Q1 2027 IPCA Laboratories Ltd Earnings Call

August 14, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the IPCA Laboratories Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator: Ladies and gentlemen, good day and welcome to the Ipca Laboratories Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen only mode 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital. Thank you. Over to you, sir.

Operator: Ladies and gentlemen, good day and welcome to the Ipca Laboratories Q1 FY 2027 Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital. Thank you. Over to you, sir.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded.

Speaker #1: Aina, hand the conference over to Mr. Nitin Agarwal from DAM Capital. Thank you, and over to you, sir.

Speaker #2: Hi, thank you. Hi, good afternoon, everyone, and a very warm welcome to IPCA Labs Q1 FY27 earnings call. Hosted by DAM Capital Advisors Limited. On the call today, we have, representing IPCA Labs management, Mr. A.K. Jain, Managing Director, and Mr. Harish Kamat, Corporate Counsel and Company Secretary.

Nitin Agarwal: Hi. Thank you. Hi. Good afternoon, everyone, and a very warm welcome to Ipca Labs Q1 FY27 earnings call hosted by DAM Capital Advisors Limited. On the call today we have representing Ipca Labs management, Mr. Ajit Jain, Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I will hand over the call to Mr. Jain to make opening comments, and then we will open the floor for questions. Please go ahead, sir.

Nitin Agarwal: Hi. Thank you. Hi. Good afternoon, everyone, and a very warm welcome to Ipca Labs Q1 FY 2027 earnings call hosted by DAM Capital Advisors Limited. On the call today we have representing Ipca Labs management, Mr. Ajit Jain, Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I will hand over the call to Mr. Jain to make opening comments, and then we will open the floor for questions. Please go ahead, sir.

Speaker #2: I will hand over the call to Mr. Jain to make opening comments, and then we'll open the floor for questions. Please go ahead, sir.

Speaker #3: Thank you, Nitin, and DAM Capital, for organizing this call. Today's hearing, call, and discussion, and the answers given, may include some forward-looking statements based on our current business expectations.

Ajit Kumar Jain: Thank you, Nitin, and DAM Capital for organizing this call. Today's hearing call and discussion and answer given may include some forward-looking statement based on our current business expectation. This must be viewed in conjunction with risks that pharmaceutical business faces. Our actual future financial performance may differ from what is projected and perceived. You may use your own judgment on information given during the call. Our domestic formulation business for Q1 FY27 has delivered growth of 13% to around INR 1,082 crores, as against INR 961 crore in Q1 FY26. Mid-June 2026, Ipca's rank remained continuously around 16 as per IQVIA. Market share has marginally improved to around 2.08%, as against 2.07% in mid-March 2026. Top six brands of Ipca continue to feature in the top 300 brands of the country. In both on chronic and acute segments, Ipca has outperformed the IPM.

Ajit Kumar Jain: Thank you, Nitin, and DAM Capital for organizing this call. Today's hearing call and discussion and answer given may include some forward-looking statement based on our current business expectation. This must be viewed in conjunction with risks that pharmaceutical business faces. Our actual future financial performance may differ from what is projected and perceived. You may use your own judgment on information given during the call. Our domestic formulation business for Q1 FY 2027 has delivered growth of 13% to around INR 1,082 crores, as against INR 961 crore in Q1 FY 2026. Mid-June 2026, Ipca's rank remained continuously around 16 as per IQVIA. Market share has marginally improved to around 2.08%, as against 2.07% in mid-March 2026. Top six brands of Ipca continue to feature in the top 300 brands of the country. In both on chronic and acute segments, Ipca has outperformed the IPM.

Speaker #3: This must be viewed in conjunction with the risks that the pharmaceutical business faces. Our actual future financial performance may differ from what is projected and perceived.

Speaker #3: You may use your own judgment on information given during the call. Our domestic formulation business for Q1 FY27 has delivered growth of 13%, to around ₹1,082 crore as against ₹961 crore in Q1 FY26.

Speaker #3: Met June 26, IPCA's rank remains continuously around 16 as per IQVIA. Market share has mildly improved, to around 2.08%, as against 2.07% in March 2026.

Speaker #3: The top six brands of IPCA continue to feature in the top 300 brands of the country. In both the chronic and acute segments, IPCA has outperformed the IPM. Our chronic segment growth is around 17.2%, and acute growth is around 8.9%.

Ajit Kumar Jain: Our chronic segment growth is around 17.2% and acute growth is around 8.9%, and overall, IQVIA has tracked our growth at around 11.7%. Overall export business has delivered growth of around 34% for Q1 FY27 to around INR 603 crores from INR 450 crore in Q1 FY26. Promotional branded markets of ROW markets has delivered growth of around 16% to INR 143 crore from INR 124 crore in first quarter last financial year. Generic business, excluding tender business, has delivered growth of around 27% for Q1 FY27 to around INR 340 crores as against INR 268 crore in Q1 FY26. Institutional generic businesses delivered growth of around 107% to around INR 111.75 crore from INR 58 crore in Q1 FY26. Approximately INR 40 crore worth of shipment, which was to go in March, was shipped in April, and therefore institutional business has shown exceptional growth in this particular quarter.

Ajit Kumar Jain: Our chronic segment growth is around 17.2% and acute growth is around 8.9%, and overall, IQVIA has tracked our growth at around 11.7%. Overall export business has delivered growth of around 34% for Q1 FY 2027 to around INR 603 crores from INR 450 crore in Q1 FY 2026. Promotional branded markets of ROW markets has delivered growth of around 16% to INR 143 crore from INR 124 crore in first quarter last financial year. Generic business, excluding tender business, has delivered growth of around 27% for Q1 FY 2027 to around INR 340 crores as against INR 268 crore in Q1 FY 2026. Institutional generic businesses delivered growth of around 107% to around INR 111.75 crore from INR 58 crore in Q1 FY 2026.

Speaker #3: Overall, IQVIA has tracked our growth at around 11.7%. Our export business has delivered growth of around 34% for Q1 FY27, to approximately ₹603 crore from ₹450 crore in Q1 FY26.

Speaker #3: Promotional branded markets of ROW markets have delivered growth of around 16%, to ₹143 crores from ₹124 crores in the first quarter of last financial year. The generic business, excluding tender business, has delivered growth of around 27% for Q1 FY27, to around ₹340 crores as against ₹268 crores in Q1 FY26.

Speaker #3: Institutional generic business has delivered growth of around 107%, to around ₹111.75 crore from ₹58 crore in Q1, FY26. Approximately ₹40 crore worth of shipments, which were to go in March, were shipped in April, and therefore the institutional business has shown exceptional growth in this particular quarter.

Ajit Kumar Jain: Approximately INR 40 crore worth of shipment, which was to go in March, was shipped in April, and therefore institutional business has shown exceptional growth in this particular quarter.

Speaker #3: The API business in Q1 FY26 has delivered growth of almost 30%, to around ₹424 crore, as against ₹362 crore in FY25. So, almost all businesses have delivered good growth for the company in the first quarter of the current financial year.

Ajit Kumar Jain: API business of Q1 FY26 has delivered growth of almost around 30% to around INR 424 crores as against INR 362 crore in FY26. Almost all businesses have delivered good growth for the company for the first quarter of the current financial year. On consolidation basis, if we see, overall business has grown to around 21% to INR 2,788 crore from INR 2,309 crore in FY26. For Q1 FY27, we have seen a lot of uncertainties, significant fluctuations in material prices, shipment delays, non-availability of containers and significant increase in logistic cost. Which is further going up in the month of from July to August, and some of the destination sites like South America, and all, very difficult to get the containers and ship. Overall, despite all these factors, we could deliver the better profitability. Overall consolidated EBITDA margins has improved to 22.88% for Q1 FY27, from 18.39% for Q1 FY26.

Ajit Kumar Jain: API business of Q1 FY 2026 has delivered growth of almost around 30% to around INR 424 crores as against INR 362 crore in FY 2026. Almost all businesses have delivered good growth for the company for the first quarter of the current financial year. On consolidation basis, if we see, overall business has grown to around 21% to INR 2,788 crore from INR 2,309 crore in FY 2026. For Q1 FY 2027, we have seen a lot of uncertainties, significant fluctuations in material prices, shipment delays, non-availability of containers and significant increase in logistic cost. Which is further going up in the month of from July to August, and some of the destination sites like South America, and all, very difficult to get the containers and ship. Overall, despite all these factors, we could deliver the better profitability.

Speaker #3: On a consolidated basis, if we see, the overall business has grown by around 21% to ₹2,788 crores from ₹2,309 crores in FY26. For Q1 FY27, we have seen a lot of uncertainties—significant fluctuations in material prices, shipment delays, non-availability of containers, and a significant increase in logistic costs, which is further going up in the month of June through July and August. For some of the destination sites, like South America and all, it is very difficult to get containers and ship.

Speaker #3: Overall, despite all these factors, we could deliver better profitability. Overall consolidated EBITDA margins have improved to 22.88% for Q1 FY27 from 18.39% for Q1 FY26. That's an improvement of almost around 4.49%, and in absolute amount, it is around ₹638 crores as against ₹425 crores in the last financial year—an increase of almost around 50%.

