Q3 25/26

Feb 10, 2026

Summary

Q3 revenue and PAT declined YoY, while EBITDA was nearly flat. Atali start-up delays and softer APIs temper FY26 growth, with CDMO and xanthine capacity expected to support future expansion.

Ladies and gentlemen, good day and welcome to Aarti Pharmalabs Q3 and nine months FY 2026 earnings conference call hosted by Dolat Capital Markets Private Limited. 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 then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Zain from Dolat Capital Markets Private Limited. Thank you, and over to you, sir. Hi. Good evening, everyone. I am Zain Ghulam Hussain from Dolat Capital Market Private Limited. It gives me immense pleasure to hold 3Q FY 2026 Aarti Pharmalabs Limited conf call. From the management team, we have Mr. Rasesh Gogri, Chairman, Mrs. Hetal Gogri Galla, Vice Chairperson and Managing Director, and Mr. Piyush Lakhani, Chief Financial Officer. Now I pass it over to the management for their opening remarks. Over to you, sir. Good evening all, and welcome to Aarti Pharmalabs earning call for the third quarter of the financial year 2026. Thank you for taking the time to join us today. I will walk you through our Q3 performance and share key developments and provide insights into the steps we are taking to strengthen our growth going forward. Let me start with a summary of our standalone financials for Q3 FY 2026. The revenue was INR 425 crores, which was earlier INR 471 crore a year back. The EBITDA was INR 103 crores as compared to INR 105 crores for the corresponding period of the previous year. The profit after tax for the Q3 FY 2026 was INR 44 crore as compared to INR 74 crores a year back. I am pleased to inform you that the board has declared an interim dividend of INR 1.5 per share. Now let me present a few business highlights. Aarti Pharmalabs operates across three key verticals, xanthine derivatives, API and intermediates, and CDMO/CMO services. The xanthine derivatives segment contributed to 49% of our turnover in Q3. The volume split was 63% beverages customers and 37% others. In terms of geographical split, the export sales were 51% and the rest was 49% was local sales. The API and intermediate business stood at 39% of the turnover. This sub-segment wise breakup is 52% regulated market, 34% ROW market, and 14% non-reg market. The API business continues to see some margin pressure. While early indication of recovery are emerging, we remain vigilant and are directing all our efforts towards patent expiry over coming years. The third segment, CDMO/CMO, has contributed to 12% of the revenue in this quarter. We are working with 21 customers and the number of active projects are 59, out of which 40 projects are in the commercial stage and 19 are under various stages of development both at customer end. Apart from Q3 reported sales, another INR 49 crore worth of goods were in transit as of December 31, 2025. These goods could not be booked as sales due to accounting norms. We are confident of meeting our CDMO revenue guidance for FY 2026. However, exceeding the target which was earlier a possibility, now looks difficult due to certain project deliveries getting pushed by a few months. Let me now discuss the update of the expansion projects. Atali plant started production of qualifying batches in Q3 FY 2026. While ramping up phase one, we have encountered some starting hiccups which impacted the production plan. We have corrective actions in place, and we expect the resolution by end of the current quarter. The xanthine expansion is progressing as planned, and we are targeting the mechanical completion by end of March 2026. The incremental capacity will become available for the production in Q1 FY 2027. However, utilization will increase progressively over subsequent quarters in line with the operation scale-up and the order inflows. Q forward outlook. Looking ahead for the full year FY 2026, we expect EBITDA to be largely in line with last year with only marginal growth. This revision is mainly due to the delay in Atali plant stabilization and relatively softness in API and intermediate business. While this reflects the near-term pressure, our fundamentals remain strong, and I am confident of mid to long-term growth trajectory of Aarti Pharmalabs. Our efforts are dedicated to drive operational efficiencies and scale each business segment prudently to create long-term shareholder wealth. The moderator may now open the forum for Q&A session. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Ahmed Madha from Unifi Capital. Please go ahead. Thanks for the opportunity. My first question is, if I look into CDMO business, the number of projects, the commercial has gone from 33 to 14 last 9 months. Does that give you any visibility for FY 2027 growth? I mean next financial year, considering the way the projects have shaped up, if you would like to give some comments, how is the outlook for the growth shaping up? Yeah, I think as you have seen, the number of projects have increased on the commercial side, and we are working with our customers in the starting of this year to work on this number. I think we will be able to give that guidance of CDMO/CMO growth post our budgeting exercise, which we will do in next month. I think next financial year. But we are looking at good growth. I think we have strong pipeline of projects with these 21 customers, and we are confident that we will be moving forward with very good growth. In the incremental projects that have come, are those products already commercialized and scalable, and we are getting added as a secondary supplier? Or some of these products are getting launched probably a year down the line or next year? It is mixture of everything. Basically, we are getting added. In certain