Q4 25/26

May 26, 2026

Summary

FY26 revenue rose to INR 1,798 crore, while EBITDA and PAT declined amid forex and cost pressures. Record CDMO and Xanthine sales, capacity ramp-ups and 15%-18% long-term growth guidance frame the outlook.

Ladies and gentlemen, good day, and welcome to Aarti Pharmalabs Limited Q4 FY 2026 earnings call, hosted by Yes Securities Limited. Please note all participants are currently in listen-only mode. There will be an opportunity for you to ask questions following the conclusion of the management's opening remarks. Please note that this conference is being recorded. I now hand the conference over to Mr. Sidharth Jain from Yes Securities. Thank you, and over to you, sir. Hi. Good evening, everyone. I am Sidharth Jain from Yes Securities Limited. It gives me immense pleasure to hold the Q4 and the FY 2026 Aarti Pharmalabs Limited conference call. From the management team, we have Mr. Rashesh Gogri, Chairman, Mrs. Hetal Gogri Gala, Vice Chairperson and Managing Director, and Mr. Piyush Lakhani, Chief Financial Officer. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For more details, kindly refer to the investor presentation and other filings that can be found on the company's website. Without further ado, I would like to hand over the call to Rashesh sir for his opening remarks, and then we can open the floor for Q&A. Thank you, and over to you, sir. Good evening, everyone. I would like to welcome you to the Aarti Pharmalabs earnings call, covering the fourth quarter and the full financial year concluded in March 2026. I appreciate your participation today. I will start with a high-level review of our financial health, followed by an update on our key business development, and brief look at our growth outlook for the coming quarters. Let me start with a summary of our standalone financial for Q4 FY 2026 and full financial year FY 2025-2026. The revenue was INR 580 crore for Q4, which was INR 530 crore a year back, an increase of 9% YOY. On a full year basis, FY 2026 revenue came in at INR 1,798 crore versus INR 1,771 crore in FY 2025. The EBITDA was INR 134 crore as compared to INR 141 crore in the corresponding period of the previous year for the Q4. For the full year FY 2026, we achieved the annual EBITDA of INR 406 crore versus INR 428 crore a year back. The profit after tax for Q4 FY 2026 was INR 62 crore as compared to INR 89 crore a year back. For the full year FY 2026, the profit after tax stood at INR 176 crore versus INR 257 crore in FY 2025. It is noteworthy to mention that profit and loss account for the financial year FY 2026, there was a net foreign exchange loss of INR 33 crore. I am pleased to inform you that the board has declared a final dividend of INR 2 per share, and this brings the total dividend of FY 2026 to INR 3.50 per share. Now, let me present a few business highlights for each business segment. The Xanthine Derivative segment recorded the highest-ever quarterly revenue and contributed to 43% of our turnover in Q4 FY 2026. The volume split was 74% beverages customers and 26% other. In terms of geographical split, the export sales was 63% and rest 37% was local sales. The API and Intermediate business stood at 28% of the turnover. The sub-segment-wise breakup is 53% regulated market, 30% ROW, and 17% non-reg market. Looking ahead at FY 2027, we anticipate YOY growth for this business. However, it is important to recognize the persistent competitive pressure and the market headwinds affecting our product portfolio. The third segment, CDMO/CMO, has contributed to 29% revenue in this quarter. This segment also logged the highest-ever quarterly revenue of INR 155 crores. As of FY 2026 end, we are working with 21 customers and the number of active projects is 54, out of which 35 projects are in the commercial stage and 19 are under different stages of development. Both at customer ends. For the full year FY 2026, the CDMO/CMO segment has shown a robust revenue growth of 32% YOY. Nearly all of our revenue came from phase III molecule, phase III and commercial molecule reiterating a clear focus on late-phase projects. The impact of ongoing war, geopolitical tension in West Asia has caused significant raw material shocks, including logistics hurdle and rising energy costs. These inflationary pressures have strained profitability and supply chain operations, particularly in the intermediate segment, where competitive pricing makes cost passing difficult. However, our two other business units have reasonably been able to pass cost hike in our customer pricing. Let me now discuss the updates on the expansion projects. We have invested approximately INR 400 crore capital during the financial year 2026, and we plan to maintain the similar level of spending for the FY 2027. The budget includes ongoing Xanthine expansion, debottlenecking at Tarapur Unit 4, and a possible new production block at Atali. Atali is now largely past startup issues which were encountered during the ramp-up of phase one. With the corrective actions majorly in place, we are progressing well with the production scale-up, and phase one is likely to become completely operational by the end of this current quarter. Having cleared the customer audits, the site is well-positioned to support CDMO and intermediate production in coming months. The phase one of Atali, which comprised of 440 KL of reactor capacity, it is a multipurpose block. Given the current visibility within the CDMO segment, we are assessing to put up a dedicated manufacturing block tailored to specific projects. These dedicated assets offer superior operational efficiency and require lower CapEx. Currently, we are in preliminary designing and planning stage of this block, and the completion timeline could be expected 12 months from the construction commencement, being a brownfield project. The Xanthine