24.1%, with our guided range, within our guardian range, of 23 to 25% for a year. Inclusion therapy grew by 11.1% to 259.2 crores, led by strong domestic growth and back a rising share of higher value-added products and price increases. Internationally, we have started to witness a strong recovery in the business despite 32% rigor in the Middle Eastern markets. Orthopathy contributed 49.2 crores, which reflects the consolidation of CTF-E. Cardiology grew from 2.9 crores to 28.6 crores, led by pendocular acquisition together with genuine scale-up of domestic business. Others grew by 18.5% to 149 crores, constituting the balance. The one soft spot was renal, which grew by 3.8% to 43.2 crores. The regional business was impacted by continued pricing pressure from Chinese players in India, but we made a conscious choice to raise prices to push in the raw metal price increases rather than defend volume at any cost. Separately, there is an important development. Based on application filed by the company, the government has initiated an anti-dumping investigation into reports of dialysers from China and Malaysia, and we have claimed for an injury margin of 20%, and we hope that in the next few months, we will see some decision taken by the government to protect local industry. On the balance sheet front, the liquidity remains strong and with a cash of about 855 euros, which is the reserve we have set aside for strategic initiatives. Let me connect this to a forward-looking guidance for FY27. Before this, I would also like to point out that the company has been now pushing hard on developing new medical devices, and for that, we have also initiated a lot of clinical studies, and as a support, the Government of India has also granted an aid of around 3.3 crores for undertaking clinical studies of some new critical devices we have just recently developed. On the guidance front, on the consolidated basis, we are guiding for a revenue of $2,300 to $2,400 crores, including the full-year consolidation of Penderakian and GDF. We are maintaining this guidance. After quarter one, on standalone business, we maintain revenue guidance of 1,900 to 2,000 crores, with the domestic business expected to grow over 20% and international business growing by over 15%. Standard-owned EBITDA margin is expected to be between 25% to 27%, though currently in the first quarter we have been 28%, but still we think that, you know, maybe for the first quarter, the margin was slightly higher because of price increases we have taken and some inventory correction. But hopefully, we should be in the higher range of, you know, 25 to 27 percent. With consolidated EBITDA margin expected to be in the range between 23 and 25 percent. This quarter we run 24 percent, so we are pretty much in the range, and hopefully we can maintain this. We expect to spend between 200 to 225 crores in the TLPX to FI27. In summary, this is a quarter where the strategy started converting into numbers. The high technology, high complexity segment we invested in through Polymer 2.0 are now generating the value we anticipated. I remain confident in the direction of the business for the year FY27. Thank you very much for your trust and time. I will now hand over to operator and will be very happy to take your question.

Thanks again, everyone.

Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Before we take the questions, In order to ensure that the management will be able to address all the questions from the participant, we request you to kindly limit your question to two questions only per participant. If you have a follow-up question, please rejoin the queue.

Ladies and gentlemen, we'll wait for a moment while the question queue assemble.

First question comes from the line of Bhavliya Gandhi with Bajaj, Alternate Investment Managers Limited. Please go ahead.

Yeah, hi. Thanks for the opportunity. Hope I'm audited.

Yes, sir, you are.

Yes, sir. Yeah. Just wanted to understand on the standalone business, we are looking at an absolute revenue of closer to 350 to 400 crores. Whereas in Q1, we've grown closer to 12% on the standalone business. So if you can just help us tally the number in terms of absolute revenue, 350 to 400 crores, where exactly are we planning to get there? Yeah, that is question one.

So, you mean the incremental growth of $350,000 to $400,000? That's what you mean?

Yeah, yeah.

Yeah, so I think our quarter one tends to be the lowest if you look at the history of the business, and it tends to grow as we go into the financial year. This year, because we've also taken a price hike, right, at the beginning of the financial year to... Account for the increase in dormitory prices. The beginning of the year was slightly slow and we recovered some of the revenue in the later part of the quarter. As that momentum continues, we believe that we should be able to get to much better numbers in Q2 onwards and still achieve the guidance that we've given.