projects, we are primary source, certain projects we are getting added as a secondary source. But largely, I think it is more the products are getting launched, or we are getting qualified in these projects as approved source. With this happening, I think we will have the number of projects which are adding meaningful value to our sales are increasing every year. Sure. On the API side, I understand we had few good launches last year and the pricing pressure is the nature of the business. Going forward, for the new launches on the diabetic side, the gliflozins and the onco side, do we have any new launches in the pipeline? Or for the next year, we have to rely on the existing portfolio? No, no. We have new launches. Yeah, definitely we are validating couple of or quite few APIs on onco side, and also improving our manufacturing processes on diabetic side. However, some of these APIs will have the patent expiry somewhere around 2027, 2028, and we will see more and more customers getting into our kitty with the validation completion in current quarter and in the next quarter as well. So 2026 also, we will have couple of new launches for the onco APIs as well, and also we have a new CSO who has joined. So we are working very aggressive on revisiting our strategy and working on capturing the onco pipeline early on. Yeah. Sure. Got it. My follow-up question on that is, does that mean FY 2026, 2027, this year obviously we'll have degrowth, but FY 2026, 2027, do we consolidate or we can grow from that base? See, what we are doing is that we are trying to debottleneck the steroid line so that we can add more sales. Of course, we have space in our general block where we are trying to get more projects validated, and that validation has been done in this year. So those will get commercialized. These are some of the old products that we have taken up because we had space. All that effort. And of course, in 2026, we have few launches like apixaban and a few other anti-cancer products that are getting launched in 2026. So with those launches, we will see 2026 to be a better year, 2026/2027 to be a better year overall in terms of API. And also API business numbers also consolidate the numbers of intermediates. There are few intermediates that we supply from our range of intermediates for these newer launch drugs also. So those are also going to increase significantly going forward. Sure. That helps. Thirdly, on Atali, you spoke about the operational challenges. Can you just elaborate a bit what sort of issues we are facing? And when we say they are resolved by Q4 end, does that mean that we can shift some of our current intermediates from Vapi to Atali from Q1 and ramp up the utilization? Yeah. Basically, see, we were trying to validate several products there. And in the validation, there were certain challenges that the company faced at Atali side because of the newer staff and newer nature of the plant. So those issues are getting settled, I think, with the operational team getting strengthened and the process team also being stationed there because all the entire new set of reactions and the equipment that we have commercially started in phase one are all large equipment. So that's where we are taking much larger batch sizes. So those challenges we anticipate to get over in the current quarter, and the batches have progressed well now. So overall, that has led to some delays in the certain validation quantities that were supposed to go for the CDMO projects in the current fiscal, but they will get pushed little bit to next quarter from Atali. Yeah. In FY 2027, we will have more products range getting validated from Atali, and this will definitely help our intermediate capacity increase. A couple of questions on the numbers side. Gross margin- Thank you, sir. If you have a follow-up question, please rejoin the queue. Sure. Thank you. Thank you. The next question comes from the line of Rahul Jain from Credence Wealth. Please go ahead. Hello, am I audible? Yeah. Yes, sir. You are. Yeah. Thanks for the opportunity. Sir, first question is with regards to the impact of this consignment which is in transit, where roughly we have cost to the extent of INR 30 crores and INR 49 crores could have been the revenue value. Just to understand what exactly is the impact on the numbers which have been declared for December, how is that being accounted, and what is the impact in the December quarter with regards to same, and what can be the impact in the next quarter coming in? Yeah. This is Mr. Piyush Lakhani. The impact is essentially what we have given in our note. If we had been able to book the revenue in quarter 3, then our top line would have been higher by that amount, INR 49 crores, then the PBT would have been higher by the same amount. INR 19 crores. INR 19 crores. INR 19 crores. Yes. Yeah. Right. So currently, how is it accounted? Is there some impact in the current numbers? Yeah. So currently it is being shown as a stock in transit. So that is why it is carried at INR 30 crores, INR 30 point something crores, which otherwise would have been INR 49 crores if we had been able to book the revenues. Okay. So do I understand in the coming quarter what would happen is, this INR 30 crores stock that will be sold at INR 49 crores, so that INR 19 crores will be booked in quarter 4. Correct? Correct. Correct. Yeah. Okay. Secondly, sir, with regards to the CapEx, what kind of incremental cost we have incurred, with regards to this CapEx underway till now, and what is the further cost expected, and how do we see the ramp-up in the coming quarters? No. We have done the capitalization of around INR 300 crores, and the total project outlay is around INR 400 and- 50 crores. INR 50 crores. So that balance, certain second phase is getting