Derivative expansion is progressing as planned, with current capacity being six thousand metric tons per annum, and the incremental capacity will be available for production at the end of the current quarter. The ramp-up to nine thousand metric tons per annum in next few quarters gradually will happen. Recently, the steroids block at Tarapur Unit 4 has undergone the debottlenecking, resulting in capacity increase by about one-third of existing capacity. Similarly, there are few more brownfield expansion initiative planned at our Tarapur Unit 4, USFDA approved API facility in the financial year 2027 to increase the capacity of anticancer and other blocks. We have decided to invest in R&D of TIDES, that is peptides and oligonucleotides, and this investment done in new R&D technologies will not yield immediate results, but has a good potential in the future, and we would like to explore these newer technologies. Looking forward, we are confident that our recent investments and expanded capacities will drive significant momentum across our businesses. Based on current project visibility and the operational ramp-up, we are guiding 15%-18% growth in both revenue and EBITDA for next 3-4 years. For immediate FY 2027, we expect the CDMO/CMO business to lead the growth with a projected sales growth of 40%-50% per annum. Moving forward, we remain focused on driving operational rigor, expanding the market reach, and investing in the talent and technology essential to our long-term success. The moderator may now open the forum for Q&A session. Thank you. Thank you so much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may click on the Raise Hand icon from the Participants tab on your screen. We request participants to restrict to 2 questions only, and then return to the queue for more questions. To rejoin the queue, you may click on the Raise Hand icon again. We will wait for a few minutes until the question queue assembles. We have our first question coming in from the line of Ankit Gupta of Bamboo Capital. Ankit, please go ahead with your question now. Yeah. Am I audible? Yes, please. Yeah. Thanks for the opportunity, sir. Sir, a few questions on the CDMO side itself. If you can elaborate on this dedicated block that you are planning for the CDMO project at Atali. Is it for the molecule which has recently got approval for hot flashes, or is it for the molecule which is under phase III and for lowering LDL or some other new molecule? If you can elaborate a bit more on this project and upon completion, what can be the revenue potential from this new block, and when do you expect to reach that? See, we are exploring putting up this dedicated block, which can manufacture several of these potential long-term projects for us. We are working on overall capacity and working with the customers on what kind of visibility they are able to give us in the coming quarters. Once we have some strong understanding of that, I think in the future quarter, we will let you know. But I think as you know, we have very strong pipeline of these products, and these products can have very good revenue in future. That is how we have projected the line of sight of close to $100 million in CDMO segment going forward. Sure. What can be the potential from this block and this molecule when we start operations from them or from this new block? I think we are assessing all the possible options and working with the customer over their demand basis, which I think, of course, the current Atali is capable of manufacturing it in multipurpose block. But in future, I think dedicated block would be prudent so that we keep on freeing our multipurpose capacity for the newer projects. That is how we are going to work and all the projects which enter into this commercial phase post phase III or launch and the customers have higher visibility, those products will move to dedicated block where we have 5-10 year visibility of these projects. We will start with this kind of approach, and that is what all the larger CDMO also do and that can give us higher visibility. I think depending on how we configure this, it can have potential of close to INR 250 crore to INR 300 crore top line also, single block. Yeah. Sure. And sir, on our overall guidance for the CDMO, if you look at our FY 2026 performance, we also had some spillover of CDMO revenue from Q4 FY 2025. And with Atali commencing operations in a full-fledged way by June 2026, audit's been completed. So shouldn't we expect higher growth in FY 2027 given our lower base in FY 2026? And overall in the CDMO segment, with this will be starting dedicated blocks. Are we on track to reach INR 1,000 crore revenue from the CDMO segment in FY 2028 or max by FY 2029, as you have been highlighting in the earlier calls? Yeah. Basically, the traction is to reach this goal as soon as possible. Of course, it depends on the customer projections and how the products get launched. We have some visibility on approved products, but I think there are a few products which are still going to get this approval, and that's why we don't have a firm number, how we will reach and when we will reach this number of $100 million. But that number is there, and we are pretty sure that we will reach that number, going forward. And, I think that's what I can share with you now. Sir, just one last question on the API segment before I come back in the queue. The API segment last year, we saw significant degrowth. You had highlighted about price erosion and inventory destocking, which was happening for some of our newly launched products in FY 2025. We have some decent launches planned in the oncology side in FY 2027. You did highlight about growth in the segment in FY 2027. What kind of growth are we looking in the API segment? If you can also elaborate a bit more on the launches planned for FY 2027 and FY 2028. Yeah. For FY 