Gland Pharma Limited — Q4 FY26

GLAND Q4 25/26 Earnings Conference Call https://stockanalysis.com/quote/nse/GLAND/transcripts/422328-q4-25-26/ Published: sourced from public earnings transcript

Operator Ladies and gentlemen, good day, and welcome to the Gland Pharma Limited Q4 FY 2026 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 this conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shriniwas Dange , Head, Investor Relations. Thank you, and over to you, sir. Shriniwas Dange Head of Investor Relations, Gland Pharma Thank you, Sagar. Good evening, everyone. We welcome you to Gland Pharma earnings conference call for Q4 of FY 2026. I am Srinivas Dange from the Investor Relations team at Gland Pharma. Today, we have Mr. Srinivas Sadu, Executive Chairman, Mr. Ravi Mitra, Chief Financial Officer from India office, and Mr. Alain, CEO of Cenexi, who is connected from France. We will begin the call with the business highlights and operational highlights from Mr. Sadu, followed by updates about Cenexi from Mr. Alain. This will be taken up by the group financials overview by Mr. Ravi. Before we proceed, I would like to remind everyone that some of the statements made today will be forward-looking and are based on management's current estimates. These statements should be considered in light of the risk associated with our business. This call is being recorded. The playback and script will be available on our website shortly. With that, I hand over the call to Mr. Sadu for his opening remarks. Over to you, sir. Srinivas Sadu Executive Chairman, Gland Pharma Thank you, Srinivas. Good evening, everyone, and a warm welcome to all of you to the Gland Pharma earnings call for the fourth quarter and full year ended FY 2026. I will begin with the strategic and operational overview. Alain will then share an update on Cenexi, and Ravi will walk you through our financial performance. It has been a very strong quarter and a year for us in terms of revenues and profitability. This has been driven by robust growth in the CDMO segment alongside new product launches, improved Cenexi performance and healthy profitability across various business segments, supported by ongoing cost efficiency initiatives. We remain confident in sustaining this momentum, supported by a pipeline of complex product launches and the continued ramp-up of CDMO partnerships. Let me begin with an overview of our performance. For the fourth quarter of FY 2026, we reported revenues of INR 17,428 million, reflecting a growth of 22% year-on-year. Adjusted EBITDA for the quarter stood at INR 5,244 million, wih margins of 30% and adjusted profit after tax was INR 3,667 million with margins of 21%. The quarter saw strong momentum driven by new product launches, including dalbavancin, higher volumes from recently secured tender wins, continued ramp-up in key products and improving capacity utilization along with steady contribution from Cenexi. For the full year FY 2026, our revenue stood at INR 64,307 million, registering a growth of 14.5%. Adjusted EBITDA came in at INR 16,826 million with margins of 26%, while Adjusted PAT stood at INR 10,455 million with margins of 16%. The CDMO business represented 46% of total revenues, supported by healthy growth of 28%, driven by our continued strategic focus and investments. The consolidated performance reflects our ability to deliver high-margin CDMO projects along with expansion of product portfolio, supported by strong operating leverage and cost optimization initiatives. Let me now walk you through the base business operational performance during this year. Starting with the United States, which continues to remain our largest market, we have seen strong new product and volume-led growth. Revenues for the quarter were INR 9,716 million, growing at 26% year-on-year, while for the full year revenue stood at INR 33,181 million with a growth of 11%. This growth has been primarily driven by new product launches and increased volumes from existing and new GPO contracts. During the year, we launched 31 products in the U.S., including five products in quarter four. Improved margins during the year reflect efficacy of operational efficiency improvements and operational leverage backed by volumes-based and new product base expansion. In Europe and other regulated markets, there's strong and accelerating momentum. Revenues for Q4 stood at INR 794 million, while full-year revenues were INR 3,249 million, reflecting a growth of 11%. Growth has been supported by early benefits from our integrated business development model. In the rest of the world markets, revenues for the quarter stood at INR 1,468 million, growing at 17% year-on-year, while full-year revenues were INR 6,511 million, reflecting a growth of 7%. Growth has been supported by tech transfer in CDMO business along with steady performance in our own portfolio. In India, revenues for Q4 were INR 670 million and INR 2,600 million for the full year. Coming to the Cenexi business, it continues to deliver a steady performance with revenues of EUR 45 million during the quarter, reflecting a growth of 4% year-on-year. Cenexi is now EBITDA positive, operationally stable and poised for growth. This performance reflects disciplined execution throughout the year, driven by higher capacity utilization, contract renegotiations to account for inflation, workforce rationalization, ramp-up of new products, and deeper integration with Gland across business development, technology transfer and shared functions. Alain will provide further details of the same. We remain confident of its continued contribution to both revenue growth and margin expansion over the medium to long term, notwithstanding some inherent quarter-to-quarter variability. At an overall level, during FY 2026, we have strengthened our market position, supported a broader geographic footprint, deeper customer engagement, and increasing traction from ou r differentiated and high-value product portfolio. Operationally, FY 2026 has been characterized as strong volume growth and improved capacity utilization. Capacity utilization across key lines is now translating into improved operating leverage and profitability. We are putting new capacities in our sites to cater to improved demand of our existing products and planned new launches. In line with our expectations, we have received approvals, particularly the albumin in February and multivitamin in April. The albumin has been launched in U.S. and European markets and is already seeing strong demand and ramp up. Similarly, our multivitamin portfolio is expected to have a steady revenue contribution. These products are expected to be meaningful contributors to growth in FY 2027 and beyond. Our CDMO business continues to show strong traction and is emerging