1) VODAFONE IDEA LIMITED
- Losses narrowed down to Rs. 6,432 crores in Q1 25
- Vodafone Idea Ltd. reported loss of Rs. 6,432 crores this quarter, a 17.96% improvement if compared to Q1 24 levels. Revenue from operations declined marginally YoY by 1.38% to Rs. 10,508 cr. ARPU for the quarter stood at Rs. 146, same as the previous quarter, or 4.5% growth if compared YoY.
- Finance costs for the quarter stood at around Rs. 55.18 billion, declining from Rs. 62.8 billion in the previous quarter. It declined mainly due to the reversal effects following the Supreme Court’s order on Revenue Share License Fee (RSLF) and the reversal of accruals amounting to around Rs. 650 crores based on the agreement on the payment plan with some vendors on the due amounts.
- Higher churn rate and loss of customers remains an issue
- The subscriber base stood at 210.1 million, a quarterly decline of 2.5 million subscribers, or a decline of 11.3 millions subscribers, if compared YoY. The company has churn rate of 4%, highest in the industry. The management expects this rate to come down in the coming years with higher investment in the 4G field leading to better networks.
- Successfully raised Rs. 240 billion of equity this quarter
- Apart from the equity fundraising via FPO of Rs. 180 billion, which was subscribed almost 7 times, and preferential issue of Rs. 20.8 billion to ABG entity, the company raised Rs. 24.6 billion via preferential issue of equity share to Nokia and Ericsson. This transaction will further bolster the capex rollout of 4G and 5G networks. Post this transaction, the shareholding of Nokia and Ericsson is 1.5% and 0.9% respectively.
- The company plans capex of 500 to 550 billion over the next 3 years
- The fund raised will be utilized towards capex. This capex is needed for the expansion of 4G coverage and launch of 5G services. The company is also in discussions with lenders to raise fund-based facilities amounting to Rs. 250 billion and non-fund-based facilities of Rs. 100 billion.
- 4G coverage to be the focus area going ahead
- The company plans to increase 4G coverage from 1 billion to 1.2 billion in the next 12 months. The company currently has 168,000 sites which is expected to reach around 215,000.
- Acquired 50 megahertz of spectrum across various bands in 11 circles
- The company participated in spectrum auction in this quarter and acquired 50 MHz of spectrum. Out of this, 37.6 MHz was acquired in the sub-gigahertz 900 band. The total commitment for this spectrum is Rs. 35.1 billion.
- Vodafone Idea Ltd. holds highest 4G spectrum per million subs amongst the three private operators.
- ARPU to increase in the coming quarters led by tariff hikes by the company
- This quarter saw an increase in the tariffs by the three private operators. The price increase by Vodafone Idea Ltd. was around 17% on a blended average. The management expects a two-thirds to three-fourths flow through of this percentage to the revenue increase.
2) NATCO PHARMA LIMITED
- Natco Pharma Limited (NPL) has, over the years, developed a forte for manufacturing complex generic products with few competitors, especially for the US market. On a consolidated basis, the topline increased by 19.47% and the profit increased by 59.05% YoY driven by export formulation business as the domestic pharma business remains stable. Compared to the previous quarter, the revenue grew by 27.55% and the profit surged by an impressive 73.05%. The company also reported a decline in SG&A expenses by 0.35% QoQ, though these expenses saw a modest increase of 2.75% YoY. This efficient cost management contributed to the rise in profitability. Operating income also showed strong growth, increasing by 72.18% QoQ and 57.01% YoY. EPS for Q1 stood at ₹37.32, marking a 60.45% increase YoY.
- Guidance of annual growth rate of 20%
- Company is expected to grow at a rate of 20% annually over the previous year’s profit of around ₹1,400 crores. Company’s strategy revolves around niche, high-value products, particularly in the generic rare disease market rather than moving to more capital-intensive business.
- Aim to capture one-third of the market by Jan 2026
- Company strategy is to build a diverse pipeline across multiple geographies to reduce volatility and enhance growth prospects. There is also a possibility of acquiring businesses outside their current key markets i.e. Brazil, Canada, US and India. The focus is on expanding geographically to markets where the company currently has limited or no presence such as Europe, Africa, Southeast Asia and Australia.
- Company facing headwinds in the agro segment but expects to improve
- The ongoing weakness in the agro business is expected to take two or three years to built a stable long-term business with strong revenue.
- Exports lead to revenue boost while domestic remains stable
- Domestic market is stable growing around 8-10%. Export business in Canada is performing well as company has over 40 products there reducing the risk of revenue concentration.
- Initiated risk mitigation program
- New approvals for US supply has been halted as company in April received a warning letter from the USFDA for its Telangana-based manufacturing plant, however plant continues to supply previously approved orders. In response to this, company initiated a risk mitigation program which includes moving filings and production from Kothur, Telangana to other locations such as Vizag.
- Cash reserves to grow upto ₹3000-4000 crores by the end of this FY
- Company have approximately ₹2000 crores in cash on their books post-Q1 and expect this to grow to ₹3000-4000 crores by the end of the financial year. They outlined their long-term growth strategy which includes a focus on interesting and valuable filings that can sustain growth over the next 10 years. Key products in their pipeline include Semaglutide and Olaparib, among others.