2027, I think, as you rightly mentioned, that FY 2026 was a soft year. Of course, it was marred by inventory issues and the issues at our customer's end. I think we are looking at growth in FY 2027 going forward because we actually de-grown in last year over earlier years. I think we will be definitely able to surpass that number and further grow our API business beyond the FY 2025 numbers. That's what we are looking at. It should be around in that range. Yeah. So we'll be surpassing the FY 2025 numbers that we did or like. Yeah. Or even adjust. No, no, we will be able to surpass the FY 2025 numbers of API intermediates. We were around INR 770 crore, so we should be able to surpass that in FY 2027. I think it was INR 700. That is what the split I have. Okay. Here we did INR 600. Sure. Okay. Thank you. I'll come back in the queue. Thank you. We'll take our next question from Meet Katrodiya of Niveshaay. Meet, you can unmute your microphone. Yeah. Hi. Good evening, sir. My question is on, let's say, our EBITDA guidance is of 15%-18%, right sir? Yeah, if I reconcile the EBITDA, the math. You are guiding your CDMO vertical will grow 40%, 50% next year. Xanthine is also ramping. Can we expect a much higher growth in FY 2027? I'm not asking for a specific guidance. Just directionally, if you can share anything on this. I think, we don't want to give a pointed guidance for this year. We are giving a general guidance of 15%-18% because, the projects keep on shifting by quarter, and that can really hamper our numbers. And as you rightly mentioned, there are a lot of different plants which are going to do the ramp-up, and those costs we will have to absorb, whereas the production ramp-up will take some more time. So I think, we have to be little patient about overall how the profits will ramp up in future. So that's what I have comment. Got it, sir. And sir, another question on the Xanthine part that crude prices have gone up, right? So, just want to understand, are we able to pass on the prices? How is similar. Is there any lag? Secondly, China is also removing the rebate, right? So pricing of the Xanthine is increasing. So just want to understand how much peak revenue we can do from Xanthine as from your total capacity that is going to be live. Yeah. As you rightly mentioned, the cost has gone up because of Yeah the West Asia crisis, and we have been pushing our customer for the price increase, and we have had some success on that. And it is quite logical that we cannot absorb the full cost of the West Asia crisis, which for certain products was quite heavy. And in terms of overall revenue, we feel that, with this current new capacity expansion, it can be well beyond INR 1,000 crores from the Xanthine newly added capacity and already whatever that we are doing. And in this current quarter only, we have been able to do close to INR 200 and significant percentage of sales has happened in the current quarter also. So INR 227 crore was what we did in the current quarter. Got it. Sir, on the CDMO positioning as compared to our peers, most of Indian CDMOs works on maybe early phase molecules also, right? Our model is a little different. We work on a more commercial phase molecules, right? Maybe I want to have some understanding. Let's say, how does our margin profile differ as compared to our CDMO peers? Their revenue is quite lumpy because there are only two, three commercial CDMOs, and ours is structurally good and less lumpy. Just want to have your view on lumpiness plus margin profile as compared to our peers. Yeah. Basically, Aarti Pharmalabs and the entire Aarti Group is having the focus on chemical manufacturing and pharma manufacturing. Our genesis is manufacturing, and that's what we specialize in, and that's where we get the core value. Of course, now we have R&D centers which can do much complex R&D also. As I mentioned in the opening remarks during my speech also, that we are going to enter into this newly, the peptides and oligonucleotides (TIDES) linkers, this kind of chemistry, going forward. That's where we will also try to do early phase work with our customers. Currently, there was a lot of traction towards moving away from China because of the U.S. customers wanting the products to be coming from a differentiated geography. That's where we found a lot of opportunities, and that's how we could get a lot of projects from our customers. That's where we have been concentrating till now. But we are open to doing work even at early phases. We have certain projects which are also bit of early phase or phase I, II moving to III kind of projects as well. Got it. Sir, can I ask a follow-up on this? Meet, I am really sorry. Would you like to rejoin the queue? We have other participants as well. Sure. Done, sir. Thank you. Thank you, Meet. We have our next question coming from Yash Doshi of Unifi Capital. Yash, please go ahead with your question now. Hello. Yes, Yash, please go ahead. Regarding the Xanthine, we have done a turnover around INR 252 this quarter. Rashik, sir. Hi. Can you hear the question? No. Yash, can you speak closer to the microphone, please? Am I audible now? Yes. In Xanthine business, we have done around INR 227 crores turnover in this quarter. Was it more of volume led or price led, since the prices have gone up for Xanthine in last 2, 3 months. Along with that, what has been the capacity utilization for Xanthine this quarter? Currently we are operating 6,000 metric tons per annum capacity before the current new block comes into the operations, and we are fully utilizing this capacity. Current, I think, overall sales were led by both, I think, quantity as well as the overall rate changes that we affected in this product. Okay. Another thing was, regarding we said that we will surpass the FY 2025 numbers for API intermediate. Which product gives us the confidence that we