completed. We will have that completion happening in next couple of months. Mm-hmm. I was asking also about the OpEx, because I can see some increase in other expenses and depreciation. Yeah. What kind of OpEx has already been accounted in, say, quarter 3, which has been flown through the P&L? Yeah. We had taken the complete depreciation as well as the OpEx numbers of Atali have also been accounted for this validation program whatever that we had undertaken. The depreciation on the entire 300 crores of capitalization has started, and on top of it about 1.5 crores of monthly OpEx that we are running at. Okay. Quarterly will be around, say, 5.25 depreciation on INR 300 crores. It will be INR 16 crore depreciation in a year for that. But then we will be capitalizing the additional also. Yeah. Once the additional gets capitalized, then the depreciation will increase. Sure. Last question, sir, with regards to Xanthine ramp-up. How do we see the Xanthine ramp-up over, say, next year with this mechanical capillary combination? Yeah, I think currently as I have informed all of you in the last call that we are currently running at around 500 tons per month capacity and slowly ramping it up. I think with the new capacities coming up, we are adding close to 300 tons per month additional capacity. That, we will have that available. But I think quarter by quarter, we will have in first quarter maybe 300, 400 tons manufacture. Second quarter we will manufacture more, and then in a year, we should be at least able to utilize close to 50%-60% of that capacity overall. So the exit rate will be 50%, 60% or overall average could reach 50%, 60%? Overall will be 50%, 60%. Yeah. Okay. Average for the year could be in the range of 50%-60%. Yeah. Sure. That is quite helpful. Sure. Sir, just last thing with regards to the API. You mentioned in your initial commentary also and in the press release also, presentation also, just to understand where are we in this cycle. On one side you have mentioned there are some green shoots which are visible, at the same time the margin pressures continue. Is it that the demand has started picking up, but the price realizations have not yet moved up? Is that what the revenue and plus how do we look it forward now? See, API business, generic business, the prices never increase. They always go down only. Ultimately the game has to be played where you increase the capacity. What we have done in our generic block also we have put the Block Five expansion couple of years back, so that is available with us. Then we have also mentioned that in this year we are also going to do the debottlenecking of the steroid block and our onco block eventually we will in future also we will do the debottlenecking. Once we have the more capacity and the more products get off patent and to supplement our usage, we have also undertaken few older projects where we have our own raw materials, intermediate produce in-house, which are large volume drugs. Those also have been sold for the validation part. All these efforts we see that gaining more customers for newer products or the older products we will be able to do the growth in next year. Sure, sir. Thank you so much, sir, and best wishes. Thank you. Our next question comes from the line of Ankit Gupta from Bamboo Capital. Please go ahead. Yeah. Thanks for the opportunity. The first question is on the CDMO segment, and two parts to it. If you look at the number of molecules that we have been working on, although we have seen a significant jump in the number of commercial molecules from around, let's say, 28 to almost 40, and most of them have transitioned from under development to commercial. But overall, the molecules that we have been working on have remained in the range of around 55 to 60 over the past six to seven quarters. If you can elaborate, how do you see this pipeline increasing? That was the first part on CDMO. The second part was on, if you look at our CDMO revenues, currently they are largely concentrated on two to three molecules. When do we see other commercial molecules, which have increased from 28 to 40, contributing to our revenues and scaling up to 5, $10 million kind of thing? When do you see that thing happening, especially with Atali coming in next year in a full-fledged manner, how do you see this happening? Yeah. As you rightly mentioned, the overall list that we are maintaining is a dynamic list of 60 projects. We are reducing the number of projects which are not getting through as an approval. It's a dynamic list. What is important is how many are commercial and whether they are increasing or not, because those who are not getting approval are getting off the list also. Sure. Okay. We are getting newer projects in the commercial range where we are quite hopeful that in future we will have significant revenue. Meaningful revenue will come from these projects in future. Whatever you are able to track is only export data, right? Largely, and that also quarter-on-quarter, I do not know how much that tracking is being done. This year, largely in first 3 quarters, we have not done too much shipment. We have had total of only INR 120, 30 crores, plus of course this INR 50 crore. In the last quarter, we will have bulk of exports also happening, which will have these newer commercialized products getting exported. You will see that in the data. Yeah. Sure. That is what happened. Yeah. You are going forward. As we are putting people on ground, we have someone in Europe and someone getting shifted to U.S., so more people getting on the ground. I think with the newer customers that we have been able to approach, and with our new enhanced strengthening of our R&D team, I think in future we will have much more opportunities and you will see this list to