as a key pillar of our long-term strategy. During the year, we signed multiple new CDMO contracts and expanded our pipeline across oncology, peptides, and complex injectables. One of these major CDMO projects announced earlier is progressing well and is expected to be commercialized in H2 of FY 2028 with an estimated annual revenue potential of $25 million-$30 million. In addition, few other high-value complex CDMO contracts were signed. These are expected to contribute meaningfully in the medium-t erm. For the full year FY 2026, CDMO business contributed 23% of base business revenues, growing at 33%. We clearly see CDMO as a key driver of growth and margin expansion going forward. In the GLP-1 space, we have made significant progress with eight contracts already signed, and additional six to seven are expected to be signed soon. Our current cartridge capacity now stands at 140 million units. Our approach remains disciplined and value-focused, positioning this as a strong mid to long-term opportunity with meaningful upside. We continue to focus on capability building by exploring in-licensing opportunities in the areas of differentiated therapy areas or drug delivery systems like liposomes and biologics or biosimilars and capacity additions. On the cost front, our focus on yield improvement, alternate sourcing, energy optimization, and process efficiencies continues to deliver results, contributing to approximately 1%-2% margin improvement. At the same time, our investments in AI and automation across quality, R&D, and manufacturing will create structural efficiency advantages for the future. Our R&D efforts remain focused on building a differentiated pipeline. During FY 2026, we spent INR 2,230 million on R&D, representing a 5% of base business revenue. In the U.S.A., we filed 24 ANDAs, received 28 approvals, and launched 31 products. Our pipeline is increasingly focused on complex injectables and specialty platforms, which will drive long-term value. We are witnessing increased demand in existing products on the back of contract wins with competitive pricing, which in turn is being achieved with our cost improvement programs with respect to the procurements and economies of scale. To cater to this demand, we are investing in the capacity expansions with CapEx outlay of INR 2,000 crores over the next five years. Looking ahead, we remain confident in our growth outlook, supported by recent high-end product launches, product ramp-ups, and CDMO execution. At the same time, we expect EBITDA margins to remain strong. To summarize, in FY 2026, we have strengthened our operating foundation and built multiple growth engines. We remain highly confident in our strategy, execution, and long-term growth trajectory. Thank you for your continued trust and support. Over to you, Alain. Alain Kirchmeyer CEO, Cenexi Thank you, Mr. Sadu. Good evening, everyone. This has been another good quarter at Cenexi. We are happy to report that we delivered on our guidance for the last quarter of our financial year 2026. Cenexi recorded EUR 45 million in revenue this quarter, a 4% increase over the same period last year, with a major revenue improvement in Hérouville and Fontenay compared to the previous year. After a profitable Q3 FY 2026 quarter, we are pleased to inform you that we delivered an EBITDA of EUR 1 million in Q4 FY 2026, in line with our guidance. This underscores that our turnover strategy continues to gain momentum quarter- after- quarter. During full year FY 2026, revenue stands at EUR 182 million, reflecting an 11% growth year-over-year, and EBITDA improved by EUR 16 million. I will now provide key site level updates. In Fontenay, the production ramp-up on our new ampoule filling line, which was installed last year, is progressing as expected. We are also actively preparing the replacement this summer of another old ampoule line with a new high-capacity line that will add additional 30 million ampoule capacity by 2027. The activity in our Hérouville site continues to grow significantly, supported by the ramp-up in production of two successful products launched in 2025, an inactivated vaccine and a sterile ophthalmic gel. In Osny, one of our existing customers asked us to relaunch the development of a solid product that could become a game changer for the site. In Braine-l'Alleud, we continue to see strong momentum in our injectable pipeline, supported by sustained customer interest and a healthy flow of request for quotations, providing good visibility for future growth. We won a large contract with a leading European laboratory to manufacture a hormonal drug filled in pre-filled syringes. We remain confident in our outlook for next financial year, supported by an improvement of our operational performance and an increase of output in Fontenay, a strong ramp-up of production with recently launched products in Hérouville, and the continuing favorable outlook in Haguenau and Braine-l'Alleud. The ongoing investment in capacity increase and the fast-growing business pipeline r einforce our confidence that we will achieve our midterm objective of a mid-teen EBITDA. Thank you for your attention. I now invite Ravi to take you through our financial performance in more detail. Ravi, over to you. Ravi Mitra CFO, Gland Pharma Thank you, Alain. Good evening, everyone, and thank you for joining us today as we review our financial performance for the fourth quarter and full year FY 2026. I am pleased to share that we have reported highest ever quarterly revenues and EBITDA during fourth quarter of FY 2026. FY 2026 has been a strong and rewarding year for us, marked by healthy revenue growth, improved profitability, and solid progress across all key business segments, with significant 28% growth in CDMO business. Currently, CDMO business constitutes 46% of the total revenues. The fourth quarter performance also was stellar, with encouraging revenue growth and improved profitability with new product contribution. Let me begin with the performance of the fourth quarter. For Q4 FY 2026, our consolidated revenue stood at INR 17,428 million, reflecting a healthy growth of 22% year-on-year. This growth was driven by new product contribution, strong volume expansion, and continued traction in our older key products. The base business delivered a robust performance, while Cenexi continues its momentum with positive EBITDA contribution during the quarter. Overall gross margins for the quarter stood at 66%, an improvement of 30 basis points over previous year, reflecting the benefits of improved product mix and operational efficiencies. Excluding Cenexi, base business gross margins were at 62%, which improved 90 basis points over previous year, reflecting our continued focus on cost optimization and margin improvement plans. Moving