will be able to surpass it? Any product pipeline specifically? We operate in steroid space where we have recently debottlenecked our capacity by almost 30%, so that will also show some growth. We also have certain products which are going off-patent in this financial year, in the general category as well as the anti-cancer category. These kind of products and certain products have been launched by our customers in U.S. and Europe market. All these will give us higher sales than the last year. Last thing. On the Atali project, which has just been commercialized. Can you just quantify the OpEx which we have got? I think we are not sharing these granular details now. Okay. There are not any one-offs, right, in the OpEx? It is all basically cost of the Atali project being commercialized. Yeah. There is no one-off from the Atali plant. Have you got approval for USFDA and EU GMP for the Atali plant? No. Atali plant is going to supply the intermediates. It is not getting any inspection for the FDA. I think we have started doing the work for innovators there, for which we have got several innovators coming up to our side. I will join back in the queue. Thank you so much, Yash. Requesting all participants to restrict to two questions only and then return to the queue for more questions. We are taking the next question from T. Manish of Crisil Limited. Manish, please unmute your microphone so that you can ask your question now. Yes, please go ahead. Manish, we are unable to hear you. Please go ahead with your question. Yeah. Am I audible now? There is a bit of disturbance that we can hear. Can you try it one more time? Yeah. Is it now clear? No. Sorry, T. Manish. We are not clearly able to hear you. Do you want to try it one more time? Yeah. Yes, we can hear you. Thanks for the opportunity. I want to know since EBITDA margins have been already contracting this quarter, is it largely because of the rise in raw material prices and the logistical issues due to the West Asia crisis or anything else? And if it is due to that, how are you seeing the things for the Q1 of fiscal 2027, because only three months have Yeah. I think on the overall, expenses have been, I think, nearly similar to what we have got in previous year, if you want to answer. Yeah. No, see, quarter-on-quarter, the EBITDA margins have remained almost flattish. Are you asking compared to the last year? Yes. Last year, obviously, we have added a few facilities. Those will take time to ramp up. But then the cost is, we are basically incurring at full capacity. So that's where the cost has gone up a little compared to last year, and that's what is impacting the margin. Yeah. On this West Asia, I think, you mentioned about the cost increase also or no? Margins. Margins. Margins. Yeah. Yeah. Okay. Anything else you would like to have clarification? For Sorry, T. Manish. We are still not able to hear you clearly. Is it clear now? Okay. Yes, please go ahead. Yeah. Before the rise in cost, are you planning for any pass-through of these costs to your buyers for the API and intermediates or for the CDMO players? Because the cost increase is significant. As I mentioned in my speech, already we are able to do some pass on in CDMO as well as the Xanthine segment. In API segment, on the already orders which we have on hand, it is difficult to change those orders because these are all high-value drugs. I think in the future, we will try to get some increase, going forward. Of course, it depends on the competitive scenario for each and every product, but there are a few strong products which we have where we can get price increase as well. Okay. Yeah. Thank you. Thank you. We'll take our next question from Rahul Jain of Credence Wealth. Rahul, please go ahead. Hello. Yes. Sir, first of all, since the CFO is also here, there is some confusion on the numbers which have been spoken in the current call by you, and also based on the numbers which are there in the PPT. If I take the PPT itself, the standalone numbers which are mentioned in the PPT and the percentages, and we have always said that these percentages are to be applied on the standalone revenues. Based on that, sir, the FY 2025 API number is INR 772 crores, which has come down to roughly INR 650 crores, INR 647 crores to be precise. When to a previous participant you said we will come back to our FY 2025 revenue in FY 2027 in API intermediates, are we talking about going back from INR 647 crores to somewhere around INR 770 crores? You mentioned INR 700 crores. A bit confused on that, number one. Another confusion also is on the CDMO and Xanthine side. Again, based on the PPT proportions and the numbers given, the Xanthine Q4 revenue is roughly around INR 242 crores, and the CDMO revenue is about INR 169 crores. For the full year, it is INR 296 crores. The PPT mentions INR 276 crores and INR 155 crores for CDMO. Just now, I think you mentioned about Xanthine being INR 227 crores. If you can first clarify this or there is some confusion on these numbers, sir. Yeah, I think there are some undistributable certain sales, which is some trading activity sales or some number which gets knocked off. I think overall, you are correct. The CDMO sales for this quarter is INR 155 crores and for the entire year it is INR 276 crores for your clarification. In Xanthine sales for this financial year is INR 792 crores and for this quarter is INR 227 crores. Please note these numbers here. Then can we get what is the kind of trading turnover or if we say- It is around INR 50 crore, which changes this percentage, but that is not very significant. But that has an impact of a few crores here and there. Mm-hmm. Got you. Okay. Just to understand, sir, you mentioned that 1,000 crores of Xanthine revenues we can do in the current year, FY 2027, and we have already spoken about 40%-45% growth on the revenues in CDMO and