Ajit Kumar Jain: Overall consolidated EBITDA margins has improved to 22.88% for Q1 FY 2027, from 18.39% for Q1 FY 2026.

Ajit Kumar Jain: That's an improvement of almost around 4.49%. From absolute amount, it is around INR 638 crore as against INR 425 crore in last financial year, an increase of almost around 50%. Standalone EBITDA margins for Ipca Labs has improved to 26% in Q1 FY27 to around 23.82% from INR 557 crore from INR 416 crore in last financial year, an improvement of almost around 34%. Having given the broad numbers, I'll request participants to ask questions.

Ajit Kumar Jain: That's an improvement of almost around 4.49%. From absolute amount, it is around INR 638 crore as against INR 425 crore in last financial year, an increase of almost around 50%. Standalone EBITDA margins for Ipca Labs has improved to 26% in Q1 FY 2027 to around 23.82% from INR 557 crore from INR 416 crore in last financial year, an improvement of almost around 34%. Having given the broad numbers, I'll request participants to ask questions.

Speaker #3: And standalone EBITDA margins for IPCA have improved to 26% in Q1 FY27, up from around 23.82%. EBITDA grew to approximately ₹557 crores from ₹416 crores in the last financial year, an improvement of almost 34%.

Speaker #3: Having given the broad numbers, I will now request participants to ask questions.

Speaker #1: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answers while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wishes to ask a question may press star and one now. Participants who wish to ask a question may press star and one on their touchtone telephone. The first question is from the line of Rashmi Shetty from Dolat Capital. Please proceed.

Speaker #1: 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.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question may press star and one now.

Speaker #1: Participants who wish to ask a question may press star and one on their touch-tone telephone. The first question is from the line of Rashmi Shetty, from Dollett Capital.

Speaker #1: Please proceed.

Speaker #2: Yeah, thanks for the opportunity. Just on the India part—in the acute segment, we have underperformed the market. So, what are the reasons for this?

Rashmi Sancheti Shetty [Director of Research: Yeah, thanks for the opportunity. Just on the India part, in the acute segment, we have underperformed the market. What are the reasons for it? How are we doing overall, in the India business, both in the chronic as well as in the acute segment? What is the outlook for India business for FY27?

Speaker #2: And can you tell us how we are doing overall in the India business, both in the chronic as well as the acute segment? Also, what is the outlook for the India business for FY27?

Speaker #3: Both on chronic and acute, we have outperformed the market. It's not that we have underperformed on acute. The market IPM growth was around 2.5%, and IQVIA has tracked our growth at 8.9%.

Ajit Kumar Jain: Both on chronic and acute, we have outperformed the market. It's not that we have underperformed on acute. The market IPM growth was around 0.5%, and IQVIA said our growth was at 8.9%. By and large, in this market, I think our antimalarial segment has declined by almost around 24% this quarter. That's one of the reason that our performance is not that great compared to the overall scene because of malaria in this particular period. Where chronic is concerned, our track by IQVIA was around 17.2%, and chronic growth was almost around 50. The market growth was around 15.2%. As far as the overall business growths are concerned, let's say our internal growth, our pain management business, which includes rheumatoid arthritis and osteoarthritis, both put together, has grown by around 13% for the quarter. Cardiovascular and antidiabetic segment has grown by around 17%.

Speaker #3: But by and large, in this market, I think our anti-malarial segment has declined by almost around 24% this quarter, and that's one of the reasons that outperformance is not that great compared to the overall, because of the malaria in this particular period.

Speaker #3: As far as chronic is concerned, as tracked by IQVIA, it is around 17.2%, and chronic growth was almost around the market growth, which was around 15.2%. As far as the overall business growth is concerned—let's say our internal growth—our pain management business, which includes rheumatoid arthritis and osteoarthritis, both put together, has grown by around 13% for the quarter.

Speaker #3: The cardiovascular and anti-diabetic segment has grown by around 17%. As I mentioned earlier, malaria has declined by almost 24% in this quarter, and now the malaria business is becoming almost insignificant.

Ajit Kumar Jain: As I talked earlier, malaria has declined by almost 24% in this quarter. Now malaria business is becoming almost insignificant. It is just hardly 1% of our overall business. Antibacterials has delivered growth of 1%. CNS delivered a growth of almost 19%. Our cough and cold segment has delivered growth of around 9%. Dermatology has delivered growth of Derma business has delivered growth of almost 17%. Urology business has delivered growth of almost 25%, ophthalmology around 17%, and overall growth of business is almost 13% overall. Yeah. Overall outlook is also looking better because the market growth itself has started moving up, and what we are seeing the trend that the chronic business growth in the market is very good, and we are also delivering growth in line with markets now.

Speaker #3: It is just hardly 1% of our overall business. Anti-bacterials have delivered growth of 1%. CNS delivered a growth of almost around 19%. Our cough and cold segment has delivered growth of around 9%.

Speaker #3: The dermatology business has delivered growth of almost around 17%. The urology business has delivered growth of almost around 25%. Ophthalmology is around 17%.

Speaker #3: And overall growth of the business is almost around 13% overall. Yeah. And the overall outlook is also looking better because the market growth itself has started moving up, and what we are seeing is that the trend in the chronic business growth in the market is very good.

Speaker #3: And we are also delivering line growth in terms, in line with markets now.

Speaker #2: So, the guidance which you have given earlier of 12% to 13% will remain for this year, right?

Rashmi Sancheti Shetty [Director of Research: The guidance which you have given earlier of 12% to 13% will remain for this year, right?

Speaker #3: Yeah. Yeah.

Ajit Kumar Jain: Yeah.

Speaker #2: Okay. And third, in terms of institutional business, what kind of normalized growth should we see in the subsequent quarters, or is it best if you can give for the entire year only? And where is the pickup happening, basically?

Rashmi Sancheti Shetty [Director of Research: Okay. And sir, in terms of institutional business, what kind of normalized growth should we see in the subsequent quarters? Or it is best if you can give for the entire year only and where the pickup is happening, basically.

Speaker #3: Let's say, as I said, in this quarter the growth has been significant mainly because of Rs. 40 crore worth of shipment, which was to go in March.

Ajit Kumar Jain: Let's say, as I said, in this quarter, the growth has been significant is only because of INR 40 crore worth of shipment, which was to go in March. They were shipped in April because of shipping delays and all those. They are all nominated shipments, and it is not in our hand to We just deliver the goods to the notify that goods are available to the nominee of the buyer, and they pick up the goods depending on the availability of shipment. What happens sometime is by the time they book the ship and they take the permission to ship, the freight rate and all that, the ship has gone or the rate has gone up. So again, he has to do a chart and then delivery become later. So because of that reason, the shipments were delayed and therefore there is exceptional growth.

Speaker #3: They were shipped in April because of shipping delays and all those. These are all nominated shipments, and it is not in our hands—we just deliver the goods to notify that goods are available to the nominee of the buyer, and they pick up the goods depending on the availability of shipment.

Speaker #3: And what happens sometimes is, by the time they book the ship and take the permission to ship, the freight rate and all that, the ship has gone or the rate has gone up.

Speaker #3: So again, he has to do a chart and then delivery becomes later. So because of that reason, the shipments were delayed and therefore there is exceptional growth.

Speaker #3: In the institutional business, we don't look for very high growth. It will remain in the single-digit kind of growth. The overall business may be around ₹260 to ₹300 crore.

Ajit Kumar Jain: Institutional business, we don't look for a very high growth. It will remain in single digit kind of growth. Overall business may be around INR 260 to INR 300 crore. That's the range it will be. We are not looking for a very high growth from institutions in Tantoco.

Speaker #3: That's the range it will be. We are not looking for very high growth from institutions in the time to come.

Operator: Rashmi Ma'am, you can continue with your question.

Operator: Rashmi Ma 'am, you can continue with your question.

Speaker #1: Rashmi Ma'am, you can continue with your question.

Speaker #2: Yeah, just one last question, if I may. On the generic segment, we have seen pretty good growth. Earlier, we were facing some supply issues in the UK business.

Rashmi Sancheti Shetty [Director of Research: Yeah. Just one last question, if I may. On the generic segment, we have seen a pretty good growth. Earlier, we were facing some supply issues in the UK business. Whether all those things have been resolved now, and therefore we are seeing a good growth pickup. Are we seeing any traction in other geographies? If you can elaborate on that. What will be the outlook for the whole year for this piece as well as for the branded generic business?

Speaker #2: Whether all those things have been resolved now, and therefore we are seeing a good growth pickup. Are we seeing any traction in other geographies?

Speaker #2: If you can elaborate on that, what will be the outlook for the whole year for this piece, as well as for the branded generic business?

Speaker #3: Let's say, overall, if you look at the generic business, on a broad base, the market has given good growth. Let's say, if you look at the UK and European business overall, that has delivered almost around 70%. The EU is the main growth driver—almost. The business has gone from ₹83 crore to ₹137 crore.