grow. Sure. What some of the products, one of our products which got regulatory approvals in this financial year and one which is expected, hopefully should get approval in Europe in second half of this, in our current year and USFDA approval next year. How do you see this molecule scaling up for us? At least one of them has been commercialized. The other one is also expected to be a blockbuster drug. If you can tell us what kind of projections or what kind of indications are some of our innovators or our CDMO partners are giving for these 2 products? See, I think we are not speculating on these names because we are bound by the confidentiality agreement with our customers. The project's success depends on how well they are marketed and how well they are getting penetrated because for the same segment, there are many drugs which may be there. Luckily for us, the drugs which are there have a very differentiated segment where there are not too many competitors operating in this space. So we are keeping our finger crossed and hoping that our innovator partners are able to grow these products, and of course we are there to support them. So in future, we could see healthy growth in all these projects which we are doing with our partners. Sure. The second question was on the API part. Last year in second half, we had touched almost a quarterly run rate of INR 200 crore. We had, in fact, now exceeded that. This year we have been in the range of INR 150 to INR 160, INR 160. Of course, you have alluded the reasons. Given the launches which are happening in the coming financial year, how do you see we might end up this year around INR 650, INR 660, INR 670 kind of run rate for the full financial year, given how the trend has been for the past three quarters? Last year we were almost around INR 770 crore. So, next year, should we be looking at going back to that INR 770, INR 780 crore kind of run rate? Or we should also see some growth on that number? At least at this juncture, we are just looking to go back to the FY 2025 API numbers. Yeah. I think the first milestone is, as you rightly mentioned, quarterly INR 200, and then the next milestone is to be higher than that quarterly. So these are the milestones. I think, yeah. So that is what we will try to scale it up to. But when do you see this happening? Let's say, going back to INR 200 crore quarterly run rate on API. As we get more and more commercialization of our products and the new launches happen. So that will happen across the next few quarters. I think it's not going to happen in the next quarter, but I think it will take a couple of more quarters to come to that. Sure. And sir, this last question on the gross margin part- Sorry to interrupt you, sir, but if you have a follow-up question, please rejoin the queue. It's all right with me. Thank you. Thank you. Our next question comes from the line of Madhav Mehta from FIL. Please go ahead. On the xanthine derivatives business, if my understanding earlier was correct, we had 5,000 tons capacity. I think if I heard it right, you said you are running at 500 metric tons per month run rate right now. Just trying to clarify, that could mean 6,000 tons volume. Basically, what is the current installed capacity and volume run rate that we have in xanthine today? So basically, in the xanthine segment, we are running two manufacturing sites. What we have done is the current mother site that we have there, also, we did some debottlenecking exercise. That capacity increase has happened as phase one. The new site, that is 300 tons per month, that is getting installed mechanical completion by end of this financial year by March. Next quarter, we will start the trial production and everything. That's how the production will reach to 800 metric ton per month. That's why we are saying that currently we are at 500, because that's what we are operating as. Okay, sir. Effectively, sir, you are saying we are at 500 metric tons per month, including the debottlenecking. Yeah. At peak, including the expansion, we can get to 800 metric tons of volume from Xanthine. Yeah, that is 9,600 our install capacity. 9,000, sir? Around 9,000 considering 2025, whatever, yeah. Okay. Got it. Understood. How is the pricing trend right now in xanthine across in the various end markets which we sell? The incremental volume, will we be selling it more in pharma grade or will it be more beverages or any market mix you can give us? The pricing can vary, so just wanted to check in. Yeah. I think there is an interesting development is that China has announced that they will withdraw the rebate benefit on caffeine and its salts. With that rebate withdrawal, I think overall 13% benefit that is getting accrued to the Chinese manufacturers when they export the API, that will go away. We are hoping that this will push the prices of the product up by at least 8%-10% in future. We are seeing some increase in the pricing overall. I think in the spot market, we have seen around 5% increase in the price from lower levels. We are seeing that the overall pricing has bottomed out. Secondly, for the U.S. market now with the overall trend, I think there is a duty of 20% which is applicable on Chinese product, whereas India has a duty-free status currently because caffeine doesn't attract the Caffeine is in the annexure list, which is free from tax. With this, I think we are in a favorable position to do the exports to U.S. Imports will end at other markets also. We will have a higher overall pricing should improve, I think, going forward. Understood. Is it a fair assumption that in FY 2028, we could run at full capacity on the 9,000 metric tons can be full capacity for us? I think the efforts are going to basically achieve 85% to 90% of that capacity by that time. Okay. We