to the full year performance, I am pleased to highlight that FY 20 26 has delivered strong results across all key parameters. Consolidated revenue for the full year stood at INR 64,307 million, reflecting a growth of 14.5% year- on- year. The Base business delivered consistent growth supported by new product launches, increased volumes, and improved market share, while Cenexi contributed meaningfully with a strong recovery and growth in revenues. Overall, gross margins for FY 2026 stood at 65%, reflecting an improvement over last year of 230 basis points, driven by favorable product mix, operational efficiencies, and higher contribution from value-added segments. Excluding Cenexi, Base business gross margins were 61%, which improved by 260 basis points over previous year. Aligned with our strategy of building a strong pipeline of complex and differentiated products, R&D expenses for Q4 stood at INR 506 million, representing approximately 4% of Base business sales. For the full year, R&D expense were INR 2,230 million, or about 5% of base business revenue. Our continued investment in R&D reflects our commitment to strengthening capabilities in complex injectables, peptides, and specialty delivery platforms, and we are seeing good progress across our development pipeline. Coming to profitability, during Q4 FY 2026, Adjusted for ESOP-related non-cash expense of INR 114 million, Adjusted EBITDA stood at INR 5,244 million, with margins of 30%, a remarkable improvement of 500 basis points over previous year. Margins growth was supported by operating leverage with two additional lines getting commercialized and cost efficiencies. For the full year FY 2026, Adjusted EBITDA excluding ESOP-related expense and other one-off items stood at INR 16,826 million with a margin of 26%, an improvement of 360 basis points over previous year. This was mainly supported by Cenexi turnaround, operating leverage, and cost efficiencies. For the Base business, excluding Cenexi, Adjusted EBITDA margin remained strong at 41% for the quarter and 38% for the full year FY 2026, highlighting the inherent strength of our core operations. We are also pleased with the progress at Cenexi, which has significantly improved its EBITDA performance and returned to profitability for the three quarters during the year, marking an improvement milestone in its turnaround journey. Other income comprising primarily foreign exchange gains and interest income stood at INR 1,115 million for Q4 and INR 3,163 million for FY 2026. Adjusted net profit for Q4 stood at INR 3,667 million, translating to Adjusted PAT margin of 21% versus 13% in previous year. For the full year, Adjusted net profit stood at INR 10,455 million with margins of 16% versus 12% in previous year, reflecting a strong improvement over the previous year. On taxation, the effective tax rate for the quarter stood at 28% and the full year stood at approximately 29%. As of March 31, 2026, total cash and cash equivalent at the group level stood at INR 33,591 million. External debt at Cenexi level stood at INR 2,434 million. Overall, our balance sheet continues to remain strong and well capitalized. Cash flow from operations remain healthy at INR 4,045 million for Q4 and INR 10,314 million for FY 2026 compared to INR 9,147 million in FY 2025, reflecting improved operating performance and better working capital management. Our cash conversion cycle for FY 2026 averaged 164 days, showing improvement compared to previous year, driven by better inventory management and receivables control. Total CapEx during FY 2026 amounted to INR 4,938 million, primarily directed toward the capacity and capability expansion in India, ongoing investments at Cenexi and selective projects aligned with our CDMO and complex product strategy. These investments are in line with our long-term strategy and building high value capabilities and supporting future growth opportunities. The year has seen strong revenue growth, improvement in margin profile and robust cash generation, along with a significant improvement in Cenexi performance. There is an increasing integration of Cenexi with Gland Pharma's core operation, particularly in business development, customer engagement and tender participation. We are now seeing meaningful cross-selling benefits with joint capabilities enabling us to win larger multi-geography contracts and attract new global customers. Cenexi and Gland will increasingly be operating as one uniform platform in future. With that, I would now request the moderator to open the lines for questions. Thank you. Operator Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Tushar Manudhane Analyst, Motilal Oswal Financial Services Thanks for the opportunity and good set of numbers for the quarter. If you could share the milestones and the revenue shares for the quarter? That's my first question. Srinivas Sadu Executive Chairman, Gland Pharma For the quarter, profit share is 9%, milestone is 6%. Tushar Manudhane Analyst, Motilal Oswal Financial Services Excluding that or adjusting for the same, the EBITDA margin is still quite healthy for the quarter, and in fact, in terms of the absolute EBITDA as well. Just to understand how sustainable is this as far as base business EBITDA is concerned. Srinivas Sadu Executive Chairman, Gland Pharma Yeah, as I said, I think we could launch the major CDMO products and also the two large products, dalba and, yeah, dalba got launched in March, so that will be analyzed this year. That's a big product, I imagine. Also there are several CDMO projects what got launched in this quarter. This will be analyzed this year, and these are long-term contracts. This will be sustainable in terms of long- term. Yeah. Tushar Manudhane Analyst, Motilal Oswal Financial Services Got it. Secondly on this, if you could quantify like the eight contracts, value-wise, how much of this would be like the GLP-1 eight contracts which you mentioned are already signed? How much of the capacity of this 140 million units will get utilized for these eight contracts? Srinivas Sadu Executive Chairman, Gland Pharma Tushar, we're not actually talking any numbers for GLP-1. Even the guidance we're giving is excluding GLP-1 because it all depends on these partners getting approvals in different markets and volumes. We're not giving any numbers out yet. We're just saying how many contracts and, you know, the units also is very difficult to assume right now. The forecasting or the guidance we give is excluding GLP-1. Anything which happens on GLP-1 will run upside. Tushar Manudhane Analyst, Motilal Oswal Financial Services Got it. While not getting into details with respect to GLP-1, but any approval, so to say, you expect in FY 2027 or FY 2028? Srinivas Sadu Executive Chairman, Gland Pharma Yeah. At