Q1 25/26

Aug 13, 2025

Summary

Standalone EBITDA rose 14% YoY and PAT 9% despite lower revenue; consolidated comparisons reflect Ganesh Polychem’s move to equity-method accounting. FY26 growth plans rely on CDMO momentum and H2 capacity additions.

To Aarti Pharmalabs Q1 FY 2026 earnings conference call hosted by Nuvama Wealth Management Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shrikant Akolkar from Nuvama Wealth Management Limited. Thank you and over to you, sir. Thank you and good day everyone. On behalf of Nuvama Wealth Management, we welcome you all to Q1 FY 2026 earnings conference call of Aarti Pharmalabs Limited. From the management side, we have with us Mr. Rashesh Gogri, Chairman, Mrs. Hetal Gogri Gala, Vice Chairperson and Managing Director, and Mr. Piyush Lakhani, Chief Financial Officer. I will now hand over the conference call to Mr. Rashesh Gogri for his opening remarks. Thank you and over to you, sir. Yeah. Good evening, everyone, and welcome to Aarti Pharmalabs earnings call for the first quarter of the financial year 2026. I appreciate you taking the time to join us today as I walk you through the performance of Q1 FY 2026 and share key business developments. Let me start with an overview of our standalone financials for Q1 FY 2026. The top line in Q1 FY 2026 was INR 375 crores, which was INR 394 crores a year back. The EBITDA was INR 95 crores as compared to INR 84 crores in the corresponding period of the previous year. This is an increase of 14% YOY. The profit after tax in the Q1 FY 2026 was INR 51 crores as compared to INR 47 crores a year back, which was an increase of 9% YOY basis. Even though the revenue has been slightly dip in this quarter year-on-year, the EBITDA and the PAT have grown reasonably well. I remain confident that the underlying fundamentals and the long-term drivers of the business are intact. Now I will talk about the consolidated financials for Q1 FY 2026. The top line was INR 386 crores against INR 355 crores in Q1 FY 2025. The reported consolidated top line of Q1 FY 2026 is not actually comparable to that of Q1 FY 2025 because this does not include the proportionate share of the Ganesh Polychem turnover. Following the amendment in the subscriptions and shareholders agreement, Ganesh Polychem is a joint venture from Q1 FY 2026 onwards. Accordingly, in the consolidated financials, a single line of share of profit is added following the equity method of consolidation. Basically the consolidated turnover for Q1 FY 2026 onwards will not include Ganesh Polychem's contribution and hence will look optically lower year-on-year. However, the EBITDA and the PAT will continue to include Ganesh Polychem's share and will be comparable year-on-year. The EBITDA was INR 95 crore as compared to INR 97 crore in Q1 FY 2025. The profit after tax for the quarter was INR 50 crore as compared to INR 56 crore a year back. Additionally, for the revenue of Aarti USA Inc, the Q1 FY 2026 has significantly come down and this was communicated in past calls. This is due to limited business activities in the subsidiary which were earlier carried out for the Aarti Industries Limited distribution business, which has shifted to the Aarti Industries subsidiary in the U.S. Now let me present the business highlights. Aarti Pharmalabs continues to operate in three key verticals, xanthine derivatives, API and intermediates, and CDMO/CMO services. The xanthine derivative segment contributed to 60% of our turnover in Q1. The volume split was 65% beverages customers and 35% for others. In terms of geographical split, the export sales was 57% and rest of 43% was local sales. The API and intermediate business took 41% of the turnover and the sub-segment while the breakup is 49% regulated market, 43% in ROW market, 8% in non-regulated market, which aligns with our long-term focus towards regulated market. We are continuously working towards development of new molecules with patent expiry in next three to five years. The number of US DMFs have gone up to 53 from 50 in last quarter and the CEPs have gone up to 35 from 31 in last quarter. Also, the number of commercial APIs now stand at 60. The third segment, CDMO/CMO, has contributed to 10% of the revenue in this quarter. We are presently working with 21 customers and the number of active projects are now 60, of which 33 are in commercial stages and 27 are in different stages of development, both at the customer end. Based on the current order book, we are on track to achieve our target of FY 2026 CDMO sales. It is important to mention that one of our site which supports xanthine derivatives business was under extended plant annual shutdown and upgradation in this quarter. This is partially the reason for decline in our standalone top line. For the last couple of months there has been a lot of geopolitical turmoil and globally there has been a business uncertainty due to U.S. tariffs. However, the current tariffs rule do not impact our pharma products and even xanthine derivatives like caffeine are under