Ajit Kumar Jain: Let's say overall, if you look at generic business, broad-based, all the market has given good growth. If you look at European business overall, that has delivered almost around 70%, which EU is the main growth driver. Almost business has become from INR 53 crore to INR 137 crore. So that's a significant growth that has come from EU. Our shipment to US is around 8% up. Canada, there is some minor decline is there. Overall, let's say the generic business is almost around, excluding institutions, is around INR 268 crore. So it became around INR 370 crore for Ipca as a whole. Overall growth because of institutions and other European high growth in Europe, overall business growth was very high. Yeah.

Ajit Kumar Jain: Let's say overall, if you look at generic business, broad-based, all the market has given good growth. If you look at European business overall, that has delivered almost around 70%, which EU is the main growth driver. Almost business has become from INR 53 to 137 crore. So that's a significant growth that has come from EU. Our shipment to US is around 8% up. Canada, there is some minor decline is there. Overall, let's say the generic business is almost around, excluding institutions, is around INR 268 crore. So it became around INR 370 crore for Ipca as a whole. Overall growth because of institutions and other European high growth in Europe, overall business growth was very high. Yeah.

Speaker #3: So that's a significant growth that has come from the EU. Our shipment to the US is around 8% up. In Canada, there is some minor decline.

Speaker #3: And overall, let's say the generic business is almost around 200 crore. Excluding institutions, it is around 268 crore. So it became around 370 crore for IPCA as a whole.

Speaker #3: And overall growth because of institutions and other European high growth in Europe, overall business growth was very high. Yeah.

Speaker #2: So, are we going to upgrade our guidance for generic business for FY27?

Rashmi Sancheti Shetty [Director of Research: So are we going to upgrade our guidance for the generic business for FY27?

Rashmi Sancheti Shetty [Director of Research: So are we going to upgrade our guidance for the generic business for FY 2027?

Speaker #3: Overall, let's say at the beginning of the year, we have given the business growth guidelines that overall the business will grow around 12 to 13%.

Ajit Kumar Jain: Overall, let's say in the beginning of the year, we had given the business growth guidelines that overall business will grow around 12% to 13%. Now looking at the upside, what we are getting from the overall generic business, India business performing very well. Even the API business has given good growth. So overall growth percentage from 12% to 13% may become almost around 14% to 16% overall for the whole of the current financial year.

Speaker #3: But now looking at the upside, what we are getting from the overall generic business, the India business is performing very well. Even the API business has given good growth.

Speaker #3: So, overall growth percentage from FY12 to FY13 may become almost around 14 to 16% overall for the whole of the current financial year. Yeah.

Speaker #2: Okay. And this 14–16% will be mainly driven by your upgrading in some parts of the guidance in the branded market and generic market. Any update on your Unichem, which is also performing very well in terms of margin, and also in terms of strong growth on the revenue front?

Rashmi Sancheti Shetty [Director of Research: Okay. This 14% to 16% will be mainly driven from your upgrading in some part of the guidance in branded market, generic market. Any update on your Unichem that is also performing very well in terms of the margin also and in terms of a strong growth on revenue front? Where do we stand there, and what kind of growth and margin guidance do we give now?

Speaker #2: Do you know where we stand there, and what kind of growth and margin guidance do we give now?

Speaker #3: Let's say overall for Unichem, I think if you look at it, for the first quarter, US business has given growth of almost around 27%. That is largely, I think, Unichem portfolio per se has grown by around 9%.

Ajit Kumar Jain: Overall for Unichem, I think if you look at for Q1, US business has given growth of almost around 27%. That is largely, I think Unichem portfolio per se has grown by around 9%. It is Ipca portfolio which they are selling for us in US. That portfolio has grown very well and that's the reason it delivered almost around 27%. Per se, their Unichem's own portfolio has delivered a growth of almost around 9%.

Speaker #3: It is IFCA portfolio, which they are selling for us in the US. That portfolio has grown very well, and that's the reason it delivered almost around 27%.

Speaker #3: Per se, their UniChem’s own portfolio has delivered a growth of almost around 9%.

Speaker #2: Okay.

Rashmi Sancheti Shetty [Director of Research: Okay.

Speaker #3: Their Europe portfolio has delivered growth of almost around 3%. Brazil has given good growth, and Brazil taxation is also improving. So, they have grown by almost around 52% in this quarter, and they will continue to do well in Brazil.

Ajit Kumar Jain: Their Europe portfolio has delivered growth of almost 3%. Brazil has given good growth, and Brazil traction is also improving. They have grown by almost 52% in this quarter, and they will continue to do well in Brazil. Acacia business, which is their ROW market business, has also become almost double in the quarter from INR 8 crore to INR 17 crore. API business of Unichem has also started now moving up from INR 33, 34 crore to almost INR 58 crore. It is almost 73% kind of overall improvement in that business. Overall, Unichem has also done well in terms of overall growth.

Ajit Kumar Jain: Their Europe portfolio has delivered growth of almost 3%. Brazil has given good growth, and Brazil traction is also improving. They have grown by almost 52% in this quarter, and they will continue to do well in Brazil. Acacia business, which is their ROW market business, has also become almost double in the quarter from INR 8 to 17 crore. API business of Unichem has also started now moving up from INR 33, 34 crore to almost INR 58 crore. It is almost 73% kind of overall improvement in that business. Overall, Unichem has also done well in terms of overall growth.

Speaker #3: Acacia business, which is their ROW market business, has also become almost around double in the quarter, from ₹8 crore to ₹17 crore.

Speaker #3: So, overall, the API business of UniChem has also started now moving up, from ₹33–34 crore to almost around ₹58 crore. So, it's almost around 73% kind of overall improvement in that business.

Speaker #3: So overall, UniChem has also done well in terms of overall growth. Yeah.

Speaker #2: And the guidance of 10% growth in the UniChem portfolio and 13% EBITDA margin, which you had given last quarter, that remains intact, right?

Rashmi Sancheti Shetty [Director of Research: The guidance of 10% growth in the Unichem portfolio and 13% EBITDA margin, which you had given last quarter, that remain intact, right?

Speaker #3: Yeah. UniChem guidelines I'm not revising right now. Let's see for some more quarters how it performs, and we are working hard to deliver more growth, but let us see on the ground, and thereafter we'll revise the guidelines.

Ajit Kumar Jain: Unichem guidelines, I am not revising right now. Let us see for some more quarter how it performs, and we are working hard to deliver more growth, but let us see on ground and thereafter we will revise the guidelines.

Speaker #2: Okay, okay. Thank you so much, sir. From my side, that's it.

Rashmi Sancheti Shetty [Director of Research: Okay. Thank you so much, sir, from my side. That is it.

Speaker #1: Thank you. The next question is from the line of Kunal from Axis Capital. Please proceed.

Operator: Thank you. The next question is from the line of Kunal from Axis Capital. Please proceed.

Speaker #4: Hi. Good afternoon. Thanks for the opportunity. Sir, firstly on the US business, if you don't mind giving us some color on what we can expect for the next one to two years, maybe some sense of the number of launches, both from the IPCA stable as well as from Unichem. And also, you had talked in the past that, you know, for some of Unichem's products you're going to change the API source to IPCA. So, some more color on the US business would be very helpful, sir.

[Analyst] (Axis Capital): Hi, good afternoon. Thanks for the opportunity. Sir, firstly, on the US business, if you mind giving us some color on what we can expect for the next 1 to 2 years. Maybe some sense of the number of launches, both from Ipca's stable as well as from Unichem. You had talked of in the past that some of Unichem's products, you are going to change the API source to Ipca. So some more color on the US business would be very helpful, sir.

Kunal Randeria: Hi, good afternoon. Thanks for the opportunity. Sir, firstly, on the US business, if you mind giving us some color on what we can expect for the next one to two years. Maybe some sense of the number of launches, both from Ipca's stable as well as from Unichem. You had talked of in the past that some of Unichem's products, you are going to change the API source to Ipca. So some more color on the US business would be very helpful, sir.

Speaker #3: I'd say normal IFCA launches will be almost around 3 to 4 product and uniChem will also launch similar kind of products. So almost in a year there I think there will be around 7 7 to 8 kind of launches both IFCA and uniChem put together will be there.

Ajit Kumar Jain: I say normal Ipca launches will be almost around 3 to 4 products, and Unichem will also launch similar kind of products. So almost in a year, I think there will be around 7 to 8 kind of launches, both Ipca and Unichem put together will be there. Some of the product approvals are already received for source changes. Some products are still in pipeline. So that journey is going on. They are also working very hard on, let us say, cost reductions on API, and those are also filed with FDA, and somewhere it is on CBE-30 and somewhere it is on the fast basis, so it may take some more time to get those kind of approvals. But that journey is going on, yeah.

Ajit Kumar Jain: I say normal Ipca launches will be almost around three to four products, and Unichem will also launch similar kind of products. So almost in a year, I think there will be around seven to eight kind of launches, both Ipca and Unichem put together will be there. Some of the product approvals are already received for source changes. Some products are still in pipeline. So that journey is going on. They are also working very hard on, let us say, cost reductions on API, and those are also filed with FDA, and somewhere it is on CBE-30 and somewhere it is on the fast basis, so it may take some more time to get those kind of approvals. But that journey is going on, yeah.