always want to have some free capacity. Yeah, and we wanted to reach top three in the world with this kind of capacity, so to have a good position across. Understood. In the API business, although the reported revenue obviously seems like there's a decline, just wanted to check. Until last year, we had a subsidiary where the revenue used to be booked in the top line. Now it's moved to the associate line item, the JV which we had. Is the decline in API business because of that change in the reporting? Because of that or there's actually been a decline of 20%? See, you have to look at the standalone business and standalone to standalone, what is the gap, that is what is important. Yeah. Overall. See, in this current quarter, we have added INR 5 crore PAT below the line for that entity. So which had negative numbers in last two quarters have become positive and this quarter it has added INR 5 crores in this consolidated results. We are hopeful that in the future also we will see similar positive numbers from that joint venture that we have. Sure. Just want to clarify this INR 167 crores approx API intermediate business which you booked in Q3. What was the like-for-like number last year, if I compare apple to apple for this business? That number, I think even the percentage you will have to see. Last year, Q3 was 40% of I think the breakup was around 44% in the Q3. On what top line, sir? On what top line? I think it was around INR 180. INR 180. Yes. The decline is more like 5%-6%, right? Yeah. Much larger number which comes because of the 180 has become 160. 158, 160. Yeah. Okay. Sir, last question on the CDMO business. I know that it's tough to Thank you, Prachi Shaw, but if you have a follow-up question, please rejoin the queue. There are a couple of participants waiting in the queue. Thank you. Our next question comes from the line of Shikha Mehta from Time and Tide Advisors. Please go ahead. Good evening, sir. Am I audible? Yeah. Congratulations on the recent set of numbers. I wanted to understand the gross margins a little better. Of course, this quarter we are seeing superior gross margin. Is this something we can maintain going forward? Is this sustainable or is there some kind of one-off? Along with that, on our other expense side, there is a significant rise. Is that just the Atali operational expenses that you were mentioning earlier, or is there anything else part of it? Yes. The first one, I think quarter to quarter, the gross margins will vary a little. If you see nine months, it is basically trending at almost the same level. If you look at gross margin as well as EBITDA, we are around the same level. Second question about the expenses. Yes, mainly the increase is contributed by the Atali side. There is one more site that we have taken on lease, where we are paying conversion fees. There also, there is some contribution also coming in and there is corresponding some expenses also that is getting booked. That particular disclosure we had given in the Q1 that we have entered into a conducting agreement with one of the players who had some extra capacity and empty plant. Understood. The other expense should broadly normalize once you start seeing revenues coming in from Atali, et cetera, right? It should move back to that 21%-22% of sales that it used to be. Yeah. It will move more in tandem with the growth in the top line. As you rightly said, basically it will increase once the operations are stabilized and ramped up at Atali. Another thing, sir, in our presentation and in our opening remarks, we mentioned that we are looking to end FY 2026 on a flat to moderate growth on EBITDA basis for FY 2026. That would suggest a very large quarter-on-quarter jump in the Q4 numbers for EBITDA. It would lead to almost 50%-55% of an EBITDA jump quarter on quarter. Is that understanding correct? Are we geared towards doing that? Yeah. As we have mentioned in today's presentation also that one revenue we had to defer, the INR 49 crore sales that we had to take at INR 30 crore COGS. With that and the normal increase, I think whatever that we are projecting because a lot of CDMO sales are still going to happen in the last quarter. With that, we are anticipating good growth in the last quarter. Sir, lastly, on the API side, I understand a lot of participants have asked this earlier as well, but I am just looking to understand. Last year Q3 and Q4, obviously, were tremendous quarters for us. In the near future, maybe Q1 or Q2 in FY 2027, can we expect that kind of revenue and margin, or is that something to look at as a one-off and might not happen going forward? No, we are increasing the capacities. Which quarter we will be able to grow whatever we are pushing. No, sir, I am just trying to understand that was Q3, we had EBITDA margins of almost 27% last year, Q4. Is that margin a one-off or is that something that, in the imminent future, we can expect at some point in FY 2027? I think Q4 margin was driven by the CDMO, CMO as well. In the Q4, we had CDMO, CMO almost going up to 27% of the sales. Overall, I think the last year, Q3, Q4, both we had good API sales overall as well. But the bump was largely due to CDMO, CMO. Understood. As that continues to grow at this 30%-40% rate that we have had before. Yeah. It should possibly come back. Yes. All right, sir. Thank you. I will come back in the queue. Thank you. Our next question comes from the line of Ahmed Madha from Unifi Capital. Please go ahead. Yeah. A few questions on the numbers. Did we have any Forex loss in quarter 3? Last quarter we had some. Yeah. That gets parked in the other income. We have gain on the exports, and we have loss because the rupee is depreciating, obviously. So loss on the imports. On top of it, the part of the interest on the foreign currency