least our partners are expecting approvals. Yes. Two partners. Yeah. Tushar Manudhane Analyst, Motilal Oswal Financial Services Got it. Just, secondly, with respect to Cenexi, is it now safe to assume that, at least we'll be EBITDA neutral for 2027 and with sort of EUR 45 million revenue? Srinivas Sadu Executive Chairman, Gland Pharma For FY 2027, our target is to reach, at least, mid single- digit, high single- digit, EBITDA. By the end of this year, you know, we should get there. Yes. Tushar Manudhane Analyst, Motilal Oswal Financial Services This should be- Srinivas Sadu Executive Chairman, Gland Pharma For the year. Yeah. Tushar Manudhane Analyst, Motilal Oswal Financial Services This should be driven by the scale-up in revenue as well. Given Q4 actually didn't have scale-up in revenue despite that. Srinivas Sadu Executive Chairman, Gland Pharma Yeah. The focus is more on efficiencies and putting up lines which we have invested into. The focus is more on that and with these new product launches, their high-value products will replace the low-value products. The revenue increase may not be that great. Mostly on the profitability, the improvements will be. What you have seen is more on the efficiency side. Yes. Tushar Manudhane Analyst, Motilal Oswal Financial Services Got it. Sir, just lastly, on the hedging policy, if you could sort of refresh, followed by Gland Pharma on both base business as well as Cenexi? Srinivas Sadu Executive Chairman, Gland Pharma We have naturally hedged policy. Most of our raw material which we import is open and as well as the revenue is open. In Cenexi, it's mostly euro revenue and euro cost, there's no need to hedge there. Tushar Manudhane Analyst, Motilal Oswal Financial Services Got it, sir. Thanks. Thanks a lot for this . Operator Thank you. The next question comes from the line of Neha Manpuria from Bank of America. Please go ahead. Neha Manpuria Analyst, Bank of America Yeah, thanks for taking my question. My first question is on Cenexi. On your comment that the revenue increase should not be that much, I mean, given the investments that we have made with the addition of ampoule lines and the contract lines that we're talking, we did see EUR 50 million in the last quarter. Should Cenexi not be above EUR 200 million of revenue in FY 2027? Srinivas Sadu Executive Chairman, Gland Pharma We might touch about close to EUR 200 million in FY 2027. The majority of the growth might come next year when we put up this additional line in August of this year that will add capacity. That will commercialize next year. That will ramp up a bit. FY 2027, EUR 200 million is the target we're looking at. Yes. Neha Manpuria Analyst, Bank of America Understood. Okay. The capacity addition that we're doing, the ampoule lines that we're adding will not contribute in this year. Even the line that we have added last year, one of the lines. Srinivas Sadu Executive Chairman, Gland Pharma Last year's line which we added, the ampoule line in Fontenay is ramping up now. Neha Manpuria Analyst, Bank of America Okay. Srinivas Sadu Executive Chairman, Gland Pharma That is adding the revenue, increased revenue at Fontenay site. The new additional line which will be put up in August of this year, post getting it qualified, the ramp-up will happen next year. Neha Manpuria Analyst, Bank of America Understood. Okay. For the Base business, what is the growth momentum we should assume there? You know, is the mid-teens, mid to high- teens, given the you know, CDMO contract wins and the new product launches, would that be a fair assumption? How should we think about ex Cenexi growth? Srinivas Sadu Executive Chairman, Gland Pharma As a console, we are looking at around 13%, 12%-13% growth. It's a mix of both Cenexi and the base business. This is excluding the GLP, whatever we get offset on that. Neha Manpuria Analyst, Bank of America Understood, sir. On this CDMO business that you mentioned, because, you know, I missed the revenue, but did you say it was 46% of the revenue and grew 23%? Srinivas Sadu Executive Chairman, Gland Pharma Yeah. The base business is 23% because Cenexi is 100% CDMO. As a group, it's 46%. Neha Manpuria Analyst, Bank of America Okay. Srinivas Sadu Executive Chairman, Gland Pharma At the Base business is about 23%. Yeah. Neha Manpuria Analyst, Bank of America Okay. The contract, the high-value contracts that you're talking about, I think one of them, that should start I mean, all of the contracts put together, what would be the pipeline that we have which gives you this medium-term visibility? If you could give any color there of the CDMO business. Srinivas Sadu Executive Chairman, Gland Pharma FY 2027, it's almost, I would say INR 40 million. INR 40 million-INR 50 million will come from CDMO. The additional growth coming from the CDMO contracts in FY 2027 will be between INR 40 million-INR 50 million. Neha Manpuria Analyst, Bank of America This is in the Base- Srinivas Sadu Executive Chairman, Gland Pharma The larger contract. Yeah. Sorry? Neha Manpuria Analyst, Bank of America This is in the Base business? Srinivas Sadu Executive Chairman, Gland Pharma Yeah, Base business. Correct. Neha Manpuria Analyst, Bank of America Okay. Sorry. Go ahead, sir. Operator Thank you. The next question comes from the line of [Shashank Goel] from Infinity Capital. Please go ahead. Speaker 14 Yeah. Thank you so much for the opportunity. Am I audible? Srinivas Sadu Executive Chairman, Gland Pharma Yes. Operator Yes. Speaker 14 Yeah. Firstly, a very good set of numbers. I have two questions. First one is, what are the growth do you expect for the overall business in the coming year and over the next three years? Like, you answer this question, I've got one more question. Srinivas Sadu Executive Chairman, Gland Pharma Sorry. Can you repeat that? It's not clear. Operator Yes. [Shashank], sir, if you're using, speaker mode, may we request you to use answer please? You're sounding slightly muffled. Speaker 14 One minute. Can you hear me now? Operator Yeah, go ahead. Speaker 14 Hello. Srinivas Sadu Executive Chairman, Gland Pharma Yes. Yes, go ahead. Speaker 14 Yeah. My question is, what sort of growth do you expect for the overall business in the coming year and over the next three years? Srinivas Sadu Executive Chairman, Gland Pharma The next four years, we're looking at a CAGR of 15% as a consolidated basis. Speaker 14 Okay. My next question is, on Cenexi, like what sort of steady-state margin profile can we achieve? Srinivas Sadu Executive Chairman, Gland Pharma Cenexi? Speaker 14 The, like you said, Cenexi. Srinivas Sadu Executive Chairman, Gland Pharma Like you said, Cenexi. Speaker 14 What kind of steady-state margin profile can we achieve? Srinivas Sadu Executive Chairman, Gland Pharma We are looking