Speaker #3: And some of the product approvals are already received for source changes. Some products are still in the pipeline, so that journey is going on. They are also working very hard on, let's say, cost reductions on API, and those are also filed with FDA. Somewhere it's on CB30, and somewhere it's on the past basis.

Speaker #3: So, it may take some more time to get those kinds of approvals, but that journey is going on. Yeah.

Speaker #4: But sir, on your base, then would it be kind of—can you expect a 20–30% kind of a consistent growth for the next few years?

[Analyst] (Axis Capital): But, sir, on your base then, can we expect a 20% to 30% kind of a consistent growth for the next few years?

Kunal Randeria: But, sir, on your base then, can we expect a 20% to 30% kind of a consistent growth for the next few years?

Ajit Kumar Jain: Maybe around 15%, 16%, 17% kind of growth is possible, but currently looking at portfolio and other things.

Speaker #3: It's maybe around 15, 16, 17% kind of growth is possible, but currently, looking at the portfolio and other things.

Speaker #4: Sure, sir. Sure. Sir, one more question, sir. You mentioned about material cost going up significantly. So, maybe if you can just quantify a bit on the kind of gross margin impact that one can expect in the coming quarters.

[Analyst] (Axis Capital): Sure, sir. One more question, sir. You mentioned about material costs going up significantly. Maybe if you can just quantify a bit on the kind of gross margin impact that one can expect in the coming quarters. Is this fluctuating or is it going up unidirectionally? Some more color, sir, would be helpful.

Kunal Randeria: Sure, sir. One more question, sir. You mentioned about material costs going up significantly. Maybe if you can just quantify a bit on the kind of gross margin impact that one can expect in the coming quarters. Is this fluctuating or is it going up unidirectionally? Some more color, sir, would be helpful.

Speaker #4: And is this, I mean, fluctuating, or is it going up unidirectionally? Some more color, sir, would be helpful.

Speaker #3: Going up then came little down then again little because petroleum price is going up. Somewhere supply chain disturbances some product going down somewhere going up.

Ajit Kumar Jain: Gone up, then came little down, then again little because petroleum prices going up, somewhere supply chain disturbances, some product going down, somewhere going up. Overall, if you look at last financial year, let's say we have grown in terms of turnover, but Ipca's overall, let's say, material cost to sales was down by around 2%. This quarter, when you look at, we have grown by around 21%, and my material cost has also moved up by 21%. Overall, let's say we have improved the EBITDA margin by almost around 2.4%, but largely it has not come from overall, let's say, savings on material cost. It is just savings on material cost is just 0.14%.

Speaker #3: Overall, if you look at last financial year, let's say we have grown in terms of turnover. But IPCA's overall, let's say, material cost to sales was down by around 2%.

Speaker #3: This quarter, even if you look at it, we have grown by around 21%, and my material cost has also moved up by 21%. So, overall, let's say we have improved the EBITDA margin by almost around 2.4%, but largely, it has not come from overall, let's say, savings on material cost.

Speaker #3: The savings on material cost is just 0.14%. Largely, the EBITDA improvement has come because turnover has moved up, so personnel cost to sales has gone down by almost around 1.41%, and overall manufacturing cost to sales, overall to the revenue, has gone down by almost around 0.91%.

Ajit Kumar Jain: Largely, the EBITDA improvement has come because turnover has moved up, so personal cost to sales has gone down by almost around 1.41%, and overall manufacturing cost to sales overall to the revenue has gone down by almost around 0.91%. On consolidation basis, if you look at material cost is down by almost around 1.35%, personal cost is down by almost around 1.95%, and manufacturing and other cost is down by around 1.19%. Overall, let's say EBITDA has improved on consolidation basis almost around 4.49% for the quarter.

Speaker #3: And on a consolidated basis, if you look at it, material cost is down by almost around 1.35%. Personnel cost is down by almost around 1.95%. And manufacturing and other costs are down by around 1.19%.

Speaker #3: So overall, let's say EBITDA has improved on a consolidated basis by almost around 4.49% for the quarter.

Speaker #4: But sir, my question is more looking ahead, because you mentioned that in July and August, prices are going up again. So, do you foresee some margin pressures in the remaining quarters?

[Analyst] (Axis Capital): But sir, my question is more like going forward, because you said in July, August, prices are going up again. Do you foresee some margin pressures in the rest of the quarters?

Kunal Randeria: But sir, my question is more like going forward, because you said in July, August, prices are going up again. Do you foresee some margin pressures in the rest of the quarters?

Speaker #3: No, no, no margin pressure. You will see that as your sales grow, compared to sales growth, material cost will come down a little.

Ajit Kumar Jain: No margin pressure. I would see that compared to sales growth, material cost will little come down.

Speaker #4: Okay, that is good to know. And sir, are there any other costs? You also mentioned shipping, container, and logistics costs. So all that is baked in your guidance, sir, right?

[Analyst] (Axis Capital): Okay. That is good to know. And sir, any other cost? You also mentioned shipping and container and logistics cost. All that is baked in your guidance, sir, right?

Kunal Randeria: Okay. That is good to know. And sir, any other cost? You also mentioned shipping and container and logistics cost. All that is baked in your guidance, sir, right?

Speaker #3: Yeah, we had taken that into account. But you say freight rates somewhere have gone up by three times. Like, say, South American markets—from, I think, your containers—the freight was almost around $3,000.

Ajit Kumar Jain: Yeah, we have taken that into account, but you see freight rate somewhere has gone up by 3 times. Like, say, South American markets from, I think the containers, the freight was almost around 3,000, it is almost around 9,000 to 10,000. And that too, availability is difficult. As far as US reefer containers were available at around 7,000 to 7,500. Now it is almost 12,500 to 13,000. Even European containers, which were 3,000, now it is almost around 5,500. So everywhere, rates are moving up.

Ajit Kumar Jain: Yeah, we have taken that into account, but you see freight rate somewhere has gone up by three times. Like, say, South American markets from, I think the containers, the freight was almost around 3,000, it is almost around 9,000 to 10,000. And that too, availability is difficult. As far as US reefer containers were available at around 7,000 to 7,500. Now it is almost 12,500 to 13,000. Even European containers, which were 3,000, now it is almost around 5,500. So everywhere, rates are moving up.

Speaker #3: It is almost around 9,000 to 10,000, and even then availability is difficult. As far as US shipper containers, they are available at around 7,000 to 7,500.

Speaker #3: Now it is almost 12,500 to 13,000. Even European containers, which were 3,000, now are almost around 5,500. So everywhere, rates are moving up on shipments, and we have taken that into account.

[Analyst] (Axis Capital): Got it.

Kunal Randeria: Got it.

Ajit Kumar Jain: We have taken that into account, yeah.

Speaker #3: Yeah.

Speaker #4: Got it, sir. And just one more question, if I can. On the India business, can you share a Salesforce trend and what are the expansion plans?

[Analyst] (Axis Capital): Got it, sir. Just one more question, if I can. Sir, on the India business, can you share a sales force strength and what are the expansion plans?

Kunal Randeria: Got it, sir. Just one more question, if I can. Sir, on the India business, can you share a sales force strength and what are the expansion plans?

Speaker #3: We are almost around 7,000 people—medical reps—around, and the expansion plan is already completed. So, that 7,000 includes that. I think in the middle of the year, we may include another almost around 200 people more.

Ajit Kumar Jain: We are almost around 7,000 people, medical reps around, and expansion plan is already completed, so that 7,000 includes that. I think in the mid of the year, we may include another almost around 200 people more on some of the new divisions which we will be launching in the current year. That will not increase significantly the number, just by around 200.

Speaker #3: On some of the new divisions which will be launching in the current year, but that will not increase significantly the number—just like around 200.

Speaker #4: Got it, sir. Got it. Very helpful, sir. Thank you, and all the best.

[Analyst] (Axis Capital): Got it, sir. Very helpful, sir. Thank you and all the best.

Kunal Randeria: Got it, sir. Very helpful, sir. Thank you and all the best.

Speaker #2: Thank you. The next question is from Mohit of Oculus Capital. Please proceed, Mr. Mohit. Yes, sir.

Operator: Thank you. The next question is on the line of Mohit from Oculus Capital. Please proceed. Mr. Mohit?

[Analyst] (Oculus Capital): Hello.

Mohit Vijay: Hello.

Operator: Yes, sir.

Speaker #4: Yeah. Sir, my question is regarding your associate company, Leica Labs. We invested in this company in FY22 and then invested further through the primary route also till FY25.

[Analyst] (Oculus Capital): Yeah. Sir, my question is regarding your associate company, Lyka Labs. We invested in this company in FY 2022, and then invested through primary route also till FY 2025. Now, this company's revenue has not grown, and even the EBITDA has become negative. So any plans to revive this company? What is happening there in the lipolyzed injection? What are we doing there?

Mohit Vijay: Yeah. Sir, my question is regarding your associate company, Lyka Labs. We invested in this company in FY 2022, and then invested through primary route also till FY 2025. Now, this company's revenue has not grown, and even the EBITDA has become negative. So any plans to revive this company? What is happening there in the lipolyzed injection? What are we doing there?

Speaker #4: Now, this company's revenue has not grown and even the EBITDA has become negative. So, any plans to revive this company? What is happening there in the lyophilized injection? What are we doing there?

