Prevest Denpro Limited (PREVEST.BO) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Prevest Denpro Limited H1 FY '26 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Ms. Bhumika Maheshwari from Hem Securities. Thank you, and over to you, ma'am.

Thank you, Rutuja. A very good afternoon, ladies and gentlemen. Thank you for joining Prevest Denpro Limited H1 FY 2026 Earnings Call. Joining us on the call today from the management team are Mr. Atul Modi, Chairman and Managing Director; Mrs. Namrata Modi, Whole-Time Director and CFO; Dr. Sai Kalyan, Director of Research and Academics; Mr. Vaibhav Munjal, Chief Marketing Officer; and Mr. Vinay Jamwal, Financial Adviser. We will commence the call with opening thoughts from the management, post which we will open the forum for Q&A, where management will be glad to respond to any queries that you all may have. Before we go on to the main call, I would like to read the standard disclaimer. There will be forward-looking statements about the company which are based on the beliefs, opinion and expectations of the company's management as on the date of this call. The company does not assume any obligation to update their forward-looking statements if those beliefs, opinions, expectations or circumstances should change. These statements are not guarantees of future performance and involve risks and uncertainties and are difficult to predict. Consequently, listeners should not place any undue reliance on forward-looking statements. I would like to hand over the call to Mr. Atul Modi to come in and share his thoughts on the performance and strategic progress made by the company. Thank you, and over to you, sir.

Thank you, Bhumika. Good afternoon, esteemed investors and stakeholders. I am pleased to share the performance update for the H1 FY '26. The first 6 months have been encouraging for us, both financially and operationally. And they reflect the steady progress we are making across all key business verticals. For H1 '26, our revenue growth has been supported by strong performance in both domestic and export markets. While the domestic business has maintained a stable and healthy run rate, I'm pleased to highlight that our export revenue have grown by 24% year-on-year. This is a significant improvement considering the challenges many of these markets faced last year due to currency volatility and regional uncertainties. Several key countries are now showing clearer signs of stabilization which has directly contributed to this positive export momentum. A major driver for confidence this year is the continued progress in digital dentistry. Building on our successful 3D printing portfolio, we are moving deeper into advanced digital solutions with the development of 3D printers and scanners. These efforts combine our internal R&D strength with collaboration with leading global technology partners. The early market feedback has been very encouraging, and we expect this vertical to become one of the important pillars of our business in the medium term. Our U.S. subsidiary, Axiodent, has also begun contributing meaningfully. We have secured initial orders and entered into private label arrangements that are opening up promising long-term opportunities. Despite the tariff-related cost pressures in the U.S. market, we have managed to maintain steady growth through disciplined pricing, efficient sourcing and a focused product mix strategy. The U.S. remains the world's largest dental market, and we are positioning ourselves carefully to build a sustained presence over the next few years. The Oradox oral care range continues to perform well as we scale our presence in the consumer dental segment. Insights received from the channel partners and early consumers have been helpful in fine-tuning our go-to-market approach. With consistent brand building and improved distribution, we see this category gradually evolving into a strong recurring revenue stream. An important milestone for us this year is the commercialization of our disinfectant business. This marks the beginning of a new vertical that aligns well with the rising demand for hygiene-driven products in the dental and medical setting. We see meaningful potential here, both domestically and in selected export markets, and this business will be scaled thoughtfully over the coming quarters. From an operational standpoint, our focus on improving internal efficiencies, streamlining presence processes and maintaining tight cost control has allowed us to navigate inflationary pressures while protecting margins. Capacity utilization across key product lines has improved. And with the ongoing optimization of our manufacturing processes, we expect further productivity gains in the second half. Looking ahead to the rest of the financial year '26, we remain cautiously optimistic. The stabilization of the international market, the momentum in digital dentistry, the strengthening footprint in the U.S. through Axiodent and the launch of the disinfectant vertical provides us with multiple growth levers. We are also actively engaging with distributors in new geographies and several of these discussions are at advanced stage. Our priorities for the next phase of growth are centered around deepening our digital dentistry capabilities, further expanding our U.S. presence through Axiodent, scaling the [ order ] product consumer range, building the disinfectant segment into a meaningful vertical, strengthening our R&D pipeline for the next-generation dental materials and digital solutions and our continuing to enhance operational efficiencies and margin discipline to support sustained, stable and value creation. We remain committed to delivering high-quality, innovative dental solutions while building a stronger and more diversified business. With this, I would now like to invite Mrs. Namrata Modi, our Whole-Time Director and CFO, to present the detailed financial performance for the first half of 2025, '26. Over to Mrs. Modi.