Got it. And the second question is regarding the inorganic acquisition. We have closer to 850 crores in terms of cash. If you can throw some light, what exactly are we looking out for? Are we going to utilize the entire amount of 850 odd crores or how is it? Yes, that is question too.

So, basically, we are looking at expansion, organic and inorganic, and as we have done a very small acquisition in Brazil recently, We are trying to put our presence there, and the board has also allocated some funds for the Brazilian market where we can expand with direct sales presence. And, of course, we are looking at technologies around three critical businesses in cardiology, oncology, and orthopedics, and we are looking at adjacent technologies, and wherever we find an opportunity, we will look at that. And some of the funds are also allocated for the CAPEX to be done at two plants which are under construction at this moment. And one is coming in Polverance in Faridabad and then one in Noida, basically, in the Medical Device Park.

Okay, got it. Would you like to share some asset turns for the KPEX that you are planning?

The asset turns for us, if you look at the cost, remains between 1.2 to 1.4, and we expect on a balance sheet a similar kind of asset turn to continue.

Okay, fair enough, sir. Thank you so much.

I'll get back in the case. Thank you.

Thank you. My next question comes from the line of Siddharth and Higanthi with CWC. Please, correct.

Hi, thank you for the opportunity. If I look at our India growth X of renal, and I'm assuming all of renal was India, then that is 27%. But overall, infusion growth was much lower, right? Around 11%. So what was the therapy that drove India growth, if you could give us some understanding? And on the disruption that you've seen in ROW exports, right, given that this is really at some level an essential product, have you seen the resumption of exports in Middle East, or are you still envisaging this to continue until the conflict settles? And the third one is, do we expect further RM cost impact in Q2 versus what we've seen in Q1, given your inventory levels? I know you've taken certain price increases, but how should one think of gross margins in Q2? These were my three questions.

Yeah, thank you for these questions. Let me take the first one, which is the segment which has driven the growth for us domestically, right? As you rightly said, our infusion therapy business has grown at about 11%, and this reflects the performance both domestically and internationally. On the domestic side, infusion business has actually grown 20% plus for us in this quarter. The other segment which have grown for us is obviously cardiology, critical care, two segments which we have recently initiated, and those are contributing to growth quite meaningfully in this quarter. Your second question came.

So on the second question, you know, the supply chain, you know, on the shipping, you know, still are disrupted right now. If you look at the skipping schedule, shipping schedule is still disrupted for Middle East, and it's still hard to find containers, you know, which can go to Middle East, you know, ports. So, still the disruption continues. Hopefully, in coming weeks, we may have something easing out. But on the demand side, we see, you know, still it's an entire demand. We have orders from customers. They are piling up at the ports, but unfortunately, as the ships are not calling, so they are stuck up at the ports. So, that's the issue. On the price side, I think... Currently, as crude stays where it is, I think we don't see a major impact on raw metal costs, you know, with minor few percent here and there, but more or less, I think probably we have, you know, almost seen that peak off.

Right. And just on the acquisitions, any update in terms of how the integration is going? You know, how are you thinking of any integration in terms of cross-sell or the movement of some of that production back to India? Just some updates on that.

Siddharth, I think we are quite happy with the way how the integration process is going on. For both the acquisition that we've done, we have clearly identified areas of benefit that both the companies see with each other. We have created a group which is continuously following up on all of these synergies. This includes across the cost items as well as on the R&D side plus the sales. The velocity that we are trying to increase. So, on an overall basis, we are very happy on the part of moving the manufacturing process to India. We are currently working with both PenderCare and GTF on that part. Given this is a regulated sector and any such process change needs a regulated approval, some of these processes currently are at the regulatory approval stage.

Got it, Rahul. So, have we already started seeing some cross-sales synergies, or is that going to be more later in the year?