Speaker #3: Let's say they are building up three different kinds of businesses. One is for the animal health business. They have a lot of injectables which go into animal health.

Ajit Kumar Jain: Let's say they are building up three different kind of businesses. One is for animal health business. They have lot of injectables which goes in animal health. They have done good work in terms of building that business. Second, they have started the critical care business in terms of directly selling to the hospitals. Earlier their most of the business was coming from B2B supplies to the other pharma company. That business is coming down and their own promoted business is now moving up. That is the second business. Third, they have lot of products relating to IVF. That part has also started doing well. They have added almost a significant number of field force in last two years, and that is they are incurring the cost. Some of these are around breakeven, and some of these divisions is still under below breakeven.

Speaker #3: They have done good work in terms of building that business. Second, they have started the critical care business in terms of directly selling to the hospitals and all.

Speaker #3: Earlier, most of their business was coming from P2P supplies to other pharma companies. That business is coming down, and their own promoted business is now moving up.

Speaker #3: So that is the second business. And third, they have a lot of products relating to IVF. So that part has also started doing well, and they have added almost a significant number of field force in the last two years.

Speaker #3: And that is they are incurring the cost. Some of these are around break even and some of these divisions is still in under below break break even.

Speaker #3: And therefore, that cost is also a part of their overall. So overall, I think we are hopeful that Leica will do well in time to come.

Ajit Kumar Jain: Therefore, that cost is also with a part of their overall. Overall, I think we are hopeful that Lyka Labs will do well in time to come. They are on the right path.

Speaker #3: They are on the right path.

Speaker #4: Okay. Sir, just one suggestion. At the time of the results, if you guys can give some press release mentioning what is happening there, because it is very difficult to find out what that company is doing.

[Analyst] (Oculus Capital): Okay. Sir, just one suggestion. At the time of the results, if you guys can give some press release mentioning what is happening there, because it is very difficult to find out what that company is doing. Because that is also a listed company. If a press release can be given with the updates, what is happening there, that will be very helpful. Thank you, sir. All the best.

Mohit Vijay: Okay. Sir, just one suggestion. At the time of the results, if you guys can give some press release mentioning what is happening there, because it is very difficult to find out what that company is doing. Because that is also a listed company. If a press release can be given with the updates, what is happening there, that will be very helpful. Thank you, sir. All the best.

Speaker #4: That is also a listed company, so if a press release can be given with updates on what is happening there, that would be very helpful.

Speaker #4: Thank you, sir. All the best.

Speaker #3: I think this year they have given the press release, I think.

Ajit Kumar Jain: I think this year they have given the press release, I think.

Speaker #4: Okay. I could not see that. Okay, thank you.

[Analyst] (Oculus Capital): Okay. I could not see that. Thank you.

Mohit Vijay: Okay. I could not see that. Thank you.

Ajit Kumar Jain: Okay. We will send it to you. Yeah.

Speaker #3: Yeah. Yeah.

Speaker #2: Hello? Thank you. The next question is from the line of Shilpa from Lotus Wealth. Please proceed.

Operator: Thank you. Next question is from the line of Shilpa from Lotus Wealth. Please proceed.

Speaker #5: Hello. My question is in regards to Unit N. Sir, are our gross margin improvements due to rupee appreciation driving realization, or has the supply of API from Itka started?

[Analyst] (Lotus Wealth): Hello. My question is in regards with Unichem. Sir, our gross margin improvements are due to rupee depreciation driving realization or supply of API from Ipca has started?

Shilpa Saboo: Hello. My question is in regards with Unichem. Sir, our gross margin improvements are due to rupee depreciation driving realization or supply of API from Ipca has started?

Speaker #3: Oh, Itka’s supply to Unit M is hardly any. It is because, I think, one product—they have given the order now, because that's a short change as approved.

Ajit Kumar Jain: IPCA supply to Unichem is hardly any. Because I think one product they have given the order now because that source change has happened, so there is no. One is their overall cost reductions has been good as far as their own captive production of API. So that has also resulted in overall some margin improvement there. And also their European business is doing well. So that business improvement overall in the margins and Brazil, which were incurring losses now is coming positive and that business is also expected to improve well. So these are things which are resulting in the better overall margin. As they start, they have whole program of filing the new products in all these markets like Europe, Australia, New Zealand, Canada, Chile and all those.

Speaker #3: So there is no one is there. Overall, cost reductions have been good as far as their own captive production of API, so that has also resulted in some overall margin improvement there.

Speaker #3: Yeah. And also, their European business is doing well. So that business improvement overall in the margins, and Brazil, which was incurring losses, is now coming positive, and that business is also expected to improve well.

Speaker #3: So these are the things which are resulting in better overall margins. And as they start, they have a whole program of filing new products in all these markets like Europe, Austria, New Zealand, Canada, Chile, and all those.

Speaker #3: I think once these registrations start coming in, the business profile of this company will also change, because currently it's mostly the U.S. and the market where the margins are always under pressure.

Ajit Kumar Jain: I think these all when these registrations start coming in, the business profile of this company will also change. Because currently it is mostly the US and the market where the margins are always under pressure. So these market, once the product mix, overall market mix improve, so profitability of Unichem will also improve.

Speaker #3: So, as these markets and the overall product mix improve, the profitability of Unit M will also improve.

Speaker #5: Okay, sir. So this quarter, the repeat appreciation impact is not as much, right?

Operator 3: Okay, sir. So in this quarter rupee depreciation impact is not as such, right?

Shilpa Saboo: Okay, sir. So in this quarter rupee depreciation impact is not as such, right?

Speaker #3: I think rupee depreciation is also there. If you look at overall turnover, let's say out of, let's say, 21% growth, about a 5% increase is only on account of rupee depreciation.

Ajit Kumar Jain: Rupee depreciation is also there. If you look at overall turnover, let us say out of let us say 21% growth, 5% increase is only on account of rupee depreciation. Because dollar has almost gone up by almost around 11% compared to last year's Q1. But that has also resulted simultaneously that our material cost has also moved up. But that has helped in the overall margin. But material cost has also moved up because let us say lot of your contents are also in dollar terms and those cost has also moved up.

Speaker #3: Yeah. Because the dollar has gone up by almost around 11% compared to last year's first quarter. But that has also resulted simultaneously in our material cost moving up.

Speaker #3: But that has helped in our role in the overall margin. However, material cost has also moved up because, let's say, a lot of your contents are also in dollar terms, and those costs have also moved up.

Speaker #3: But that is only for that 25%, because material cost to sales is almost around 25%. So, on 25% of that cost, your depreciation cost has gone.

Operator 3: Okay.

Shilpa Saboo: Okay.

Ajit Kumar Jain: But that is only for that 25% because material cost to sales is almost around 25%. On 25% of that cost, your depreciation cost has gone, but rest has come in terms of margin. Yeah.

Speaker #3: But rest has come in terms of margins. Yeah.

Speaker #5: Okay sir. Thank you.

Operator 3: Okay, sir. Thank you.

Shilpa Saboo: Okay, sir. Thank you.

Speaker #2: Thank you. Before we take the next question, we would like to remind participants that you may press star one to ask a question.

Operator: Thank you. Before we take the next question, we would like to remind participants that you may press star and 1 to ask the question. The next question is from the line of Tushar from Motilal Oswal. Please proceed.

Operator: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask the question. The next question is from the line of Tushar from Motilal Oswal. Please proceed.

Speaker #2: The next question is from the line of the Shah from Motilal as well. Please proceed.

Speaker #6: Thanks for the opportunity, sir. I mean the EBITDA margin guidance is very short for FY27, firstly. Can you just share that again?

[Analyst] (Motilal Oswal): Thanks for the opportunity. Sir, I missed the EBITDA margin guidance which you had shared for FY27, firstly. If you can just share again.

Tushar Manudhane: Thanks for the opportunity. Sir, I missed the EBITDA margin guidance which you had shared for FY 2027, firstly. If you can just share again.

Speaker #3: Let's say at the beginning of the year, we gave the EBITDA margin guidelines of around 22% on a consolidated basis. I think because of better performance, our overall EBITDA margins may remain around 23%.

Ajit Kumar Jain: Let's say at the beginning of the year we gave the EBITDA margin guidance of around 22% on consolidated basis. I think because of better performance, overall EBITDA margins may remain around 23%. I am improving the guidelines by 1%, yeah.

Speaker #3: So, I'm improving the guidelines by 1%. Yeah.

Speaker #6: Okay. Sir, secondly, while raw material fluctuations are there, the repeat depreciation should be able to offset any fluctuation in your raw material prices. In fact, is it safe to assume that the repeat depreciation benefit is much more than the raw material price fluctuation, and hence it should result in better gross margin?

[Analyst] (Motilal Oswal): Okay. Sir, secondly, while the raw material fluctuations are there, the rupee depreciation should be able to offset any fluctuation in your raw material prices. In fact, is it safe to assume that rupee depreciation benefit is much more than the raw material price fluctuation and hence it should result in better gross margin?