Thank you, Mr. Modi. Good afternoon, everyone, and thank you for joining us. I would like to take this opportunity to provide an overview of our performance for the H1 financial year 2025-'26. It has been a steady period for us and the result reflects the consistent efforts made across our operational, financial and commercial functions. For the first half, revenue from operations stood at INR 34.41 crores, reflecting a 16.14% year-on-year increase. Total income rose to INR 36.77 crores, up 16.61%. We have maintained a disciplined focus on cost management, product mix optimization and operational efficiency initiatives that continue to support our margin profile. EBITDA for the period was INR 14.35 crores marking 17.36% growth with an EBITDA margin of 39.04%, a level we have consciously aim to sustain. Profit before tax stood at INR 13.36 crores 18.43%. While profit after tax came in at INR 9.95 crores, up 17.20%, reflecting a PAT margin of 27.06%. Turning to quarterly performance, quarter 2 recorded INR 18.64 crores in revenue, an 18.24% increase over quarter 1 with total income at INR 19.83 crores, up 17.14%. Profitability strengthened further during the quarter. EBITDA increased 21.51% to INR 7.87. And PBT and PAT grew 23.11% and 25.82%, respectively. On a year-on-year basis, quarter 2 also remained robust with revenue rising 14.57%, EBITDA 14.94% and PAT 15.11%. As we enter financial year 2025-'26 amid several external challenges, we remain grounded in strong financial discipline. We have a prudent policy as regard to working capital management, managing input cost efficiently and ensure consistent execution across key functions. These efforts helped us sustain profitability margins while maintaining a healthy balance sheet. Our collections have been steady. well and our cash positions continue to be robust through the period. We continue to maintain a healthy balance sheet, reinforced by healthy cash flows. This solid financial foundation enable us to act decisively on strategic and make counter investment opportunities as they appear. Beyond preserving liquidity, we are proactively positioning the company to take advantage of future market opening. Overall, the first half has shaped up well for us. Demand remains steady. The cost environment is manageable, and we entered the second half with strong visibility. With the initiatives already underway, we are confident about sustaining this momentum in the coming quarters. Thank you for joining us today and for your trust in Prevest Denpro. With that, I would now like to hand over the session to Mr. Vaibhav Munjal, who will take you through the next part of the discussion. Over to you, Mr. Vaibhav.

Thank you, ma'am. Good afternoon, everyone, and thank you for joining us today. For the second half of financial year '25-'26, our overall sales grew by 16%. It reflects consistent demand and a stable market base that continues to support our broader strategic direction. The first half of the year tested the domestic market in many ways. Local disruptions from the near war-like situations in Jammu to unusually heavy rains and river flooding created operational hurdles. The GST revisions also led to temporary realignment with our distributor network. Even with all these challenges, our domestic operations remained steady through disciplined cost control, tighter working capital management and focused execution, we were able to maintain business continuity and sustain our margins and growth without compromising on growth priorities. We posted a robust 12.88% growth in Q2 compared to the same quarter last year, along with an impressive 18.97% quarter-on-quarter growth. These results demonstrate our resilience, the strength of our sales and distribution efforts and the solid equity of our brand in the market. Our export business has also held up well and continues to contribute meaningfully to the overall numbers, while India remains our core focus, maintaining the international presence ensures balance and keeps us aligned with the global trends. One of the highlights this period has been Rotoflex, our newest launch of endodontic files, which continues to show strong acceptance among dental practitioners. The repeat demand reassures us that the product is hitting the right clinical requirements. We have also made progress on the engagement side. This year, we launched a structured educational program for dental clinics and institutions, both in our clinical range and the digital dentistry space. It covers product knowledge, correct usage and clinical benefits. The response has been encouraging, and we see this as an effective way to build long-term relationships with the dental community. Alongside this, we are strengthening our networking team across regions. The aim is to increase field presence, improve customer connect and ensure better support for clinics. It's still a work in progress, but the early signs are positive. I'm also glad to share Oradox is beginning to show encouraging traction. The brand is slowly gaining visibility and customer acceptance has improved over the last few months. We have also initiated more hiring of people, both at senior and frontline in Oradox to drive sales. While it will take time to scale meaningfully, the direction is positive, and our team continues to refine the strategy based on ground feedback. We also leveraged and broadened our association with the Indian Dental Association through the second edition of Charaka Awards this year to extend our reach with the dental community. Participating inside and platforms helps strengthen brand credibility and visibility, and we plan to continue exploring similar avenues. Our broader vision remains consistent to build Prevest into a comprehensive one-stop partner for dental and oral care solutions, whether through product expansion, clinical education, training or service support, all our initiatives are aligned in this direction. Before closing, I want to express my sincere appreciation to all our stakeholders. Thank you for your continued trust and support. It motivates us to keep improving and delivering more. Thank you.

[Operator Instructions] The first question is from the line of [ Yash Nayar ] from [ Karmakar Wealth Management ].