at mid-teen EBITDA level in the midterm. Speaker 14 Okay. Okay. Thank you so much. Yeah, that's it. Operator Thank you. The next question comes from the line of Devang Shah from ENT Financials. Please go ahead. Devang Shah Analyst, ENT Financials Yeah. Hi, sir. Am I audible now? Srinivas Sadu Executive Chairman, Gland Pharma Yes. Devang Shah Analyst, ENT Financials Sir, the first question is from the Cenexi part. We did the acquisition few years back, and still also like just now on the last question you spoke about that in next year we can achieve the mid-teen numbers, right? Was it a good purchase or it's like, I'm not understanding what was the concept behind it. Like, what was the rationale? Because it's, we have purchased it two, three years back, if I'm not wrong. Srinivas Sadu Executive Chairman, Gland Pharma Uh- Devang Shah Analyst, ENT Financials In, next year at mid-teen EBITDA levels, like, what was the rationale behind it? Srinivas Sadu Executive Chairman, Gland Pharma You mean the rationale behind purchasing Cenexi? That's the question? Devang Shah Analyst, ENT Financials Yeah. Srinivas Sadu Executive Chairman, Gland Pharma One is, of course, we have not still exploited the synergies. As a strategic initiative, we need to enter CDMO business in Europe. That's one. Second, the clientele of Cenexi is completely independent of what we have. We are not completely exploited that. We are working on that. We have already signed five to six products with the same clientele what Cenexi has. Although those don't reflect in Cenexi's business, but that adds to at a group level. One is that. Second, our own products now we have actually taken MA in Europe. Cenexi will act as a releasing entity there. More products of Gland can get into European market as well. From technology front, they have technologies which we don't have. Again, like sex hormones we don't have, so we're doing a development program where we can develop and then get manufactured at Cenexi, because there's a substantial business out there for that. There are not many sites available for it. There are multiple reasons why I acquired this, not just the business what they have. As we speak, we have already started developing some hormone products. Now we are looking at the controlled substances which you can't do in India. Signing contracts with customers of Cenexi for our products and our own products getting launched in U.S. There are several reasons why we did this acquisition. Devang Shah Analyst, ENT Financials Okay. sir, the main other thing was like, currently the Cenexi is operating at the maximum level or it's like, the capacity utilization is at 50% or 80%? Can you just give me the brief, like what's the capacity utilization over there? Srinivas Sadu Executive Chairman, Gland Pharma At Cenexi? Devang Shah Analyst, ENT Financials Yeah. Srinivas Sadu Executive Chairman, Gland Pharma Cenexi, some sites are at operating at full level. Like Fontenay is at almost 100%. That's why we added line and one more line we're adding, replacing that so that we can increase the capacity. There is a demand, higher demand than what we're able to supply today. Only again our solid orals, it's almost 100%. I would say 90% occupancy. The other tw o sites we have capacity, where the tech transfer programs have happened and some products are getting launched. Those are probably at 50%-60% capacity, two sites. Devang Shah Analyst, ENT Financials Okay. Sir, on the Gland Pharma group base, what are your future plans to maintain this EBITDA level of 25%+? Like we are just spending 4%-5% on the R&D. Is there any plan to increase or ramp up that part on the double-digit or something? Srinivas Sadu Executive Chairman, Gland Pharma We have the several programs what we are doing. One is of course internal R&D where we spend 4%-5%. We also do co-dev projects. Around 15 projects we are working with development partners. Those don't reflect in this spend what we do. We're also doing an in-licensing program with China in the liposomal site. Those also do not reflect. This is an internal R&D spend what we're showing reflecting, but there's also spend which is done on different aspects. The other is of course more focus on high-tech CDMO. The investments are going into, say, for example, microscale manufacturing technology, nanotechnology. Those are high value CDMOs where the margins are very high. On one side, the volumes are helping us in terms of the products, high, high volume products, which is helping us in operating leverage. Keeping the cost down and per unit cost down. The other side, we are also entering contracts which is high, high value CDMO contracts. Long run, I think we can be sustainable in terms of margins. Devang Shah Analyst, ENT Financials That's all from my side. Thank you. Srinivas Sadu Executive Chairman, Gland Pharma Yeah. Devang Shah Analyst, ENT Financials Thank you. Operator Thank you. Participants, you may press star and then one to ask a question. The next question comes from the line of Rahul Jeewani from IIFL Capital. Please go ahead. Rahul Jeewani Analyst, IIFL Capital Yeah. Thanks, sir, for taking my question. Sir, this overall consult top line guidance of 12%-13% which you provided for FY 2027. I'm assuming that is in INR terms. On the currency as well, both on USD INR and Euro INR, we would see almost a 5%-6% kind of a benefit in FY 2027. Do you think that your guidance of 12%-13% is a bit conservative? Essentially what we are implying is that the constant currency growth would only be, again, high singl- digits. Srinivas Sadu Executive Chairman, Gland Pharma We can't assume what the currency rate would be. We're taking on a constant currency whenever we're giving a guidance. This is based on constant currency growth. If any fluctuation currency happens, then that will be an upside. Rahul Jeewani Analyst, IIFL Capital Okay. 12%, 13% is on constant currency only? Srinivas Sadu Executive Chairman, Gland Pharma Correct. Correct. Rahul Jeewani Analyst, IIFL Capital Sure, sir. Well, let's say while you said that, Cenexi might see growth acceleration from FY 2028, for the Base business, what is driving, let's say, growth in FY 2027? Srinivas Sadu Executive Chairman, Gland Pharma Like I said, the products what we launched in the last quarter, and that's why the numbers look good. That is annualized, we also won a GPO contract for that. The DMVI multivitamin we're launching in this quarter. This just these three or four products are actually contributing to about INR 40 million. We have our own new launches helping us give another INR 200 crores. Together that's about INR 650 crores is from the base business and about INR 150 crores will come from the Cenexi business. Rahul Jeewani Analyst, IIFL Capital Okay. Srinivas Sadu Executive