the exempt list and I see minimum impact on our sales. Lastly, I will share the progress updates on the ongoing CapEx. Our brownfield expansion for increasing xanthine derivative from 5,000 metric ton per annum to 9,000 metric ton per annum is progressing as per our plan. The commissioning will be done in a phased manner across H2 FY 2026. The greenfield project at Atali, Gujarat is in final stages of completion. The mechanical completion of the phase one has been done. The commercial production will commence towards the end of Q2 FY 2026. However, it will take us until the end of FY 2026 to ramp up and operate the plant at an optimal utilization. In conclusion, I remain confident in our strong fundamental strategic initiatives and dedicated team driving Aarti Pharmalabs forward. Our strategy remains firmly intact, and we are focused on navigating any near-term challenges with agility and discipline. We are well-positioned to achieve our targets for the year and continue delivering the sustainable growth and our values to all our stakeholders. The moderator may now open the forum for Q&A session. Thank you. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from Rahul Jain with Credence Wealth. Please go ahead. Thanks for the opportunity. Am I audible? Yeah. So just given the top-line degrowth, sir, and also the scenario, we have delivered some good set of numbers. So just to understand, sir, you mentioned about two things on the impact of sales and also one is the Ganesh Polychem numbers, which are not including the sales. So because in standalone sales, I think the plant shutdown has impacted the sales. So what is the impact in terms of sales with regards to this plant shutdown? The plant shutdown sales impact would be around INR 15 crore-INR 20 crore. Okay. Okay. Sir, when I look at this intermediate sales- that has come down on year-on-year basis from about 170 to 150 currently. In fact, in the previous quarters, we were averaging around INR 200 crore for last two quarters prior to the June quarter. In fact, even the earlier quarter, we were around INR 190 crore. So this quarter is down to around INR 155 crore. Do we read anything into this? No, if you see, in this quarter, we were at higher inventory because the shipments were little impacted towards the end of the quarter due to unavailability of shipping space. I think that would have some impact of some amount of sales. But overall, API business, we have been able to have good pace. Whereas in intermediate business, it shares the asset with the CDMO CMO. So there we are progressing more with the CDMO projects in the current quarter. So the intermediate sales is little bit on a lower side purposefully. Sure. With regards to, sir, margins. Our gross margins are at the highest level for this quarter, around 57%, which are around 51% the previous quarter and even the year. On year-on-year basis, it is up from 48%. Typically now, how do we look at the gross margins going ahead? If you could understand that there is some impact on Ganesh Polychem side, what could be the. This I am talking about standalone, sir. I am not talking on the consolidated. Yeah, I think, in terms of margin, of course, this year was a higher margin because this inventory had an impact. Overall, the products that we have sold were all more into regulated market and beverages and export markets. That has yielded us better pricing than the lower price market on these xanthine segments. Overall, I think it is the product mix that we have played and which has yielded in better margins. Yeah. Okay. Last questions. Hi. There is one addition to this also. Earlier, there has been some disclosure change in the financials that we have published. Earlier, some of the consumables that we normally consume in the plant were getting clubbed into cost of materials. Now because these are consumables like filter cloths and valves and those engineering items, as we say. From this quarter onwards and including the previous earlier quarters also, we have now shown it as under other expenses. Okay. Now the cost of material consumed consists of only our raw material, packing material, and fuel. These engineering consumables that we are saying are now clubbed under other expenses. Okay. Last question. Sir, with regards to the guidance, we have maintained guidance both on CDMO growth and also on the EBITDA growth. Given the current quarter has been almost flattish on EBITDA on consolidated, and if we need to maintain this 12%-15% guidance, then the next three quarters, the kind of growth in EBITDA will be around 15%-20% if we want to meet our guidance of 12% to 15%. Given the expense of new plant coming in at Atali and also xanthine, and probably they are not contributing much to the revenue, what gives us this confidence that we will achieve this EBITDA growth? Yeah. See, basically, the EBITDA guidance that we had given was on the standalone basis. This time, anyway, we have a standalone basis EBITDA increase of almost 14% Y-o-Y. Looking at overall, the