I would expect some of this to start playing out from next financial year onwards, because, you know, all of these, you know, given medical devices in the regulated sector, any new market that you want to open up, like even for India, if you want to bring those products into India, we need to take the approval from the CTSO, and that process is on. So I would expect that to, you know, start revisible from next financial year onwards.

Got it.

Got it. Thanks. Thanks a lot.

Thank you. Reminder to all the participants, kindly limit your question to two questions only per participant. If you have a follow-up question, you can rejoin the queue. Our next question comes from the line of Raksha Sivastava from Normalia Financial Services.

Have my articles?

Can you be louder, please? We can't hear you.

Participant has left the queue. We can move forward to the next participant. A next question comes from the line of Bharat Sisha with BCA's Capital Ideas Private Limited. Please go ahead.

Yeah, hi, Mancho. Good to see the hunger for the growth is enunciated in Polymed 3.0. So, the first question is, we have said we want to double the turnover and margins to be the industry-leading margins, and the growth will come both organically as well as inorganically. So, when you say 2030, I presume it is March 2030, so four years, right? Okay, and that means doubling will mean about 18% compounded growth in the four-year journey. That's a good one. So, how much of that is counted as organic?

So, Bharatai, if you see, current avatar company does around 80% organic business and 20% inorganic business. And I think we'll probably continue at a similar run rate. Okay.

So, about 14-15% domestic, sorry, organic, and 3-4% would come from acquisition.

So, that's in a trajectory, basically.

Sure. And by industry-leading margin, I presume much better than what we have outlined for the current year, but what kind of margins should one assume on that?

This is Raul. If you look at the margin profile of Columet today, we are already the flag bearers in terms of profitability across the industry. I think we have the ability to improve our margins even now, but given we are focusing on growth in the near term, we want to keep the margins in the similar range. Currently, obviously, margins have been between 25% to 27% margin. We expect that we should close this year with upper end of that guidance range, and as the scale happens, we should be able to increase that margin as well, but, you know, given we'll be reinvesting back in the business, from a modeling perspective, assuming a similar kind of margin will be a reasonable assumption to take.

So, similar margins, but not lower, right?

Yes, that's correct.

Okay. And, Himanshu, I'm just trying to understand. When we look at somebody like Merrill, which is doing a lot of cardiology-related business, the scale-up is really the margin, sir, and the scale-up itself has happened at a pretty rapid pace. And the margins also are quite impressive. So, you know, I was just wondering what kind of opportunities we can hunt around because this kind of margins and the rapid scale-up in the business, what are your own thoughts and your observations?

So, Bharat, I may have started a career-based business around 15 years ago. So it's not something that they've started new. They had started this business almost 15 years ago, developing products, and polymorty was never in that space earlier. And of course, we still had, you know, great margin profile between 25 and 27 percent. And we have started cardiology only two years ago, and that's how we are building it up, taking, you know, developing products. As I just told you, you know, we have given a grant of 3.3 crores for clinical studies in India because these are import substitution devices. So that's been our focus. And as we move up, you know, again, regulatory pathway is very important because that needs time and it cannot be as tight as you build a product and you can start selling tomorrow. So it's all about regulatory pathway, clinical studies. So we're building this up, and I think in the next two, three years, you will see a lot of new products coming from our portfolio on cardiology side. And I think that's the journey we need to take. But let's not forget that we have our global excellence on infusion of hospital access, and we will continue to build that globally also. So we have a cash core, we have a product which works very well for us. So we'll continue to build there, but we'll also continue to invest in this new area of orthopedics. Cardiology and critical care that will help us to actually grow business in India and internationally in near future.

Okay. And just one last thing. Last year, in many ways, has been a bit of a tumultuous kind of a year where many imponderables kept coming in, many of them outside your control in the external environment. Today, as we stand, and with some of the acquisitions that we have done, with the plants and the capacities in place, and some of the new categories established, When you look at the 2030 reason that you have spelt out, what are some of the very positive points you carry in your mind and what are still some of the challenges that you visualize?