also with regards to API, you mentioned. If I try to sum these numbers up, and also based on the CapEx which we have done in last 2, 3 years, do we feel that the guidance which we have given both for revenue and the EBITDA is a more conservative number as far as FY 2027 is concerned? See, first of all, my guidance is for 3 to 4 years. FY 2027 numbers, basically what happens is, annual number pinpointing becomes difficult because of the CDMO, CMO nature and the kind of approvals which our customers will get. I think depending on that, the revenue can move from one quarter to other or half year to second half year. That's why we have decided to give longer term guidance. I think, looking at the current scenario, it is possible on the top-line growth. Definitely, we will be able to grow the top line. Of course, on the EBITDA, I think we have to look at overall Russia crisis and how the war situation moves ahead and how the things normalize in future, and what will be the rupee going forward. All these factors have a lot of bearing on overall EBITDA. We will have to wait and see what happens. Thanks. Yeah. Sir- Sorry. Rahul, would you please rejoin the queue? We have other participants waiting, please. Okay. Yeah, sure. Thank you. We have our next question coming in from Dhwanil Desai of Turtle Capital. Dhwanil, please go ahead. Yes. Please go ahead, Dhwanil. Yeah. You are able to hear me? Yes. So far, two questions. If we look at historically, in last 3 years, we have spent INR 1,300 crore, INR 1,400 crore odd of CapEx. As you mentioned, including FY 2027. We are kind of catching up in terms of ramp up. It will take its own sweet time. Should we look at our company going forward from next year onwards, capital intensity coming down and more kind of ramp up revenue catching up and hence EBITDA to PAT conversion getting better? Is this how we should think or we will continue to invest this kind of capital going forward? See, I think last year we spent INR 400 crore, and year before that we spent INR 200 crore. 400. No, no. Last to last year we spent INR 200 crore. So total INR 600 crore spent. This year we plan to spend another tentatively INR 400 crore going forward. Of course, these are for the projects. Whereas, this entire Atali CapEx itself was close to INR 450 crore. Also the CapEx for the Xanthine expansion was also. So these two were very large CapExes, which we had to, of course, Atali being greenfield, we had to do lot of first-time CapEx. Now looking at newer blocks, which can double the capacity will be at much lower cost going forward. So we have to bite in the first round of higher CapEx in Atali. As far as other CapExes are concerned, we are trying to do more brownfield, where we did expansion of our API facility and steroid block expansion and anti-cancer block coming in future. I think these days, current year capacity expansion that is planned, we have earlier mentioned on our call that we want to do every year one block at Atali going forward, and we will stick to that. As our projects move to commercialization phase, we will have more and more manufacturing will move to Atali in future. I think overall, to meet our long-term revenue growth of this 15%-18%, we have to grow manufacturing footprint, and that's for which we have to do the availability of volumes beforehand. We are doing appropriately expansion to manage the overall capacity. Got it. So sir, my question is that I understand the need to expand. But I'm saying because most of this expansion going forward will be brownfield. Generally, the ramp-up is faster and the CapEx outlays lower. So the depreciation amortization is much lower. Is that how the equation will pan out from FY 2028 onwards? Is that how we should look at it? Yeah. From FY 2028 onwards, that is what will happen. We had to do more CapEx greenfield in this year. The capacity of Xanthine also required some greenfield and some brownfield. Yeah, got it. Got it. So the CapEx capacity will come down from FY 2028. Yes. Yeah. Sir, second question. We have guided for next three, four years, 15%-18% revenue, 15%-18% margin. In the previous commentary, we have talked about CDMO being the highest margin, followed by Xanthine, followed by API. If I look at the CapExes that we have done, the large ones that we have done are mainly on the CDMO and Xanthine side. Of course, the proportion of revenue from Xanthine and CDMO will go up in the overall pie. Ideally, that should lead to margin improvement and hence, much better EBITDA growth than revenue growth. I mean, that's on a conceptual level. What am I missing here? In Xanthine currently, we are trying to capture all the marquee customers. As our higher capacities will come, we will have to go after more spot market where, of course, we have to fight with our competitor and get that volume. That is where definitely the top-line growth will come. Overall, I think EBITDA growth will not catch up to that level. I think in CDMO, CMO also, as we commercially ramp up the products, I think the volume can grow faster, value can grow faster, but of course, we have to get lower margin expectation as we increase our sales for the commercialized products. And of course, slowly, I think once we catch up on this manufacturing and commercializing the benefits of that is why we are looking at doing for purpose expansion for this kind of project, so that the plants are designed for what they are manufacturing. So we can get more yields, more recycling of solvents and stuff like that in future. Then the cost efficiencies can come in future. So that is to be seen. But overall, that is where we are in terms of EBITDA and the revenue. Got it. Very clear. Thank you. I will come back again. Okay. Thank you so much. We will take our next question from Preet Jain of Nivesha Investments. Please unmute your microphone, Preet. Hello. Am