Chairman, Gland Pharma Excluding the Forex, excluding the Forex and the GLP-1, we are also seeing a lot of shortages, we are hearing from U.S. now. That could also be an upside. We think that with the current order book and forecast in hand, 12%- 13% is the guidance we want to give. Rahul Jeewani Analyst, IIFL Capital Sure, sir. Last question from my side. Obviously over past couple of quarters, we were banking on dalbavancin and the multivitamin portfolio, which gets launched, which is helping us to drive growth now. For FY 2027, are we looking at, let's say, any critical product opportunities to come in, which you can call out? Srinivas Sadu Executive Chairman, Gland Pharma No. There are already products which are approved, which we have tentative approval and the patent is expiring later this year. The product is already approved, just the launch is there. There are other CDMO contracts which we'll start producing it. These are all approved products. The guidance what we're saying, 12%-13% is without any risk, I would say, because almost all the products we have approval except one small product. Rahul Jeewani Analyst, IIFL Capital Okay, sure. Thank you. Thanks for answering the questions, sir. Operator Thank you. The next question comes from the line of Ashish from Leo Capital. Please go ahead. Speaker 15 Thank you for taking my question, sir. On GLP-1, are we looking to register the product ourselves in any of these markets or we will be prematurely relying on manufacturing partners, we'll be manufacturing partners for companies registering the product? Srinivas Sadu Executive Chairman, Gland Pharma Yeah. We are not developing these products. We are only a CDMO for GLP-1. We will be producing all liraglutide, semaglutide and tirzepatide. All the 3 GLP-1 versions we'll be manufacturing, but everything for other customers. Speaker 15 Got it. My second question is, considering we have eight GLP-1 in the pipe, eight customers approved and six in the pipeline, what markets have our partner received approvals in and what sort of capacity utilization do we expect over the next one, two years? Srinivas Sadu Executive Chairman, Gland Pharma I can't give more details because if I tell whether the customer got approved or not, then it's very obvious. We don't want to let that out. Volumes also, it's too early to tell. Like I said, our guidance we're saying is ex-GLP. We want to see how the market forms and when these customers get approvals and how many units they can sell. It's too early to give a guidance on that. Speaker 15 Okay. Any specific markets which they've gotten approved, can you give that out? Srinivas Sadu Executive Chairman, Gland Pharma No, no, probably you'll hear once they launch. We don't want to let out their names, yeah. Speaker 15 Okay. Thank you. That's all from me. Srinivas Sadu Executive Chairman, Gland Pharma Yeah. Thank you. Operator Thank you. The next question comes from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead. Abdulkader Puranwala Analyst, ICICI Securities Yeah. Hi, sir. Thank you for the opportunity. First question, just a follow-up from the previous participant on GLP-1. First of all, any reason why we are not including this in our guidance for 2027? Secondly, if you could, you know, just broadly help us understand this 140 million capacity what we have now. Say over the next two to three years, how should we, you know, kind of build up a ramp-up into this capacity? Srinivas Sadu Executive Chairman, Gland Pharma See, as you know, it's very difficult to give a guidance because one is of course we are not selling directly to our customers. Second, the timing of launches will vary from customer to customer, market to market. Most of the volumes, as you know, comes from U.S., where the patent is supposed to 2030. The ramp-up will happen mostly on during that time. I think next year I would say a lot of exhibit batches filings and some approvals will come later part of this year, maybe 3rd quarter. It's very difficult to assume numbers without actually having to know when the approvals will come in which market. Abdulkader Puranwala Analyst, ICICI Securities Understood, sir. You know, next one just a clarification on, you know, the opening remarks from Ravi, sir, when he talked about, you know, opportunities of cross-selling coming within, you know, the parent group. You know, how exactly should we look at it from a growth perspective? Is it something what we have already worked upon and, you know, FY 2027 guidance kind of adequately covers it? You know, for the FY 2028 and beyond, you know, how should the ramp-up in these products, should pan out? Srinivas Sadu Executive Chairman, Gland Pharma You mean the Cenexi integration piece you're saying? Abdulkader Puranwala Analyst, ICICI Securities No, I'm talking with the parent, with Fosun. Cross-selling the Fosun piece there. Srinivas Sadu Executive Chairman, Gland Pharma That's not with Fosun. It's more to do with Cenexi. That's not guided in FY 2027. Cenexi clientele, whom we are signing products with them, that is not this year. You'll see that from FY 2028 and so. There are three MAs which are also signed up. You might see some launches happening from third quarter, but mostly from FY 2028. Abdulkader Puranwala Analyst, ICICI Securities Okay. Okay, understood. Sir, last one is a bookkeeping question from my end. I mean, you had a EBITDA of total 30% for the year. What should we kind of build in for the next two years? Srinivas Sadu Executive Chairman, Gland Pharma You mean the EBITDA margin? Abdulkader Puranwala Analyst, ICICI Securities No, sir. I'm talking about the tax rate. Srinivas Sadu Executive Chairman, Gland Pharma Tax rate. Abdulkader Puranwala Analyst, ICICI Securities Effective tax, yeah. Srinivas Sadu Executive Chairman, Gland Pharma Tax rate will improve because, Cenexi profitability as it improves, there will be, the blended tax rate will be better. It will come down. Abdulkader Puranwala Analyst, ICICI Securities Got it, sir. Thank you. Operator Thank you. The next question comes from the line of Smith Gala from RSPN Ventures. Please go ahead. Smith Gala Analyst, RSPN Ventures Yeah, thank you for the opportunity, congratulations on a good set of numbers. My first question is also, you also threw light in your opening remarks. What caused us to go give such a wonderful growth in Q4, especially in the Base business? What kind of margins are sustainable as the Base business is concerned? We have delivered around 40%-41% margins. For the full year, not even 20%, with 27%-28%, what kind of margin Base business are sustainable? Srinivas Sadu Executive Chairman, Gland Pharma If you see last few quarters, our Base business EBITDA margin is around 35%-36%, and we've been guiding like that. We still