Poly Medicure Ltd’s share price gained over 5% today after the medical devices maker reported strong Q2 results. The stock was trading 5.6% higher at Rs 1,516.10 per share on the BSE at 3:00 pm.
Key Takeaways from Poly Medicure’s Q2 Performance
- Consolidated net profit rose 26% year-on-year to Rs 62.19 crore in Q2FY23 compared to Rs 49.36 crore in Q2FY22.
- Revenue from operations jumped 22% to Rs 337.29 crore versus Rs 276.52 crore in the same quarter last year.
- EBITDA grew by 12% to Rs 83.23 crore in Q2FY23 from Rs 74.31 crore in Q2FY22. The EBITDA margin contracted to 24.7% from 26.9% last year.
- The company reported EPS of Rs 6.47 in Q2FY23 as against Rs 5.14 in Q2FY22.
Growth Drivers for Poly Medicure
Poly Medicure is engaged in manufacturing and marketing medical devices and disposables. The company has benefited from increased healthcare spending and greater demand for medical devices globally. Here are some key factors driving Poly Medicure’s growth:
- Increasing lifestyle diseases and ageing population leading to higher utilization of medical devices
- Growing preference for minimally invasive surgeries boosting demand for the company’s products
- Expanding healthcare infrastructure and insurance coverage widening the patient pool
- New product launches and entry into new geographies diversifying revenue streams
- Strategic acquisitions of companies and technologies to strengthen product portfolio
- Rising exports due to strong demand in the US, Europe, Latin America and Asia
Recent Developments
- In October 2023, Poly Medicure incorporated a wholly-owned subsidiary named PHL Finance Limited to carry out NBFC activities.
- In September 2023, the company commenced commercial production at its new manufacturing facility in Jaipur. This will raise capacity by over 30%.
- In Q2, Poly Medicure received US FDA approval for its greenfield IV cannula manufacturing facility in Jaipur.
- The company is planning a 120-bed super speciality hospital in Faridabad by 2024-25. Construction is expected to begin soon.
Growth Outlook
The company has guided for around 20% revenue growth in FY23, led by better capacity utilization, new product launches and geographical expansion.
Analysts expect Poly Medicure’s earnings to grow at a CAGR of 20% over FY22-24, driven by its strong brand, innovative R&D capabilities and wide product range.
The stock is trading at a P/E of 56.4x FY23 earnings, which is at a premium to the industry average of 30.6x. The premium valuation reflects the company’s higher growth potential.
Should You Invest?
Poly Medicure offers an attractive play on the fast-growing medical devices market in India. The company has consistently delivered over 20% revenue and profit growth annually.
Its strong financials, innovative products, increased capacity and healthy growth guidance make Poly Medicure a good long-term bet.
Investors with a high risk appetite can consider buying the stock on dips for gains over the next 2-3 years. However, valuation comfort is missing at current prices. Conservative investors may wait for a correction to build a position.