It's a wrong question, but I'll try to answer it in a short, limited time. So one is, I think, on the apportionist side, India happens to be the best apportionist in my view. Because now, Polymed brand is very well known. Today, we are present in almost every corporate hospital in the country or every important hospital. So most important thing will be to deepen that relationship with those hospitals and start working more aggressively and putting more products out there. So I think that is number one priority. Number two will be Europe, where we continue to expand our business and continue to go as a go-to-market direct strategy. We're currently present only in Italy, so we want to go maybe three or four geographies, we want to go direct. So that's a very important part of the strategy. And as we just hired a CEO in Brazil, so we'll also put a strategy there to go, you know, to directly with more new products, the newer range we have today. So currently, our distributors only sell our existing products. For new product ranges, we will want to go direct. And so that is on the product side, market side. And product side, anyway, we are going to launch 25, 30 products a year. So that's already in the pipeline. It's already happening. I think challenges is probably the geopolitical risk which I see. U.S. uncertain because of every day there is a new situation which is coming up. The Middle East, hopefully, the war kind of, you know, settles down so that the markets will resume and we are able to resume the flow. And also the logistic costs, which have actually gone up substantially, two, three times in the last six months, I think they will have to come down for India to remain competitive in exports. So these are some of the things which come to my mind. Barat Bhai.

Sure. Now, thank you, Himanshu, and all the very best.

Thank you, Barat Bhai.

Thank you.

Next question comes from the line of Teepak with Sundara Mutual Fund. Please go ahead.

Yeah, thank you for the opportunity. Am I audible?

Yeah, please. Please go ahead.

Yeah, yeah. Good afternoon, sir. So, congratulations on delivering a resilient set of numbers. I had a couple of questions. So, first on the acquisition, so would it be possible to call out, let's say, in Euro terms, what was the YY growth of Pendra Care and CTS and EBITDA margin for this quarter?

Deepa, I'll have to separately touch base with you on that. I don't recall that number immediately.

Okay. And the second, you know, if I look at our exports growth, you know, X of acquisition in Q1, roughly as per my calculation, we have done somewhere around 10 to 11 percent, which denotes that in nine months going into this year, we would have to clock more than 15 percent. So, just wanted to know your thoughts around, you know, what will drive this, you know, organic export growth in the next nine months, and what's the growth outlook for the arena segment since in the PPT you mentioned that we are facing some competition due to Chinese dumping.

See, on the export front, I think for us, Europe, you know, again, because we have done some new customer acquisition, so that seems to be the growth market for us this year. And Southeast Asia is also doing very well. So I think these are two markets I'll call out for the moment. U.S., yes, we are growing, but we don't know what's going to happen. If we have 100% tariffs tomorrow or today night, I don't know. So it's a pretty fluid situation regarding U.S. But these are the two important geographies that will continue to grow. And I think once the situation in Middle East improves, I think we will see probably maybe more than 20%, 25% growth from Middle East. So currently everything is stalled and all the orders are still lying at ports or in factories. So I think that is something we are looking at. And so export growth should happen. There is no reason it should not happen, and we are pretty confident. And we have almost 25 new products in pipeline for C-marking, which should come sometime between now and next few to four months. So that will also add to the bucket, basket for, you know, increasing the basket for exports.

And, uh, the second question was, uh, Sir, I asked on the renal segment growth outlook.

Pardon me for that. So on the renal side, I think we had a degree to around 3% in the first quarter, but I think, again, we have, as we have, maybe my earlier comments, you must have heard about government opening anti-dumping probe because we were pushing the government to look into the pricing which was dumped by Chinese, And most of the Chinese companies are importing into India Zero UD using the ASEAN FTA. So I think even day before yesterday, there was a minister's meeting, and we have also flagged that issue again to the minister, Mr. J.P. Nuttab. And with this anti-lumping proof getting, you know, evaluated right now, and with the engineering margin of 20%, we think that something will happen between now and end of the year. So that's number one on that front. But secondly, we have hired Abhinav Uhura, which you must have heard in my opening comments. He comes from a strong renal background, and probably that will also help us to turn around and, you know, work with distribution partners in the country and outside the country to grow that business. So hopefully this year end we should end with a growth of around 15-18% renal business, maybe close to 20% depending on how it goes, but we are pretty confident of this growth, in spite of all the challenges we face today.