guide for the year, as a Base business around 35%, 32%-35%, and as a consol basis around 25%-26% EBITDA. Now the probably from few quarters we've been saying the initiatives we took to increase the CDMO business so that those those contracts which have signed up and got commercialized last quarter and will continue to commercialize moving forward. On the initiative side, again, two more lines got operational this quarter. One more line will get operational next quarter. We're also getting an operational leverage from capacity because there is a demand in terms of products. So we've been seeing which products actually to sell. There is an increased demand. Again, we did tell that we got several GPO contracts end of last year, which started selling from beginning of this year. That also added to volumes, volume growth. With the added lines and volume growth, that also helped in operational leverage, so that's why the margins are high. Smith Gala Analyst, RSPN Ventures Okay. Srinivas Sadu Executive Chairman, Gland Pharma It's a combination of new GPO contracts which we have won, because of the better cost structure we have and then, the operational leverage and also the CDMO volumes. Smith Gala Analyst, RSPN Ventures Okay. Thank you. That was helpful. The next question is, I know that we don't have much impact to the Middle East. It's around 2%-3% of our total sales, but a ny impact do we see on the Middle East part of our business as we may have mentioned Saudi Arabia in some of our growth guidance and any development on the new CEO on appointment? Srinivas Sadu Executive Chairman, Gland Pharma If you look at the Saudi, it did impact. If you see last quarter, there's a dip in ROW business. Major dip is coming from that area because we didn't ship anything to that space. Probably, hopefully next quarter also, if it cools down, that might, you know, the shipments might start and the ROW might come on track. That's an impact for sure from business perspective. From CEO perspective, yeah, we are looking at candidates who have stronger CDMO background and also bio background as well. Yeah. That's an active requirement. Smith Gala Analyst, RSPN Ventures Okay. Okay. That was helpful. I'll, that was all from me. Srinivas Sadu Executive Chairman, Gland Pharma Thank you. Operator Thank you. The next question comes from the line of Saion Mukherjee from Nomura. Please go ahead. Saion Mukherjee Analyst, Nomura Yeah. Good evening, and thanks for taking my question. Mr. Srinivas, if you can talk about, you know, your investments and any update on the biologics biosimilar space that you had mentioned a few quarters back. Srinivas Sadu Executive Chairman, Gland Pharma Investments generally or on the just in the bio? On the investment side- Saion Mukherjee Analyst, Nomura Yeah Srinivas Sadu Executive Chairman, Gland Pharma I'll first touch upon the general side. We do have now facing some constraint on certain products. Ophthalmics, we are tight on it, so we have taken board approval to put up ophthalmic line with the capability of suspensions. Also we are getting into blow-fill-seal technology, so that will be next year. But the investment will start now. Of course, some CDMO contracts needed dedicated equipment and lines, so there's investment going in that. Around INR 2,000 crores we're investing in next three years in addition to about INR 300 crores this year. Ravi Mitra CFO, Gland Pharma Yeah. FY 2027 we expect about INR 500 crores. Srinivas Sadu Executive Chairman, Gland Pharma As a INR 500 crores investment in FY 2027, yeah. Saion Mukherjee Analyst, Nomura So- Srinivas Sadu Executive Chairman, Gland Pharma On the bio side. Saion Mukherjee Analyst, Nomura Yeah, sorry. Srinivas Sadu Executive Chairman, Gland Pharma still, we're not invested much. Still it's a slow run. In the guidance we gave also the numbers, I would say it's slow, not that much. But we are looking at smaller, small scale projects, you know, just to understand the space and know how, but not much investment going into that space yet. Saion Mukherjee Analyst, Nomura Right. Sir, I think the second question I had was on medium-term growth. You're investing INR 2,000 crores. I think you mentioned, you know, over the next four, five years you expect like mid-teen growth on a consolidated basis. And, you know, there are various growth drivers that you have talked about. Is it possible for you to sort of indicate the key drivers or, you know, what you think would be the number one, two or three drivers that would sort of help deliver 15% kind of, midterm, top line growth? Srinivas Sadu Executive Chairman, Gland Pharma I think our CDMO pipeline is very strong, I would say. The RTU bag portfolio is strong again. Several products in that, they're under patent and which goes off-patent. That is a one big growth driver. One is in the complex injectables, suspension products. There are sterile API-based complex injectables. That's another growth driver. Saion, we did mention last year on the CMS project what we signed with the European entity. That will commercialize from end of this year, third quarter of this year. That will, that is a big revenue driver for us, along with some pen device projects what we signed up with multinational on the CDMO side. That's a growth driver. There are several pipeline projects with that. I would say, you know, many are approved products. Some are changed from a vial to device projects which have taken up, along with RTU bags. I think these are the major growth drivers. Saion Mukherjee Analyst, Nomura Yes. you know, I mean, is it like over the next few years the growth rate would be largely steady at like mid-teen or you see one particular year where there could be a step up, like FY 2028, 2029 or is it be more? Srinivas Sadu Executive Chairman, Gland Pharma FY 2029 will be one big step up. Couple of complex products which are big ones will be launched probably second or thirrd quarter FY 2029. That could be one big step up. I think the steady state this year if it is, we are saying 13% at a constant, the currency, and then FY 2028 could be 15%, and then later it could be 19%-20% or bit more. There is a step up in FY 2029 where more complex products will hit the market. Otherwise it's more CDMO and other products which we have. Some we have settlement dates in FY 2028. Those also gets launched in FY 2028 also. Saion Mukherjee Analyst, Nomura Understood, sir. Just last question, if I can, on the, you know, cost side because of the Middle East, you know, are we seeing any pressure in terms of raw material availability or price or power cost in Europe? Any sort of an impact on account of the Middle East conflict? Also in your comments you also mentioned about cost optimization. I mean, is there scope for additional cost