I just wanted to understand regarding our new digital and 3D printing solution, especially the 3D printed implant. So what kind of on-ground traction are you seeing in terms of installed base and [indiscernible]?

Can you please repeat your question a bit loud?

Am I audible?

Yes, I can hear you now.

Yes. So for the newer digital and 3D printing solution, so what kind of on-ground traction are you seeing in terms of installed base and [indiscernible]?

We have already launched the 3D resin. And recently, we have started in-house assembly of the 3D printers, primarily for the dental applications. And we are focusing on the digital printing -- providing digital printing solutions to the dentist so that they can do the chairside printing in their clinic for immediate printing and immediate treatment of the patient. So we are focusing, and we have been very successful in our efforts in this direction.

Okay. And sir, what is our current capacity utilization?

See, we have a large capacity. This is a new product line. We have set up 1 year last year only. We have built the capacity for producing 3,000 kilograms of the resins every month, but it is just the beginning. So we are not even utilizing 5% of our capacity. But we have enough capacity to cater to the domestic market as well as the international market. We are talking to many international companies for private labeling, but as a supplier of the 3D resins and our -- so far, our feedback from the international customers is very positive, and we have enough capacity for the next 5 years.

And sir, regarding the channel and distribution, so could you help us understand the revenues split between the domestic dealer and export distributor agent or direct online channel?

Yes, we are going with our dealers through -- selling the products to the dealers as well as online via e-commerce platform. We sell our products on e-commerce platform. And also, we attend many conferences where we showcase our products and we come in contact with the dentists during the conferences. And we book the orders directly. So we have partnered with IDA, Indian Dental Association for all their digital dentistry programs throughout the country. And whenever there is a conference, we get very good response from the dentist, and we do the online booking on-spot booking and direct delivery from the factory to the dentist.

So mainly our revenue comes from distributor, right? Is it safe to assume?

For the 3D resin?

Yes. As for 3D resin and in -- for overall [ revenue ]?

See, overall, we are supplying our resins to the dealers as well as direct supply to the dentist because these are expensive materials, and we have bundled our printers with the resins. So we give them an offer that with the printer, we give them resins so that both printer and resins are compatible. So dentists prefer to buy directly from the company. So we are using all channels. We are selling through the dealers, resins. We are selling printers to the dealers. We are selling resins to the dealers. We are also selling resins through our e-commerce platform and also direct supply to the dentist who wants to buy the printer. So we are using all channels.

Okay. And sir, last question is where do you see the growth coming in next 2 to 3 years? So is it mainly from the digital solution of the dentistry or any other thing that you need to highlight or you want to highlight?

We expect that the major growth will come from the digital dentistry portfolio, while we are trying to maintain our growth in the existing product line. We expect a good growth from the new product line, which has been recently launched, our disinfectant range, which has been very well accepted in the market. So we expect that our new product lines like the oral care products, 3D resin, 3D printers and our disinfectant will contribute significantly in our growth. And we have also launched rotary endodontic files, which has significantly given revenue in this half year. We expect that this product line will also give us a very good revenue in the next 1 or 2 years. So we are building the brand. These are all new product lines. We are gradually building the brand. And the results are very encouraging. We expect high growth from these new product lines.

Okay. And sir, last, regarding -- so is it safe to assume we can be able to maintain this current margin or we can see some expansion over there?

At present, we don't need any expansion. We are focusing on our existing product line and already recently introduced products. This is enough for the company at the moment because it covers most of the dental requirement. Over and above this, our R&D is actively engaged in the development of the new products. When the products are developed and then we will start the commercialization process. But at this time, new product line under development is still under development. So we cannot exactly tell about the launch or the introduction of these products. But we are very actively working on the new product development, some new innovative products we have already taken up for development. And as -- and when the products are ready for commercialization, we will introduce the products in the market.

No sir, I'm asking regarding the margin. So currently, we are at around 30%...

Margin, yes. We are very careful, conscious about the margin. We are maintaining our profit and the profit margins are good. And we don't want to do anything where the margins are low. So we produce products which are only value-added products where the margins are good. So we are able to sustain and maintain our margins.

And can we see any expansion, as you mentioned that we are doing some operational efficiencies?

Operational efficiencies because we haven't seen any substantial increase in our operational expenses. We are maintaining our operational expenses in spite of the addition of the new product line, the expenses have not grown substantially. So these are all manageable expenses. The increase is manageable and because the margins are good, so we are able to maintain profitability.

[Operator Instructions] The next question is from the line of Dhaval Pandya from 47 Alpha Capital.

Congratulations on the good set of numbers. I have a few questions that I'll ask. So as we know that you highlighted some of the new biomaterials that will be introduced in the Q1. So can you tell me which of these materials completed the clinical evaluations? And what are the earliest quarter we can see the contributions in the revenue?