loan, which is over and above the normal rate of borrowing in India or INR, also gets net off against the export gains. The net impact which you are seeing in other income is because of that. So total will be INR 5 crore? INR 5 crore. INR 5 crore is the total impact that- Whatever gain we had, almost similar kind of loss we had. Okay. Sure. In terms of the capital structure, how much gross debt we have, 9 month ending? INR 650 crore. INR 650 crore. INR 650 crores. Okay. Post all the CapEx are done, I mean, the balance of Atali and Xanthine, everything, what number should we end by Q4? I think we should look at net debt to equity of around 0.3, between 0.3 and 0.35, depending upon how Q4 goes. Yeah, 0.3, 0.4, 0.3. Got it. Okay. On the Atali, you spoke about INR 450 crore CapEx of which INR 300 crore is commercialized and INR 150 crore is the balance remaining. For Xanthine, how much will be your block, which will be capitalized? Xanthine in total, the project that we have approved is around INR 150 crore, with both the sides together. Okay. Sure. Sorry to interrupt you. By just a follow-up. Please join the queue. Sure. Thank you. No problem. Thank you. Our next question comes from the line of Ankit Gupta from Bamboo Capital. Please go ahead. Thanks for the opportunity again. On the Xanthine side, we will have the entire capacity of 9,000 tons per annum by end of Q4. As you've been indicating that we are looking at, we should end FY 2027 with a decent capacity utilization of the new plant as well. New capacity addition as well. Are we looking at a scenario next year that our volume growth in the Xanthine can be around 25%-30%? Plus, given how things are there on the China because of this anti-involution thing, we should also have some 5%-10% kind of jump in realization in Xanthine. Yeah. I think, overall as I have indicated that the new plant will start up and we'll see how that goes. Overall target we have set of what we want to commercialize from that. What we did is that from the current site itself, by debottlenecking, we are anyway operating at 6,000 level today for this quarter. That really gradual thing also helps us in pushing the number because we are not taking a sudden shock of increase from 5,000 to 9,000. We already are at 6,000, so it's easier to reach to 7 or 7.5 thousand going forward. Yeah. Another thing that I think, everywhere we don't compete with China. Wherever we are competing with China, definitely we will have this advantage of margin. I don't think that we'll have a substitute because we have certain contracts which are locked in on the pricing. So, yeah. Sure. Okay. But rupee depreciation definitely helps us overall. Sure. On the CapEx part for FY 2027 and FY 2028, we were also looking at incremental blocks coming in Atali. Given some visibility on the CDMO part, are we looking at some expansion coming in for the new block at Atali in FY 2027? Yeah. We will have at least one block coming up in Atali in next year. We will get that CapEx approval going forward. Okay. It should not be a large CapEx given all the- Oh, no. It will not be a large CapEx. Okay. Does it also imply that the huge capacity is coming up and we are also looking at new block coming in for the CDMO. We have very good visibility on how CDMO should ramp up post the first phase comes in, the first block comes in. Yeah. We have good visibility. Of course, we have to keep our finger crossed. We have our partners, they have to make sure that their launch drugs are being successful and they do not have any hiccups. Everything is contingent to how they are performing post-launch. That is what we are waiting to see. I think because everyone prepares for the launch, and the first year there is always a dip post-launch. The second, third year again, it picks up because they are certain about the market targets, and they are actually trying to expand the market. That is where I think we will be in different phases with different drugs. Thank you. Thank you. Thank you, Mr. Abass. Thank you. Our next question comes from the line of Vikas Sharda from NT Asset Management. Please go ahead. Yes. Hi, good evening. One question that you have pointed out, what is the goods in transit? What would be the normalized goods in transit like every quarter, so that we can know that how much higher it is this quarter? Eight to 10 crore, I think. 10 to 12 crore will be normal. This was a specific case of an Incoterm of being a DAP, delivered at place. Basically, we deliberated the possibility of booking it in the last quarter itself. But then we deliberated with the auditor also and internally also, and it was basically as per the accounting norms, it gets booked at the time of delivery itself. But normally, we do not have too much sales with this Incoterm. So normally it is not that high as far as FG is concerned. Yeah. So it will be around 10, 12 crores, typically, which is at the transit- At the dock. At the dock. Okay. That is helpful. Secondly, you have revised down the EBITDA growth guidance from last quarter to this quarter. Besides some push out in, say, CDMO sales, any further negatives that you headwinds do you see for this year? I think, as I have mentioned, API overall growth, that we were seeing that there would be some growth, but there has been degrowth, okay, in the API sales segment that we have seen. That is also one of the reason why overall we have not been. The xanthine segment has done as what we were targeting. CDMO, CMO, little bit of pushback and API is little slow. I think these are the three factors. Then we had capitalized the Atali and then all the expenses have started coming in. We have depreciation and all that also. The running expense OpEx have also come in. There is the initial hiccups that of course will