Okay, so that's very heartening to hear. And lastly, if I look at our gross margin, you know, this quarter, we have reported multi-quarter high gross margin. I understand that you also mentioned that we have taken some price hike, which could have helped us to rake in this sort of gross margin. So, let's say on a steady state basis, at least in the near term, let's say the nine months of this fiscal year, how should we look at the gross margin? Should it normalize to that 68-69% or will it continue to clock above 70% rate?

See, basically, on standalone basis, we should see between 67% to 69%. This is what we have called out also earlier. And also, on the, let's say, console basis, we should see further, maybe 200-300% improvement because Pendrock and CDF operate on a higher gross margin. So, they probably, at the end, console numbers should look between 71% and 72%, whereas standalone should look between 68% and 69%.

Okay, sir. Very helpful and all the best.

Thank you.

Thank you. Next question comes from the line of Rashmi Shetty with Dalit Capital. Please go ahead.

Yeah, thanks for the opportunity. So again, on the margin front, on the console level, you know, overall gross margin, you said it is in the range of 71 to 72%. But on the console level, our other expenditure and personal cost for this quarter is pretty high. So on an annualized basis also, you know, it would be a similar run rate of around 24% of sales in the subsequent quarter.

Yeah, so, Rashmi, as you mentioned, our guidance for consolidated EBITDA is between 23% to 25%, and we are maintaining that guidance. As you rightly noticed, the feeble costs and expenses are higher in case of our acquisition. That's reflective of the nature of the business, plus the fact both the businesses are currently scaling up, and that's why our consolidated EBITDA margin guidance is, you know, lower than our standalone EBITDA margin.

Okay. And on sales front, you know, if you just compare organic and inorganic sales, for this quarter, inorganic is around 73 crores in the export business. So, what I understand that, you know, given whatever CY25 sales you have given for the acquired companies, and if you convert it into the, you know, Euro INR currency, then we have not seen, We are just integrating, right? We have not seen any major growth in the acquired companies, that is in the inorganic companies. We have not seen the pickup yet. Am I correct on this part?

So, basically, you have to break it down into two parts. PenraCare and CTF are two different entities, both having their own set of growth journey. For PenraCare, as we had highlighted in our last call as well, they had over-indexed exposure to Middle East of about 20-odd percent. So, that business is actually currently not growing. In fact, witnessed degrowth over last year as well. CTF is growing as per expectation in, you know, mid to high single digits, and, you know, as the synergies kick in, we should be able to increase that further.

Okay. So, in the coming years, what is the kind of growth we are, you know, assuming in case if middle list problems get resolved for FY28 from the acquired company?

Yeah, so I think on a long-term basis, as you called out earlier in our acquisition calls as well, these assets on the standalone basis have the ability to grow in high single-digit revenue growth. It's a synergy that we want to drive in through product development, cost reduction, as well as through sales channel expansion. We want this to go into the mid-teens as an aspiration basis, assuming, you know, the current geopolitical situation resolves itself over the course of next few quarters.

So, is it better to assume that, you know, from next year onwards when the sales pick up and when things get resolved, we will be able to see the overall EBITDA margin, you know, including this acquired company to expand at least 100 to 150 basis points?

We haven't given any guidance like this at the moment, so Rashvia won't be able to comment. But directionally, you know, as these businesses scale up and the synergy benefits kick in, we expect the margins of these entities to improve, which will reflect in the consolidated EBITDA margins as well.

Okay, and last question, you know, just on the gross debt figure, if you can give that figure and what are the kind of repayments you are expecting this year?

Yeah, I mean, Polymed standalone does not have any debt other than the working capital debt.

Yeah, working capital.

Yeah, so, you know, that amount is about 250 crores, which is a revolving credit. On our internet subsidiaries, you know, again, Penrackay does not have any long-term loan. For Chitlev, the total loan is about 9 million, of which about 1.5 to 2 million has to be repaid every year.

Sorry, how much?

But now, half to two minutes will be repaid every year.

Oh, okay. Thank you. That's it from my side.

Thank you.

Thank you. Next question comes from the line of Siddharth Nenganti from CWC. Please go ahead.

Hi, just a quick follow-up on what you mentioned to Bharat by regarding the overall growth aspiration. So if I have to look it up, 15% growth on the FY26. FI 26 figure, right, that gets me to 3,000 crores out of a total of what we may have, and the remaining will then come from QTF plus FenderCare, plus any new acquisitions that we make. Is that the right way of thinking about that?

So, Siddharth, you have to help me. Where are you doing the calculation? If you're looking at standalone numbers only, then you have to also add Plan 1 health into that.

So, what I'm looking at is $1,750 crores excluding Pentacare and CTF last year, right? Which at 15% for four years gets me to about $3,000. Right. The overall...

Sorry, I don't understand because we've guided for a 2x on overall basis.

I think overall, if I look at 2x on 1875, right, that leaves me with a gap of about 690 crores. So 690 crores is essentially vendor care plus ETF plus any new acquisition. Is that the broad framework that we should keep in mind?

You know, I think the Polymed standalone business will grow faster than the subsidiaries, you know, directionally because, you know, the European assets are growing at a certain pace. Polymed has been growing much higher pace. So I think even the same kind of growth may not be accurate. On a console basis, we are seeing obviously 2x, but Polymed standalone will grow faster than, you know, the underlying subsidiaries.

Okay, got it, got it. And just a clarification on the RM cost. So this quarter, the reason we have the kind of gross margins we do is more due to the inventory that we were carrying plus the price hikes we took. And therefore, should one expect some impact in Q2 or that's not really the case?

I think it is a mix of multiple things. It includes price tags, product mix, and the inventory sort of gains. And as Imanchu mentioned earlier in the call, we are guiding for more like a 68% to 69% gross margin based on a standalone basis. So, obviously, that would mean that there could be some correction to what we have reported in Q1 as gross margin.

Clear. Thank you. But overall EBITDA may remain the same depending because of the higher revenue that you projected for coming quarters.

Very clear, Manchu. Very clear.

Thank you.

Thank you.

Our next question comes from the line of Bhavna with NEG and Elastic. Please go ahead.

I want you to know what is the tariff impact from the U.S. you're estimating for financial year 27.

See, U.S. tariff in FY27?

Yes.

So currently the duty is only 10%. So if it remains where it is today, then I think we still have a good pathway, but if any changes happen, then it may impact the business. Our U.S. exposure is not very big. This year also, you know, our exports will be close to between 3.5 to 4 million. So, it should not be a big issue today, you know, if anything happens in the U.S.

All right. Thank you.

Thank you.

Next question comes from the line of Bhavya Gandhi with Bajaj Alternate Investment Management Limited. Please go ahead.

Hi, thanks for the follow-up. Sir, if we were to break up the overall employee expenses and other expenses, how much portion of that would be fixed and how much would be variable as a percentage of sales? We have around 24% as a percentage of sales coming from employee expenses and other expenses also closer to 24%. So, if you can just help us.

We don't break up, so unfortunately, we won't go to give you an answer right now on this.

Okay, just I wanted to understand how much is the operating leverage which can still play out on a longer term basis, not just one, two quarter or one or two years. Just wanted to understand on a very long term basis, on a three to four year basis, how much could be the operating leverage that can play out?