I audible? Yes. Please go ahead. Sir, my question is on the Atali plant CapEx. Sir, I want to know the block level economics of Atali plant. Now that the common utilities are in place, what is the incremental CapEx and timeline for additional block at Atali? Will you expect the asset turns to step up in subsequent phase? Earlier your guidance was 1x-1.2x for Atali. I want to know if any revision to that or are you intact on that guidance only? I think for the dedicated blocks, we anticipate CapEx turn of 1.5x-2x. Of course, it depends on the number of stages that we are doing. If we are doing quite a bit of stages, then this CapEx turn can reduce, but the margins can grow. I think for the near future, whatever the current visibility that we have, we are looking at 1.5x-2x on the CapEx turnaround. Sir, my another question is on impact of RM cost on margin. First, for Xanthine and Sulphuric Acid, Urea as RM impact, and second, API RM cost pass through logistics cost. What margin impact? Can you quantify this in value terms? No. So overall, I think, as you rightly mentioned, in Xanthine, we have several raw materials which are Urea and Methanol and Methanol-based derivatives. So all these prices have gone up by 2x of whatever they were earlier. And in certain other raw materials, of course, the prices have also gone up by 30%-40%. We are requesting our customers to take a proportionate price increase for this. In case of API, I think largely the impact has been because as you know, we are into high value, low volume API. I think largely the impact is on the solvents. And Aarti Pharmalabs has lot of solvent recycling capabilities. So, that is being fully utilized. Even our Atali plant also has a solvent recycling facility. So wherever permissible, as per GMP, we try to recycle these solvents so that this impact can be minimized. But still, I think this impact remains. Also, of course, the logistics impact also remains. I think anywhere between 5% in raw material, we are seeing this overall impact of solvents and other cost escalation, 5%-7%. Sir, and my last question is on your active CDMO customer has stayed for 21 for last five consecutive quarters. I want to know that with the players, they are shifting from China plus one value chain. So, could you please help us understand, are you in active engagement, RFP stage with any new customers that simply haven't translated to any commercial project yet? And on the new business funnel, what does your inquiry pipeline look like today versus 12 months ago? No, I think in year 2025, we had overall slowdown because of the global uncertainties and the tariffs, how and where the manufacturing should happen. I think that situation has stabilized a little bit, and we are seeing more inquiries getting generated now. In case the number of customers, which are 21 currently, but of course, we are engaging with the same customers on the newer projects as well. We are also engaging with more newer customer as well. I think in future, we'll see this number grow in this current financial year. Okay, sir. Thank you. Thank you, Preet. We will take Yash Sinha of MIPL with his question now. Hi. Am I audible? Yes, please go ahead. Sir, I just wanted to understand, this quarter we saw slightly muted performance in the intermediaries business because of the feedstock inflation that you mentioned. Just wanted to understand how has that evolved so far in Q1 of fiscal 2027, given that those key raw materials are still inflated. What kind of communication have you had with your clients about potentially at least passing on some of this expense this quarter? Or do we expect that for the rest of this financial year, performance in the intermediaries business will be kind of muted? Yeah. I think as you rightly mentioned, there was a lot of price increase due to West Asia crisis. For the orders which we had already on hand, I think the customers have resisted giving the price increase because these are all high-value, low-volume projects that we have. I think, however, they remain committed that for future, they will be able to give us some increase in the future. Normally, these projects, on which we have these orders are campaign-driven, so we have once in a year or once in every two quarter orders from this customer. So this is not a regular item. We have to see what will happen in the future and how the raw material pricing will remain in future, going forward, and how much price escalation that we can get from these existing customers. However, any new inquiry, we are able to quote at a revised cost basis where the new orders that we will accrue will be of a little bit of improved pricing over last pricing. Got it. Lastly, just a bookkeeping question from my side. This quarter, we saw that INR 23 crore in one time Forex led a loss. Do we have any other forward contracts currently on our books that can potentially lead to a one-time hit like this in financial year 2027? I think everything has been accounted for. Going forward, I think we don't have anything unaccounted, which is beyond 6, 8 months forward. Yeah. Of course, we have term loans. Basically, Yash, this INR 23 crores comprises of what the gain on the operations, that is export minus imports. Okay. That is a gain of about INR 22 crores. And INR 23 crores of this INR 33 crores is the foreign currency loss or notional loss that I incur on my foreign currency loans. Got it. This is not a cash loss, right? Just keep. No, it is not a cash loss. No. Got it. All right. Okay, that is it from my end. Thank you so much. Thank you. We will take our next question from Shubham Aggarwal of Burman Capital. Shubham, please go ahead. We will wait for the connection. Yeah. Hi, sir. Thank you so much for the opportunity. Sir, I just wanted to understand that your OpEx costs have obviously gone up by 43% year-on-year and about 