optimization within your existing setup and, you know, if you can quantify that? Srinivas Sadu Executive Chairman, Gland Pharma Yeah. This is an ongoing exercise for us in terms of cost optimization. From the cost perspective, Europe, I think Cenexi we hedge the power cost. In India now we more and more we are looking at solar. We have already acquired a solar plant, so that should help us in reducing some of our power costs. Also, it's a constant optimizing in terms of several products where the batch sizes were low, we are increasing those batch sizes because of the contracts we won. I think it's an ongoing exercise. In terms of Middle East, it's not a question of availability, but I think it's more to do with, we hear there is a short delay in solvent supplies. As planned, we're not a major API pro-producer, so there's not much impact on solvent side. From vials and glass, yes, there is a request from the suppliers to increase it by 5%-6%. We are studying the impact on the long run. It's too early to tell, but probably there could be an impact of 1%-2% overall. On the logistics side, as you know our model, we share the cost with our partner. It will be minimal cost, but again, we have to see the total impact, but probably 1%-2% on the revenue could be an impact. Saion Mukherjee Analyst, Nomura Understood. Thanks a lot. Srinivas Sadu Executive Chairman, Gland Pharma Yeah. Operator Thank you. The next question comes from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Shyam Srinivasan Analyst, Goldman Sachs Good evening. Thank you for taking my question. Just the first one on the cartridge capacity now at 140 million. Sir, I know you're not telling which are the contracts with geographies, but any sense of these, of eight, I don't know whether all eight are GLP-1, but aggregate roughly how much of that 140 million could be GLP-1 or has been contracted? Srinivas Sadu Executive Chairman, Gland Pharma All are GLP-1 only. It's just different molecules in GLP-1. Shyam Srinivasan Analyst, Goldman Sachs No, no. Sir, how much has been contracted? Not capacity. Shriniwas Dange Head of Investor Relations, Gland Pharma Sir, can you repeat, Shyam? We didn't get your last statement. Shyam Srinivasan Analyst, Goldman Sachs Srinivas, I'm just asking of the INR 140 million which is capacity, how much have been contracted now? Aggregate number. I'm not looking at which contract, aggregate how much has been contracted at least in the next 12 months. Shriniwas Dange Head of Investor Relations, Gland Pharma Shyam, it is not possible for us to give you, how much of the capacity has been contracted because it is basis, the projections that are provided by the partner, and it changes from time to time. It won't be possible for us to quantify how much of it has been contracted so far. Shyam Srinivasan Analyst, Goldman Sachs Understood. The expectation is that in the next 12 months, as these come to fruition and maybe there's a press release from some of the partners, it will come to light in the public domain. Would that be fair? Srinivas Sadu Executive Chairman, Gland Pharma Yeah. Once they get approvals, then, you know, we will make an announcement and comes with the. Shyam Srinivasan Analyst, Goldman Sachs Understood. Srinivas Sadu Executive Chairman, Gland Pharma Yeah. Shyam Srinivasan Analyst, Goldman Sachs Understood. Understood. Thank you, sir. Thank you. Second question is on constant currency growth for the quarter Q4. INR growth is 22%, but what is constant currency growth? Maybe if you can also tell us the U.S. revenue growth. Ravi Mitra CFO, Gland Pharma It's, we can come back to you on that. It's very difficult to tell because we have multiple. Because it's also volatile during that quarter because many invoices were made at different point of time. We also have U.S., some U.S. sales happening in rupees, especially with the local customers. We'll come back to you. Srinivas will come back to you separately. Shyam Srinivasan Analyst, Goldman Sachs Thank you, sir. Last question is on the d albavancin. Given we launched in February, was there a channel push or an inventory push given that which could have increased Q four numbers and maybe normalizes over time? Would that be a development in quarter four? Srinivas Sadu Executive Chairman, Gland Pharma Not really. In fact, after we launched, the customer has won, the Vizient, contract as well. The numbers are actually up from the first quarter, the next four quarters. If you annualize that, the annualized numbers will be higher than what we sold in that quarter. Shyam Srinivasan Analyst, Goldman Sachs Perfect, sir. Thank you, and all the best. Srinivas Sadu Executive Chairman, Gland Pharma Yeah. Operator Thank you. The next question comes from the line of Ashish from Leo Capital. Please go ahead. Speaker 15 I mean, I previously asked regarding the GLP-1 ramp up, and you told that it might be delayed. I wanted to know, what is the rationale behind adding the next 100 million capacity? Was the previous 40 million fully utilized? Srinivas Sadu Executive Chairman, Gland Pharma No. When everybody launches in 2030, we should be ready with that. What they have also done is they also signed a insulin contract for this line, which will help us fill the capacity for some time till the full ramp-up happens. The line what we have is combo line, which can fill vials and cartridges. We will fill insulin cartridges and vials for at least next few years till full ramp-up happens for the GLP-1. As you know, we can't produce to everybody if we just have 40 million when it commercializes. It's more to do with commercial launch. When it happens in 2030, we should have enough capacity, but the filing will happen from that line. That's the reason. Speaker 15 The insulin vials are occupying the total 140 millon? Srinivas Sadu Executive Chairman, Gland Pharma The insulin vial and cartridges might occupy INR 30 million-INR 40 million in next couple of years. It will ramp up, but at least that will cover till 2030, majority of the costs. Speaker 15 Okay. Okay, I got it. Thank you. Srinivas Sadu Executive Chairman, Gland Pharma Yeah. Operator Thank you. Ladies and gentlemen, we will take this as our last question for today. I now hand the conference over to the management for closing comments. Shriniwas Dange Head of Investor Relations, Gland Pharma Thank you, everyone, for joining us today. We appreciate your participation in the question and answer session during the call. If you have any follow-up questions, please feel free to reach out to us. We look forward to connecting with you again next quarter. Thank you. Operator Thank you. On behalf of Gland Pharma Limited, that concludes this conference. Thank you everyone for joining us, and you may now disconnect your lines. Powered by