Tushar Manudhane: Okay. Sir, secondly, while the raw material fluctuations are there, the rupee depreciation should be able to offset any fluctuation in your raw material prices. In fact, is it safe to assume that rupee depreciation benefit is much more than the raw material price fluctuation and hence it should result in better gross margin?

Speaker #3: Let's say material cost to sales is 25%. So, out of that, there are a lot of your Indian ingredients and other ingredients which are imported ones.

Ajit Kumar Jain: Let's say material cost to sales is 25%. Out of that also there are lot of your Indian ingredients and other ingredients which are imported ones. There are a lot of other costs which is also related to your dollar terms. Let's say freights are in dollar terms, your lot of testing materials and lot of those things are in dollar terms. There are a lot of machine parts which are of imported machines and testing equipments and all are also relating to dollar terms. So their maintenance contracts and other things are also linked that way. We have huge amount of field force in international markets, so their salaries are also going in dollar terms because those promotional markets and all kind of things. So it is not only that raw materials are impacted, it is other things are also getting impacted.

Ajit Kumar Jain: Let's say material cost to sales is 25%. Out of that also there are lot of your Indian ingredients and other ingredients which are imported ones. There are a lot of other costs which is also related to your dollar terms. Let's say freights are in dollar terms, your lot of testing materials and lot of those things are in dollar terms. There are a lot of machine parts which are of imported machines and testing equipment and all are also relating to dollar terms. So their maintenance contracts and other things are also linked that way. We have huge amount of field force in international markets, so their salaries are also going in dollar terms because those promotional markets and all kind of things. So it is not only that raw materials are impacted, it is other things are also getting impacted.

Speaker #3: There are a lot of other costs which are also related to your dollar terms. Let's say freights are in dollar terms. A lot of your testing materials and a lot of those things are in dollar terms.

Speaker #3: There are a lot of machine parts, which are of imported machines, and testing equipment and all are also relating to dollar terms. So their maintenance contracts and other things are also linked that way.

Speaker #3: We have a huge amount of field force in international markets, so their salaries are also going in dollar terms because those are promotional markets and all kinds of things.

Speaker #3: So there are it's not only the the that only materials are impacted. It's other things impacted. We have for promotional market we have we are running a lot of non-trading offices in various international markets.

Ajit Kumar Jain: For promotional markets, we are running lot of non-trading offices in various international markets. The cost of that is also going up because of dollar. So it is overall, but yes, in spite of, let's say, the increase in the cost and all, overall because of depreciation, it is to the extent of your margins and some of the Indian cost. That cost is not moving up and therefore you are seeing that there is a significant improvement in your overall manufacturing and other expenses.

Speaker #3: The cost of that is also going up because of the dollar, so it’s overall. But yes, in spite of, let’s say, the increase in the cost and all, overall because of depreciation it is to the extent of your margins, and some of the Indian cost, that cost is not moving up, and therefore you see that there is a significant improvement in your overall manufacturing and other expenses.

[Analyst] (Motilal Oswal): Got it.

Tushar Manudhane: Got it.

Speaker #3: So, the sales have moved up, but the cost has come down.

Ajit Kumar Jain: The sales has moved up, but that cost has come down.

Speaker #6: Got it. And so, what is driving growth in the Europe segment itself? Is it new product launches? Is it market share gain?

[Analyst] (Motilal Oswal): What is driving growth in Europe segment itself? Is it new product launches? Is it market share gain?

Tushar Manudhane: What is driving growth in Europe segment itself? Is it new product launches? Is it market share gain?

Speaker #3: Oh there are new product launches are also there. But both Europe and UK and European business both have done very well. In the.

Ajit Kumar Jain: New product launches are also there, but both European business both have done very well.

Speaker #6: And has the funnel from Unit M's portfolio started reflecting in the Europe business for IPCA?

[Analyst] (Motilal Oswal): Has the funnel from Unichem's portfolio started reflecting in the Europe business for Ipca Laboratories?

Tushar Manudhane: Has the funnel from Unichem's portfolio started reflecting in the Europe business for Ipca Laboratories?

Speaker #3: No. No.

Ajit Kumar Jain: No.

Speaker #6: When do we think that can—that would start happening, sir?

[Analyst] (Motilal Oswal): When do we think that would start happening, sir?

Tushar Manudhane: When do we think that would start happening, sir?

Speaker #3: It will take some time because, let's say, they have started filing in those markets. We have yet to get the approvals and it takes almost around one and a half years after the filing for approvals to come.

Ajit Kumar Jain: It will take some time because they have started filing in those markets. We have yet to get the approvals and it takes almost around one and a half year after the filing for approvals to come. But yes, there is a significant amount of programs for filing in the various markets. So once those approvals start coming in, the margin profile for Unichem will also start changing.

Speaker #3: But yes, there is a significant amount of programs for filing in the various markets, and so once those approvals start coming in, the margin profile for Unit M will also start changing.

Speaker #6: Understood, sir. And lastly, when do we intend to start new filings for the US market, apart from product transfers?

[Analyst] (Motilal Oswal): Understood, sir. Lastly, when do we intend to start new filings for US market, apart from product transfers?

Tushar Manudhane: Understood, sir. Lastly, when do we intend to start new filings for US market, apart from product transfers?

Speaker #3: No, we are already doing that. And I think four to five filings will happen every year for IFCA.

Ajit Kumar Jain: No, we are already doing that. I think four to five filings will happen every year for Ipca.

Speaker #6: Got it, sir. Got it. Thanks, sir. That's it from us.

[Analyst] (Motilal Oswal): Got it. Thanks a lot. That is it from me, sir.

Tushar Manudhane: Got it. Thanks a lot. That is it from me, sir.

Speaker #2: Thank you. The next question is from the line of Karthik Baner from Bajaj Life. Please proceed.

Operator: Thank you. The next question is on the line of Kartik Bane from Bajaj Life. Please proceed.

Operator: Thank you. The next question is on the line of Kartick Bane from Bajaj Life. Please proceed.

Speaker #1: Thank you for the opportunity. With the Indian field force expansion largely complete and profitability also improving, would incremental cash flows be deployed towards acquisitions or any capacity expansion, or would the focus be more on filings and launches?

Kartik Bane: Thank you for the opportunity. With the Indian field force expansion largely complete and the profitability also improving, would incremental cash flows be deployed towards acquisition or any capacity expansion, or would focus more on filings and launches?

Kartick Bane: Thank you for the opportunity. With the Indian field force expansion largely complete and the profitability also improving, would incremental cash flows be deployed towards acquisition or any capacity expansion, or would focus more on filings and launches?

Speaker #3: Let's say capacity expansion will also be needed, and that's going on right now, because we will need a lot of capacity for European markets and the US market.

Ajit Kumar Jain: Yes, the capacity expansion will also be needed, and that is going on right now because we will need a lot of capacity for European markets and US market. Right now we are building up capacities for all these controlled releases and all the extended releases kind of formulations at our Silvassa. Traditional CapExs are going on. Biotech is one area where also CapExs are going on in terms of further increasing R&D investments, R&D assets, and at plant level also, those kind of CapExs are there. On API side also, we are building up new plants because we are running out of capacities at Ratlam. New plants are build up at Dewas site and also at Wardha for intermediates and all. Some of the investments are also going on for converting the existing intermediates into more for continuous process kind of processes. Those investments are also there.

Speaker #3: So right now, we are building up capacities for all these controlled-release and all the extended-release kinds of formulations. Those are additional capexes that are going on.

Speaker #3: Biotech is one area where also capexes are going on, in terms of further increasing R&D investments, R&D assets, and at the plant level also, those kinds of capexes are there.

Speaker #3: On the API side also, we are building up new plants because we are running out of capacities, so new plants are being built at the Devas site and also at Warda for intermediates and all.

Speaker #3: Some of the investments are also going on for converting the existing intermediates into more for continuous process kind of processes. So those investments are also there.

Speaker #3: So, largely, I think almost around ₹700 to ₹800 crore in the current year will go on the capex side itself. Yeah.

Ajit Kumar Jain: Largely, I think almost around INR 700 to INR 800 crore in current year will go in the CapEx side itself. Yeah.

Ajit Kumar Jain: Largely, I think almost around INR 700 to 800 crore in current year will go in the CapEx side itself. Yeah.

Speaker #1: Thank you.

Kartik Bane: Thank you.

Kartick Bane: Thank you.

Speaker #2: Thank you. The next question is from the line of Aditya Cheda from Incred Asset Management. Please proceed.

Operator: Thank you. The next question is from the line of Aditya Khetan from InCred Asset Management. Please proceed.

Speaker #7: Hi, this is Pooja Sanghi. Thank you for the opportunity. We understand that the prices were contracted earlier and now the rupee has depreciated.

Pooja Sanghi: Hi, this is Pooja Sanghi. Thank you for the opportunity. We understand that the prices were contracted earlier, and now the rupee has depreciated, so your realizations would have gone up in rupee terms. As per my understanding of the past, whenever this kind of thing happens, the dollar prices again get renegotiated lower. If that were to happen, sir, how long do you feel that the currency benefit and the higher gross margin will be reflected in our statements, like another two quarters or another year?