13% quarter-on-quarter. I just kind of wanted to understand what is the largest driver of this increase, and should we expect the OpEx costs to remain at this level going forward, and therefore your margins can come under pressure in FY 2027? Basically we have operationalized additional almost 440 KL capacity at Atali plus another 250 KL at our Neesh site. Combined coming on our books almost 700 KL from the FY 2027 Q1. Which is a very large multipurpose capacity as against our earlier capacity of around 1,000 KL. It is almost a 70% increase, which has happened from the previous year's numbers to FY 2026 number and going forward also. This increase and overall our man-hour which have been logged in over previous year have also increased significantly, almost 50%-60% over and above the earlier year man-hour. As we expand our manufacturing footprint for these multipurpose projects, I think the costs are increasing. And of course, as the ramp-up happens, the revenue increase will also come. Sir, you mentioned that your capacity increases have largely gone in Q1 as well. Should we expect another step jump in your operational costs from Q4 to Q1 FY 2027? Yeah. I think not Q1, but I think from Q2. Q1, Q2, we will have a step jump because as we mentioned, we are just finishing our Xanthine expansion also in Q1 for final product capacity. And also we are completing the Atali all phase one completion. Whatever the small block that remained, that will also get completed and fully capitalized. With these both coming in, I think next quarter onwards, we will have full operations on all the expanded assets. Great. So sir, due to this, other increases happening from Q2 onwards, can we expect the margins for the company to go below 20%, where we can see large pressure coming in? No. Okay. Understood. Sir, lastly, on the Xanthine prices, can you just help us out with how much price increases have we seen so far due to the Chinese rebates going away and because of the war conflict? If you can just quantify that part. I think Chinese rebate was close to 11% or 13%. I think- 13%. 13%, and that is what I think overall the price has increased due to that. Apart from that, I think in U.S., there is a 20% tariff, also 25% tariff on China. So considering those benefits that we have, we have been able to get those price increase particularly for the U.S. market from our end. Sir, can you just help us with the numbers like- Sorry about that. Shubham, we have other participants waiting. Can you rejoin the queue, please? Okay. Thank you so much. We have Tushar of Omega Portfolio Advisors. Tushar, please go ahead with your question now. Yeah. Thank you for the opportunity. Sir, I just wanted to understand, in terms of if you convert our revenues in the dollar-adjusted term for the 55% of your export revenue, we see that there is a 5% of degrowth in the revenue. I just wanted to know in terms of your view on the API front and also the pass on of the prices. So how do you see the growth coming in adjusting for the dollar terms for the next 1, 2 years? That would be my first question. Sir, secondly, in terms of, you said that the CapEx costs are front-loaded. So when can we expect that balancing figure in terms of the EBITDA contribution from the CapExes from which quarter, or at least from which half to start materialize in terms of the margin expansion or at least maintaining that? I think overall, the foreign exchange rupee dollar has moved significantly over last couple of quarters. I think earlier part of the year was not that big change. So overall, I think the rupee adjusted, anyway, we have mentioned that API intermediate, there was a degrowth definitely on that segment. That has resulted in overall muted growth in rupee terms in our top line. In terms of the overall capacity and the EBITDA catch up, I think it will take at least 1 year from now for the current CapExes which are coming on stream in Q1 to meaningfully contribute to the EBITDA and normalization to happen. Okay. And sir, this whole CDMO scale-up, do you see the working capital to increase? If yes, then by what number? We have to work out the working capital increase because most of these projects have one time or two time deliveries in a year. As we grow the sales of single projects that we have, and if they are large projects, we end up carrying a lot of inventory and manufacturing across our facilities for many quarters till we deliver this. So we have to see how it goes in future. Unfortunately, these large customers don't pay us advance, so we have to finance this inventory ourselves. Fair enough, sir. I will get back on the clip. Thank you. Thank you, Tushar. We are taking our next question from Bhavika Singhvi of CJ Shah. Bhavika, please unmute your microphone. Thank you for the opportunity and am I audible. Yes. Yeah. My first question is I want to understand that in Q3, CDMO mix was very high. Still our gross margin was less Q on Q. Is it one kind of event or did you experience any major raw material pricing pressure in any division? No. I think overall, this quarter we had INR 155 crore consignment of last quarter moving to this quarter in terms of revenue getting increased in this quarter. Otherwise, last two quarters would have been INR 100 crore each of CDMO sales. As we mentioned over previous quarter, previous year, we have more operational assets to digest in, and which has resulted in higher manufacturing costs. I think going forward, as we do more meaningful production from these assets, revenues will increase and they will compensate for the cost increase in future. Okay, got it. Also I want to understand from the evaluation point of view, when global innovators shortlist CDMO partners, does Aarti Pharmalabs's financial strength, specifically because we have a very unique balance sheet as we self-fund CapEx from the Xanthine