Yeah, I mean, as you understand, there are manufacturing companies, so we have a lot of blue collar workers who are involved in production. And that's also a very, very reasonable part of our total employee cost, which you see on a consolidated basis. That piece remains as variable. The rest all is fixed, obviously subject to productivity gain. But, you know, within the staff also, there is a fixed portion plus a variable portion subject to performance. So, you know, it's a mix of things. So it's tough to give a very ballpark number right now on the call.

Okay, sure, sure. We'll take it offline. Thank you.

Thank you, our next question comes from the line of Grishan with KJMC Capital. Please go ahead.

Yeah, hi. I'm out of here. Yes, please go ahead. Thank you for giving me the opportunity. Mantuji, you, in the beginning, you outlined strategy 3.0 vision 2030. That was very helpful. And as you mentioned, we are planning to double the revenue by 2030 by both organic as well as inorganic means. And given the fact that we are now... We have already transitioned from being product focused to make therapy focused, if my understanding is correct. Are we looking to enter any new therapies or do we want to expand within the given therapies which we are already operating in?

So, Guruji, I'll answer it straight away. See, currently, we have just started these therapies, you know. It was just started, maybe someone started last year or some year before that. So, these are very, very new. If you remember, historically, our infusion business, 30-year-old business. So, it takes time to mature any therapy, and there are a lot of regulatory roadblocks, you know, which prohibit you from even moving out of the country, you know, because these are mostly critical devices, class-free devices. It takes much, much longer to register most of these products. Sometimes it takes around 2-3 years to register the product and do clinical trials. So, I think we have enough on our plate right now with our existing businesses, and I don't think we will be ready to launch anything new substantially in the next few years.

And given the existing therapies which we are present, would it be safe to assume that we cover almost 60-65% of the consumables used in the hospital?

I don't think the market is very huge today. If you look at consumable market, you know, there are many other therapies like peripheral vascular, neurology, you know, urology. You know, there are so many other therapies which, you know, let's say endosurgery. There are many, many therapies which we don't cover, you know, gastroenterology. So, there are many deep therapies we are not covering today. So, a lot of potential across different verticals, but again, it will take time to build a portfolio product, but as we move along, I think next few years, definitely, there is some work happening in the pie, but I cannot disclose what we are going to do in next two, three years on this call, you see. It's impossible.

Right.

And I think you mentioned sometimes that you're seeing some bounce back in the order business, probably because of the Indian pre-normalization. Could you comment on that and also give some idea of the working capital cycle? Have we seen any improvement in that?

So, on the Europe side, we have already seen a growth of around 17% in quarter one compared to the previous year. So, I think the demand has come back. Also, we have added some new customers. There are some customer acquisitions. Also, I think Europe seems to be in a pretty safe and good place. So we are back with the growth in European market. But on the working capital cycle, I think the cash conversion is still in the same level. In March, it was 140 days. Currently, it's also a similar range of 140 days.

Okay, and do we expect that to improve pre-power? Sorry, can you repeat that again, please? Do we expect that to improve pre-power the cash conversion cycle?

I think it depends, but I would

suggest that currently we should read it like this, but hopefully maybe as time progresses and global situation normalizes, I think we may see some improvements because of high oil prices also, you know, most of the export markets are a little choppy because of, you know, hard currency are not available in time in many markets, you know, where we operate. But now, as probably prices stabilize, oil prices stabilize, things will change and improve. So hopefully, you know, the cycle should improve. But I don't have any definitive answer today, but hopefully it will improve.

And Girish, if I could just add to what Manchu said, you know, given the current... The geopolitical situation and the war going on, the time for getting the products to the customers also increased. It does tend to put pressure on, you know, recovery cycles because, you know, you can start getting your cash flow only once the product reaches, right? So, given that situation, it's tough to give a forward-looking guidance on this at this point of time.

Thank you, Analdar Desh. Thank you. Thank you, Aradgarit.

Thank you. Next question comes from the line of promote an individual investor. Please go ahead.