Speaker #7: So your realizations would have gone up in rupee terms. But as per my understanding of the past, whenever this kind of thing happens, the dollar prices again get renegotiated lower. So, if that were to happen, sir, how long do you feel that the currency benefit and the higher gross margin will be reflected in our statements? Like, another two quarters or another year?

Speaker #3: I think there are no such renegotiations of the prices where the prices are to be reduced. No, rather we are increasing the prices everywhere.

Ajit Kumar Jain: I think there are no such renegotiations of the prices where the prices are to be reduced. Rather, we are increasing the prices everywhere because your costs are also moving up. All other costs are also moving up. There are no reductions, and prices are by and large increasing only, not going down.

Speaker #3: Because your costs are also moving up. All other costs are also moving up. So there are no reductions, and prices are, by and large, increasing only.

Speaker #3: Not not going down.

Speaker #7: Okay. Okay. Thanks sir.

Pooja Sanghi: Okay. Thanks, sir.

Speaker #2: Thank you. Participants who wish to ask a question, please press star and one now. Participants who wish to ask a question, please press star and one now.

Operator: Thank you. Participant who wishes to ask a question, please press star and one now. Participant who wishes to ask a question, please press star and one now. The next question is a follow-up question from the line of Kartik Malik from Bajaj Life. Please proceed.

Speaker #2: The next question is a follow up question from the line of Karthik Baner from Bajaj Life. Please proceed.

Speaker #1: Hello, thank you for the opportunity again. Could I get a split between the domestic growth as price/volume and the new product launches?

Kartik Malik: Hello. Thank you for the opportunity again. Could I get a split between the domestic growth as price volume and the new product launches?

Kartick Bane: Hello. Thank you for the opportunity again. Could I get a split between the domestic growth as price volume and the new product launches?

Speaker #3: Overall, I think volume growth is almost around 5%. Price growth is almost around another, another, another, I think, 4.5% to 5%. And new product launches maybe around 2% or so.

Ajit Kumar Jain: Overall, I think volume growth is almost around 5%. Price growth is almost around another, I think 4.5% to 5%, and new product launches may be around 2% or so. So overall growth is around 13%.

Speaker #3: So, overall growth is around 13%.

Speaker #1: Okay. Thank you.

Kartik Bane: Thank you.

Kartick Bane: Thank you.

Speaker #3: Compared to the industry, our volume growth is higher.

Ajit Kumar Jain: Compared to industry, our volume growth is higher.

Speaker #2: Thank you. The next question is from the line of Rashmi Shetty from Aadat Capital. Please proceed.

Operator: Thank you. The next question is from the line of Rashmi Shetty from Dolat Capital. Please proceed.

Speaker #7: Yeah. Thanks for the opportunity again. Just one bookkeeping question. This quarter we have seen a we have seen a decline in the interest cost quarter on quarter.

Rashmi Sancheti Shetty [Director of Research: Yeah. Thanks for the opportunity again. Just one bookkeeping question. This quarter, we have seen a decline in the interest cost quarter-on-quarter. If you can just give some thoughts on the total gross debt number and whether we have done any repayments or anything.

Speaker #7: If you can just give some thoughts on the total gross debt number and whether we have done any repayments or anything.

Speaker #3: Last financial year, we had almost around close to $50 million as dollar loans, which were completely repaid before March itself. In fact, before this dollar depreciation started, we had almost repaid every dollar loan.

Ajit Kumar Jain: Last financial year, we had almost around close to $50 million as dollar loans, which we have completely repaid before March itself. In fact, before this dollar depreciation started, we have almost prepaid every dollar loan. We don't have those kind of debt in books. Currently, the debt may be around INR 193 crores in books. That's a long-term debt. We don't have zero working capital debts. I think by this year-end, what we will have is INR 70 crore of term loan debt outstanding, and that will be repaid completely in the next financial year. So practically, we have more cash in books compared to the overall loans. So loans are hardly around INR 193 crore currently.

Speaker #3: We prepaid every dollar loan. We don't have those kinds of debt on our books. Currently, the debt may be around ₹193 crore in the books; that's long-term debt.

Speaker #3: We don't have zero working capital debt. And I think by this year end, what we have is ₹70 crore of term loan debt outstanding, and that will be repaid completely in the next financial year.

Speaker #3: So practically, we have more cash on the books compared to the overall loans. Loans are hardly around ₹193 crore currently.

Speaker #7: Out of that Rs 193 crore, you're saying you will be making a repayment of Rs 70 crore also.

Rashmi Sancheti Shetty [Director of Research: Out of that INR 193 crore, you are saying you will be making a repayment of INR 70 crore also?

Speaker #3: No. At the year end, ₹70 crore will be balanced, because that loan is at a much cheaper rate than current market rates. So I earn more in mutual funds rather than—so why should I pay?

Ajit Kumar Jain: No. At the year-end, INR 70 crore will be balanced because that loan is at much cheaper rate than current market rates.

Rashmi Sancheti Shetty [Director of Research: Okay.

Ajit Kumar Jain: I earn more in mutual funds rather than. So why should I pay? I will pay on due date.

Speaker #3: I will pay on the due date. Yeah.

Speaker #7: Okay. Okay. And we don't have any short-term borrowings.

Rashmi Sancheti Shetty [Director of Research: Okay. And we don't have any short-term borrowings?

Speaker #3: Zero. Yeah.

Ajit Kumar Jain: Zero. Yeah.

Speaker #7: Okay, so interest cost is expected to decline in the subsequent quarters also, right?

Rashmi Sancheti Shetty [Director of Research: Okay. So interest cost is expected to decline in the subsequent quarters also, right?

Speaker #3: Yeah, interest cost will be hardly any. We will be earning more than the decline.

Ajit Kumar Jain: Yeah, interest cost will be hardly any. We will be earning more than declining.

Speaker #7: Okay. Yeah. Understood, sir. Thank you. That's it from my side.

Rashmi Sancheti Shetty [Director of Research: Okay. Yeah. Understood, sir. Thank you. That is it from my side.

Operator: Thank you. Next question is on the line of Ankeet Pandya from Baroda BNP. Please proceed.

Speaker #2: Thank you. The next question is from the line of Ankit Pandya from Baroda BNP. Please proceed.

Speaker #1: Yeah, hi. Thanks for the opportunity. So just one question: can you give some guidance on FY28 numbers in terms of top-line growth and EBITDA margin?

Ankeet Pandya: Yeah, hi. Thanks for the opportunity. Just one question. Can you give some guidance on FY28 numbers in terms of the top line growth and EBITDA margin?

Ankeet Pandya: Yeah, hi. Thanks for the opportunity. Just one question. Can you give some guidance on FY 2028 numbers in terms of the top line growth and EBITDA margin?

Speaker #3: So I think for the current financial year, we have already given the guidelines—that our revised guidelines are around 14 to 16 percent kind of growth.

Ajit Kumar Jain: I think for the current financial year, we have already given the guidelines that our revised guidelines is around 14% to 16% kind of growth. We have revised it from 12% to 13% earlier, and EBITDA margin consolidated from 22% to 23%. We have revised upwards by 1% overall.

Speaker #3: We have revised it from 12 to 13 earlier, and EBITDA margin consolidated from 22 to 23%. We have revised upward by 1%. Yeah, overall.

Speaker #1: So I'm asking for FY28.

Ankeet Pandya: Sir, I am asking for FY28.

Ankeet Pandya: Sir, I am asking for FY 2028.

Speaker #3: So, 28 guidelines we will give at the time of quarter four. Yeah.

Ajit Kumar Jain: 2028 guidelines, we will give at the time of Q4. Yeah.

Speaker #1: Okay, fair enough. All right. Okay, that's it from me, sir. Thank you.

Ankeet Pandya: Okay. Fair enough. All right. Okay. That is it from me, sir. Thank you.

Speaker #2: Thank you. Participants who wish to ask a question, please press star and one now. Participants who wish to ask a question, please press star and one now.

Operator: Thank you. Participant who wishes to ask a question, please press star and 1 now. Participant who wishes to ask a question, please press star and 1 now. The next question is on the line of Saion Mukherjee from Nomura. Please proceed.

Operator: Thank you. Participant who wishes to ask a question, please press star and one now. Participant who wishes to ask a question, please press star and one now. The next question is on the line of Saion Mukherjee from Nomura. Please proceed.

Speaker #2: The next question is from the line of Sion Mukherjee from Nomura. Please proceed.

Speaker #6: Yes. Good evening. Thanks for taking my question. Just one question on EBITDA margin for your consolidated business and for Unichem. If you sort of bake in all the impact of Unichem synergies playing out over the next say three years or so and business scaling up in US and other markets.

Saion Mukherjee: Yes, good evening. Thanks for taking my question. Just one question on EBITDA margin for your consolidated business and for Unichem. If you sort of bake in all the impact of Unichem synergies playing out over the next, say, three years or so, and business scaling up in US and other markets, and India growing, where do you see EBITDA margin settling from a slightly medium to longer term perspective for both Unichem and Ipca as a whole?

Speaker #6: And India is growing. Where do you see the EBITDA margin settling from a slightly medium- to longer-term perspective? For both Unichem and for IPCA as a whole.