cash flow. I just want to understand that how the evaluation work. Does it play in our favor? Also for the Atali unit specifically, do you have full customer commitment in place for the capacity being built right now? This is just to understand our broader CapEx philosophy, that do we only commit to build capacity after a customer is signed or do you sometime build it speculatively and then project? If you can help me understand this. Yeah. Overall for the CDMO, we are definitely doing the CapEx keeping long-term plan in mind. I think there is a mix of multipurpose CapEx and custom-built manufacturing facilities that we plan to do in future. For several projects that we have, we have long-term understanding from the customers what kind of volumes these kind of drugs once approved can reach. Once we have this greater visibility, we are putting up these kind of assets to meet our innovator customers' demand going forward. Lastly, I think custom-built facilities are on the basis of sensible forecast that we have from these customers. Of course, these customers cannot be held at gunpoint if they don't buy from us. But we have to use our judgmental call for our CapExes. These custom-build facilities, of course, have certain reactors which can also be made multipurpose also in future if there are any issues with these customers. But largely, I think we are following with their guidance, and as long as we continue to work and meet the customers' expectations on quality and the deliverables, I think we'll continue to get more revenue from these customers. Okay. I think we missed the first part of the question that, does our unique balance sheet help us shortlist by our CDMO partners? Yeah. I think yes. I think why we get shortlisted, I think few things. Our manufacturing capabilities, overall unique ability to scale up the production from kilo lab and put up the assets. Unique ability to do a very backward integrated play where the China dependence is reduced. I think apart from the balance sheet, these are the other factors which play. Of course, the chemistry also plays a big part now with the R&D and the addition of our CSO also, along with the other team members have also one of the factor why we can get more projects. Okay, got it. Thank you so much. Thank you. We are taking the next question from Deep Gandhi of ithought PMS. Deep, please go ahead with your question now. Yeah. Hi, sir. Am I audible? Yes. Sir, first question is on the CapEx side, as you have guided that this year you will do INR 400 crores CapEx. I do not think you shared a breakup. Can you give us a broad breakup in what all areas is this INR 400 crores going to be spent? Does this also include CapEx for dedicated block? Yeah, I think it is a mix of CapEx, where we will be completing the Xanthine in this current quarter. There are certain projects which are ongoing on the Xanthine front. Also, we will be finishing our capitalization of the Atali, earlier phase 1. We are starting phase 2 there also. All these projects and of course, the bottleneck projects. I think these largely three buckets where and fourth bucket will be, I think normal CapEx that we have, the replacement CapEx. I think more or less equally spread out among all four largely, plus or minus. And of course, we will also spend on R&D. Does this include the CapEx for dedicated block or will that be a separate number which you will share later on once it is decided? That has been factored in. How much will be the CapEx for dedicated block? We are still working that out. Once we have some number, we will guide you. Okay. On the Xanthine side, can you broadly call out what was the volume growth and value growth for this quarter on a YOY basis, the growth which you have seen? I think we will have to look at the YOY numbers, but as we have mentioned, we are operating fully. So you will be having our planned rate 500 tons per month. We have given you the revenue numbers. Lastly, on the CDMO segment. Sorry, Deep. Please, we have other participants waiting in the queue, please. Okay. Would you mind rejoining? Yeah. Sure. Thank you. We have Vikas Sharda of NTAsset Management. Vikas, please go ahead with your question now. Yes. Hi. One clarification on the foreign currency loss. In the P&L, there is a line item of INR 17 crore and in the table below in the notes it says INR 13 crore. Are these overlapping numbers and how does the overall foreign exchange impacted the results this quarter or let's say going forward? Yeah. INR 17 crore is the total Forex loss for the quarter, and the INR 13 crore is on one of the contracts. That is where the difference. The INR 17 crore, as I mentioned earlier also, it comprises of my gain on the operations. That is my exports, receivable on exports less payable on the imports. Then there is the loss on the contracts, the foreign currency contracts that we enter into. Then there is a third portion, which is the increase in my foreign currency loans, which a part of it we park under foreign currency loans. That is basically net effect of that is INR 17 crore. Got it. When you look at, say EBITDA or when you guide for EBITDA, you exclude this line item or you include that? Yeah. Exclude. Perfect. Yeah. Thank you very much. Thank you. Thank you. Requesting all participants to remain in the queue. Ladies and gentlemen, due to paucity of time, we will take that as the last question for today. I will now hand it over to the management for their closing remarks. Over to you, ma'am. Yeah, I would like to thank everyone who could take the time out to attend this call. Thank you. Thank you. Thank you so much. As there are no further questions, on behalf of Aarti Pharmalabs Limited, this concludes today's conference call. Thank you all for joining us and you can now click on the leave icon to exit the meeting. Thank you all for your participation.