Yeah, thanks for the opportunity. I just have one question. From the portfolio, I see that most of the products are the existing products with some other medtech companies. Like, we don't produce something new. Do we have anything in plan that, you know, we are making something entirely new which is not correctly existing with other medtech providers?

See, basically, if you see Polymed has 399 patents, and I think we have also disclosed that in the presentation we put out. So, Polymed has a lot of products which have breakthrough technology. I don't know who we are comparing with. A lot of companies do copy our products. Polymed is a market leader in infusion therapy and a lot of other therapies we operate on, and there's a reason we are able to make that kind of margin which other companies don't make. So, this industry basically works on two different parameters. One is... A product performance where we have a global leadership there and then where products are going to 125 countries because this is based on performance, nothing works on price. And second is ability to add innovation, innovative ideas on the existing product. The product may look similar when you look from a catalog perspective, but when you use them or when a user sees basically which is a clinician or a doctor, they will see the differentiation in the product.

Okay, thank you. So, those patents are worldwide patents, right?

Sorry, sir, can you repeat again, sir?

Means the coverage of those patents is not some reason basis, right? It is a global patent.

So, the patents are patents.

The patents are global patents.

Okay. Thank you.

Thank you, sir.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and 1. Our next question comes from the line of Girish Jain with KJMC Capital. Please go ahead.

Yeah, thank you. I just wanted to add one question. Manchiji, you mentioned about the new facilities we are in operation. I think one you mentioned was in Noida. Any timeline?

I'm not able to hear very clearly. Can you please repeat the question? Maybe you're on a speakerphone. I'm not able to understand very clearly.

Okay, can you hear me now? Yeah, much better, sir. Yeah, I was mentioning that during the call, you mentioned about two new facilities coming online in the future. One is at NOIDA and the other one at another place. Could you give us some timelines? When are they expected to become operationalized and which particular therapy, if we have decided which therapy they will be focusing on?

Basically, the one coming up in Fayadabad, the Palwal area, would be basically focusing on orthopedics and transfusion business, which we are expanding right now. And then some part of extra capacity expansion of infusion will also go there. And talking about Noida, we are already planning to expand our cardio business, basically, out of the Noida facility.

And will they come online in this financial world?

The Pfizer-Balber facility should come online by March 27th, most probably. That's the timeline we are looking at, so first quarter of next year. And the Noida facility will come live in quarter, maybe commercially quarter one of FY28.

Okay. Thank you. All the best.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you. And what do you think?

I think thank you, everyone, and thank you for all your questions, and I think hope we are able to answer them, and let me assure you again to all the investors that the company is on a growth path. We have made, you know, systemic changes in the portfolio. Our over-dependence, which was there in the rest of the segment now, is now only 50%, so there's a lot of diversification that has happened, and we have, you know, moved more from low-medium technology to high-technology business, And I think that is where we are shaping up. Also, we are adding more, you know, electronics in the business where our dialysis machine, our IVL therapy is run on machines. So, I think we are, you know, diversifying into higher category of business where there are more platforms and products itself. So, that's the change we are bringing in the portfolio. And that's why we see a growth. And most of the newer products we are developing today are import substitution products. And definitely that will help us to take more market share as insurance penetrates deeper into the hospital sector. Aishwam Bharat penetrates deeper into the hospital sector in India. I think that will change the landscape where hospitals will look at more, you know, quality-oriented, cost-effective devices versus imported devices which we are using today because they are more expensive. So these are the changes we see in the industry, and thankfully this industry continues to grow at a good pace in India, the healthcare industry, and I think as that industry grows, medical devices industry, medical technology industry, as one of the partners of the industry, will grow in the same pace or even higher. Thank you again for your time, and I look forward to talk to you soon.

Thank you so much, sir. Ladies and gentlemen, on behalf of Polymedicure Limited, that concludes today's conference. Thank you for joining us, and you may now disconnect your line.