get solved going forward. Yeah. In the API segment, is the pricing pressure across the board or how is it like few specific molecules? How is the volume growth overall paced for API and intermediates? I think we are seeing pricing growth happens. That is the nature of API business. I think, overall there is always a pricing growth. We had few launches last year which have the partners with whom launch, they took significant quantities and this year they are little bit slow in taking up more quantities from us. That's one of the reason. Second thing, in terms of intermediate capacities, we did not have too much intermediate API capacity because we were running the CDMO operations in our intermediate and CDMO combined facility. Now with the Atali coming in, I think we will again focus on these intermediates. Of course, as the launches happen of the APIs which are getting expired, we'll start supplying these intermediates. Those sales also will get added into the API segment. Both these will happen. That will drive the number towards growth. Perfect. Thank you. Thank you. Thank you. Our next question comes from the line of Shubham Agarwal from Burman Capital. Please go ahead. Hi, sir. Thank you for the opportunity. Sir, I just wanted to understand that they all got an approval, US FDA approval in October of 2025 for one of their key products in the menopause and hot flashes category. They repeatedly categorize that as a blockbuster opportunity with EUR 1 billion of sale. What we understand is that, there are some key intermediates that you are supplying. Just wanted to understand how are you looking at this opportunity? Can it become a $15 million-$20 million kind of opportunity for you? And, yeah. Yeah. We are not commenting on specific molecule because of the CDA that we have with various customers. Unfortunately, I won't be able to answer this question. Understood. No problem, sir. Sir, just wanted to understand on the general CDMO part, like, from the time you ship a product from India to the receipt of goods at the customer there, what is the general time lag between that shipment as well as the revenue recognition? See, generally, most of the products which are more than INR 1 lakh a kg, we do mostly air shipment. This is being delivered in 5, 7 days, whereas the sea shipment takes 30 to 40 days. If it is going to Europe or if it goes to U.S., then it will be 60 days by sea shipment. Understood. By air it is 7, 8 days. I think the failed shipment was sea, so that's where the issue came up. In most of the cases we are able to book the revenue. Because of CIF. at the time of shipment itself. Yeah. This is the one off case. One off. That is why we had to disclose and it moves the number significantly for this quarter because it is a very large shipment that we did for one of our customer. Thanks. Yes, sir. Sir, you said earlier that there were a lot of shipments that might be flown or forwarded out there, but that usually happens later on. Just understanding from that perspective that, is there like a one-month average kind of lag between shipment to revenue recognition? Not really, because most of the shipments are air shipments. I think there is only few days of delay, but not all are DAP terms. Some of them are only DAP. Most of them are CIF, FOB and stuff like that. It depends on the Incoterm. Understood. Sir, just one last question, if I can squeeze in. Usually, sir, when an innovator is kind of receiving a US FDA approval, is there like a build-up of inventory that they would see on their end and then obviously that will follow a normalization period and possibly de-stocking of that in that one year kind of range, or usually it's more stable. Just wanted to understand that perspective. I think every innovator has a different plan and if they are getting approval of different market at a different date, then anyway the launches are deferred. But once they have key approvals in key markets of Europe, U.K. and U.S. and other important market like Japan or whatever. Then I think they are at a full potential of sales and that's where it depends on how they have prepared for each launches. Understood. They do not get a day one approval for all the markets. All the regulatory agencies have a different clock for approval. Understood. Thank you, sir, and all the best for the future. Thank you. Thank you. Our next question comes from the line of Mohammed Patel from Edelweiss Public Alternatives. Please go ahead. Am I audible? Yes. Yes, sir, you are. Sir, my question is related to the CDMO business. The number of customers were 21 at the end of FY 2025 and the number is same currently in the nine months. Are we expecting addition of customers in the near term? Yeah. We expect this customer number to go up in calendar year 2023. Okay. I have a follow question on that. Can you give some color on the current CDMO inquiries pipeline? No, I think starting this year we are having good number of new inquiries that have been generated by our BD team. Our team is really responding to these inquiries and we hope to win a few of these RFPs going forward. Okay. We are expecting INR 1,000 crore of CDMO sales. Then we should expect FY 2027 growth also to be similar to FY 2026 number? That is the target that we have, yeah. The growth, yeah. Okay. One bookkeeping question. What was the net debt? You mentioned the gross debt. What was the net debt Q3? Net debt around INR 650 crores. We don't keep too much cash in that. Okay. Last question. On the Xanthine, one of the previous participants where you were discussing the lock-in thing. I just wanted to understand what percentage of our business will be lock-in. No. Basically, we have certain commitments which are quarterly and annual nature. Our percentage of locked-in may differ for customer to customer for different quarters. On an average, what would that number be, on an average? Very approximate number is fine. See, the capacities are increasing, the sales is also increasing. That number is a dynamic number. I wouldn't like to comment on that number. Okay. Not even directionally? Around 50%. Thank you. Thank you. Our next question comes from the line of Madhav Mehta from FIL. Please go ahead. Yeah, thanks for the follow-up. I just wanted to check on the CDMO business. I think this year you've guided 30%-40%. I missed the comment. You said FY 2027 also could be similar growth. Is that what you indicated in one of the earlier questions? No, I think we will have the budget prepared by March, and I think once we have the results of this financial year, we'll be able to do the proper guidance. Okay. There will be good growth. Okay. But it is our CDMO business. The base is small. So if you get one or two good commercial opportunities, the growth can be pretty substantial, which is why I was just trying to understand if you had good projects in the pipeline. Yeah. But see, it is dependent on. So now January, February, March is a good time to understand what customers will buy in the current. Right. For next year. calendar year, and that's what will get projected in the numbers. That's how every year it works. That's why we could give a guidance last year also that this is what looks- Good for next year. Just last question. In quarter 3, versus the reported margins, you did allude to some initial OpEx that we booked for Atali, maybe for the Xanthine plant also, maybe some costs would have come in. So any cost which is up-fronted in quarter 3 for some of these new expansions, if you could clarify how much that is so we have some sense on the base business margins excluding new expansions. I think we may not have that breakup, so probably we can get you that breakup later. Okay. Thank you. Thank you. Our next question comes from the line of Deep Gandhi from iThought PMS. Please go ahead. Yeah. Hi, sir. Am I audible? Yes. Yeah. The first question is on the CDMO side. As you have indicated in the past that you've been trying to increase wallet share and even in this call you made a comment that some of the new commercial products are going to be significantly larger in the pipeline. Can you, I mean, broadly help us explain that it's in last two, three years how the wallet share has improved with the innovator partners? If you can try to quantify that. Yeah, I think we have a good five to seven projects where there are multiple number of intermediates which are meaningfully adding the gross turnover of this business, and others are shaping up basically in future. That's how the current nature of the business is. 80% sales is anchored by these few projects, seven to eight projects, and the balance is by the other projects that we have. Sure. Can you say, quantify, say, for example, can a single product. Do we have such products in the pipeline where a single product can be more than 100, 150 crores turnover? I mean, that has happened and even much larger for other CDMO companies, a single product scale. Do we have such products in the pipeline, which gives you the confidence also to reach the INR 1,000 crores turnover from CDMO? Is that a fair understanding, and if you can help us quantify. Yeah. See, we have got single POs which are in millions of dollars. So in single digit millions of dollars. So we are in that range of products. Sure. The second question I have is, in the past you've tried to explain that you are also trying to bypass, you know. You are trying to directly work with the innovator companies in the CDMO and bypassing the partners. How has been that journey in last one and a half years? If you can give us some explanation. Are we seeing any new products where we are directly working with the innovators now instead of say, working with the innovator partners? See, I think we are working with whoever wants to work with us. We are agnostic. We have a lot of chemistry strength where we can do the regulatory starting material, key starting material, GMP intermediates, and API. With different partners, we are working with different things. We have innovators also, we have CDMO partners also, and we have some traders also, not largely, but I think smaller biotech companies also with whom we work on APIs as well. It's a mixed basket but there is no deliberate attempt to bypass any of the CDMO partners because in the early phase of patent, I think all the innovators which work on these blockbusters have to have the supply chain secured in the U.S. and Europe. They have to work with those who don't have their own manufacturing capacity, have to work with CDMO partners. We don't have capabilities of doing this production in these geographies. We have to work with the large CDMO partners. Sure. Sir, this last question, just again coming back to the wallet share question. If you can't quantify in terms of value, but can you help us understand, sir, are there any new products where you are doing almost say 60%-70% of the intermediates for the innovator partner? Are you taking wallet share more in that sense? Is that a fair understanding in last one and a half years compared to what it was in the past? If you can quantify that, even that will be helpful. Yeah. We have few projects where we have that kind of wallet share. 70%, 80%? You stick to one number. 60%, 70% we may have. Okay, sure. That was helpful. Thank you. Thank you. Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. I would like to thank all the participants for taking the time and joining the call. Good evening. Thanks. Thank you. On behalf of Dolat Capital Markets Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line.