Speaker #3: If we — EBITDA margin, which is maybe around 26%, could go up to almost around 30% kind of margin, is possible. And overall EBITDA margins maybe two, three years down the line, maybe around 25–26% overall, on a consolidated basis, because by that time all these other subsidiary companies will also start doing very well.

Ajit Kumar Jain: If Ipca margin, which is maybe around 26%, could go up to almost around 30% kind of margin is possible. Overall EBITDA margins maybe two, three years down the line, maybe around 25%, 25% to 26% overall for consolidated basis because most of the, by that time, all these other subsidiary companies will also start doing very well. Yeah.

Speaker #3: Yeah.

Speaker #6: All right. So, in terms of key investments, what are those investments or new initiatives, let's say, which IPCA is planning to undertake over the next two to three years? If there are any plans or thoughts of inorganic or organic moves, or some big investment plans.

Saion Mukherjee: All right. Sir, in terms of key investments, what are those investments or new initiatives, let's say, which Ipca is planning to undertake over the next two, three years? If there are any plans or thought of inorganic, organic moves, some big investment plans.

Speaker #3: So right now, our investment is, by and large, more on the biotech side. We have almost around seven candidates in the pipeline.

Ajit Kumar Jain: Right now, our investment is by and large, more is happening in biotech side. We have almost around now seven candidates in pipeline. We are working on more number of now. R&D has capacity to work on at least around three to four products now every year. I think two products now we have already taken the engineering batches and results are absolutely in line with what we were expecting. I think validations are going on and a lot of investments will happen in terms of clinical trials of all these biosimilars. We are targeting all global markets and most of the products are known titer values are practically double or more of the current known in the market side. So we expect to do well and there will be good amount of investment further will be happening in biotech.

Speaker #3: We are working on more number of now. So R&D has capacity to work on at least around three to four products now every year.

Speaker #3: So, and I think two products now, we have already taken the this year engineering batches, and results are absolutely in line with what we were expecting.

Speaker #3: And I think validations are going on, and a lot of investment will happen in terms of clinical trials of all these biosimilars. We are targeting all global markets, and most of the products are known titer values, which are practically double or more of the current known in the market side.

Speaker #3: So, we expect to do well, and there will be a good amount of investment further happening in biotech. In the current year also, we will be investing almost around ₹100 crore more on building up the piloting facilities and additional R&D investment in biotech.

Ajit Kumar Jain: Current year also, we will be investing almost around INR 100 crore more on building up the piloting facilities and additional R&D investment in biotech. A lot of those investments are happening now. Maybe I think in one or two years' time, we may need to further increase our capacities what we have built up on biotech. So that will be another additional investment in time to come will happen.

Speaker #3: So, a lot of those investments are happening now. And maybe, I think in one or two years' time, we may need to further increase our capacities that we have built up in biotech.

Speaker #3: So, that will be another additional investment in time to come, which will happen.

Speaker #6: So, sir, you know the EBITDA guidance or EBITDA expectation that you have—is that factoring in these clinical trials and these investments on biotech?

Saion Mukherjee: So, sir, the EBITDA guidance or EBITDA expectation that you have, you are factoring in these clinical trials and these investments on-

Ajit Kumar Jain: Yeah.

Saion Mukherjee: Biotech product.

Speaker #3: Yeah. We are factoring. So because next two years no revenue will come. Because by the time clinical trial complete so all those we are factoring in.

Ajit Kumar Jain: That we are factoring. Because next 2 years, no revenue will come.

Ajit Kumar Jain: That we are factoring. Because next two years, no revenue will come.

Ajit Kumar Jain: Because by the time clinical trial completes, all those we are factoring in.

Speaker #6: Right. Right. And sir is it possible to give some color on these products so I mean you it seems that you're mentioning that you know your yields are much better than what's available in the market today.

Saion Mukherjee: Right. And sir, is it possible to give some color on these products? I mean, it seems that you are mentioning that your yields are much better than what is available in the market today. These seven biosimilars and two of them which are probably a little advanced, are these old products or are these products which will go off patent and you will be there in the first wave in the market? If you will give some color on some idea about what kind of products are you working on.

Speaker #6: So, these seven biosimilars, and you know two of them which are probably a little advanced—are these old products, or are these products which will go off patent and you will be there in the first wave in the market?

Speaker #6: And if you can give some color or some idea about, you know, what kind of products you are working on.

Speaker #3: By and large, these are old products, but there is one product which we are maybe targeting around patent expiry itself. And that is a very large product.

Ajit Kumar Jain: By and large, these are old products, but there is one product which is maybe that we are targeting around patent expiry itself, and that is very large product. Mostly the other products are all are patent expired products.

Speaker #3: But mostly, the other products are all patent-expired products.

Speaker #6: Right. Right. And so you're saying in two years we will start to see that. That means FY29, FY30 revenues will start to flow in from biosimilars.

Saion Mukherjee: Right. You are saying in 2 years, we will start to see, that means FY29, FY30 revenues will start to flow in from biosimilars.

Saion Mukherjee: Right. You are saying in two years, we will start to see, that means FY 2029, FY2030 revenues will start to flow in from biosimilars.

Speaker #3: Yeah, yeah. Because first we have to produce your API, then formulate validations, validate formulations, do the stability, then go for clinical trials. So that process is all going on simultaneously.

Ajit Kumar Jain: Yeah. Because first we have to produce your API, then formulations, validate formulations, do the stability then go for clinical trials. That process is all going on simultaneously, yeah.

Speaker #3: Yeah.

Speaker #6: Okay. And these are like global trials, so you will sort of file in the US, Europe, and other markets, and so on.

Saion Mukherjee: Okay. These are like global trials, so you will sort of file in US, Europe, and out of the markets all?

Speaker #3: Yeah, put together, these are global trials. Yeah, we already consulted European authorities, UK, then also US for all the clinical trial protocols and all.

Ajit Kumar Jain: Yeah, put together. These are global trials, yeah. We already consulted European authorities, UK, then also US for all the clinical trial protocols. All protocols are in line with all these regulatory agencies, yeah.

Speaker #3: So all protocols are in line with all these regulatory agencies. Yeah.

Speaker #6: And so, therefore, the filing will happen, like, next year, is it? Like, if you have to launch in fiscal '30, in fiscal '28 you will be making your first filing?

Saion Mukherjee: Therefore the filing will happen like next year, is it? If you have to launch in FY30, in FY28, you will be making your first filing. Will that be a right assessment?

Saion Mukherjee: Therefore the filing will happen like next year, is it? If you have to launch in FY 2030, in FY 2028, you will be making your first filing. Will that be a right assessment?

Speaker #6: Will that be a right assessment?

Speaker #3: I think this year, practically, your first validations of those products will happen, and thereafter, formulation development and stability charging will happen in this year.

Ajit Kumar Jain: I think this year, practically, first is validations of those products will happen and thereafter formulations, the development and stability charging will happen in this year. Somewhere, I think mid of next year, the initial stability results will come and thereafter by the time we have already taken those kind of approvals so we will start the clinical work. Now clinical work is significantly reduced. We have also the waiver of phase III from European authorities and also from US, so it is only the initial work need to be done. The cost has also come down significantly now because RLD is not required for phase III. So RLD cost becomes very high. Those exemptions are already come looking into biosimilarities and other parameters and results, what we have submitted to the various regulatory agencies. Overall, I think clinical things will start happening from the next financial year.

Speaker #3: Somewhere, I think, in the middle of next year, the initial stability results will come, and thereafter, by that time, we will have already taken those kind of approvals.

Speaker #3: So, we'll start the clinical work. And now, clinical work is significantly reduced. We are also— we are phase three from European authorities and also from the US.

Speaker #3: So, it's only the initial work that needs to be done. The cost has also come down significantly now because R&D is not required for Phase Three, as R&D costs become very high.

Ajit Kumar Jain: initial work need to be done. The cost has also come down significantly now because RLD is not required for phase III. So RLD cost becomes very high. Those exemptions are already come looking into biosimilarities and other parameters and results, what we have submitted to the various regulatory agencies. Overall, I think clinical things will start happening from the next financial year.

Speaker #3: So, those exemptions have already come. Looking into biosimilarities and other parameters and results that we have submitted to the various regulatory agencies. So, overall I think clinical things will start happening from the next financial year.

Speaker #6: Right. Right. Okay, sir, thank you.

Saion Mukherjee: Right. Okay, sir. Thank you.

Speaker #3: Thank you. Yeah.

Ajit Kumar Jain: Thank you. Yeah.

Speaker #1: Thank you. That was the last question for today. Ina, hand the conference over to the management for the closing comments. Over to you, sir.

Operator: Thank you. That was the last question for today. I now hand the conference over to the management for the closing comments. Over to you, sir.

Speaker #2: Yeah, thank you. Thank you very much, all the participants. Thank you. We can close this call, madam.

Ajit Kumar Jain: Yeah, thank you. Thank you very much all the participants. Thank you. We can close this call, madam.

Speaker #1: Yes, sir. On behalf of DAM Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Operator: Yes, sir. On behalf of DAM Capital, that concludes this conference. Thank you for joining us and you may now disconnect your lines.

Ajit Kumar Jain: Yeah. Thank you.

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