quarters are going to be not linear in the performance of EBITDA or top line because of the nature of business. A CDMO, CMO turnover may get top line and bottom line may get consolidated in particular quarter, which may result into a bump. I think overall, we have to look at a few quarters and then see how overall growth trajectory is to really consider, because there will be certain quarters where due to multiple stages of processing that we are doing, we may end up doing more earlier stages processing and the invoicing may happen in the later quarters. Which may impact the top line and the bottom line both. Thank you, sir. Wish you all the best. Thanks a lot. The next question comes from Aejas Lakhani, from Unifi Capital. Please go ahead. Yeah. Sir, just a clarification on the xanthine. Sir, you mentioned that INR 15 crores to INR 20 crores was on account of plant shutdown. Just wanted to understand that x of that, has there been any impact of pricing, volume, seasonality, if you can expand? No, there has been no impact on any of these things. Basically, as we have disclosed the product sales mix that we have done, we have done more sales to export as well as the beverages market in the current quarter. That has resulted in better performance in this current quarter. Understood. Sir, just could you also call out in the API business, we understand the quarterly volatility, and you mentioned that there was a shipping space impact and you had higher inventory. How do you expect the full year ramp-up to be for this segment? Yeah, in the API business also we are looking at reasonable growth, I think, going forward. EBITDA growth will be at least more than 10%. Okay. And sir, we understand that there's a shift on the gross margin front, but like to like, if one were to compare it to the previous quarter in the old format, where are gross margins today? For the standalone. So the impact of this change in the cost of material consumed has been given for the earlier quarters also. So now it is like to like, if you compare what we have published. On the presentation that was there. Yeah. Okay. And sir, in Ganesh Polychem, when do we expect the breakeven? When will it start contributing to the bottom line? And what are the key challenges today we are facing? In Ganesh Polychem last year, we had a good EBITDA of around INR 60 crores. This year, we took a plant shutdown to modify and do some modification at our plant. Post that, I think we have restarted our plant in July. I think the current quarter we will reach to normalcy of volume and demand. Okay. Finally, sir, CDMO had started off to a good start, and we thought that this is more of a second half story. Could you comment a little bit on what's driving CDMO? As mentioned in my opening remarks, I have already told that we have order book of the guidance that we have issued 35%-40% growth. We are quite confident about achieving the same. Understood. Thanks a lot. The next question comes from Ankit Gupta with Bamboo Capital. Please go ahead. Yeah. Thanks for the opportunity. Sir, you highlighted about the reason for declining revenue on the xanthine part. On the API front, sir, last year we had seen a very good growth because of the expansions we had done prior to last year. We had seen almost a growth of around 42%. I think we still had some room on the capacity available for growth in the API segment. Given how the first quarter has panned out, do you think we can still grow at least 10%-15% on the base of almost INR 770 crore of API in FY 2025 for this year, financial year 2026? Yeah. See, what has happened is that last year, last quarter, we pushed a lot of sales. We could achieve very higher sales in the last year, last quarter. Whereas in this quarter, we were constrained by shipping space availability. That resulted in an inventory stock increase in particularly API. Of course, basis on every year first quarter, normally the API sales are higher because as a start of the year, customers may like to cover some volume. I think there's some seasonality also to it. Yeah. Okay. At least compare like effect when you- Yeah. As I mentioned, we will be able to grow this business. Sure. Okay. Sir, on the xanthine part, we have the new capacities coming in, additional capacity of 4,000 tons coming in, let's say, in the second half. For this segment, we have had very good volume growth for the past 2, 3 years. But because of the fall in realizations, the overall revenue has actually remained in the range of around INR 780 crore-INR 800 crore. How do you see this xanthine segment panning out for us over the next 2 years, 2026 and 2027? 2027 we'll have the full year benefit of the expansion coming in. Do you think, the additional capacity we can utilize at least 70%, 80% next year? For this year, how do you see growth for this segment? Yeah. Overall, I think 2 years down the line, we are looking at INR 1,000 crore plus top line for this segment. I think we are quite confident with the increased capacity. We will be able to achieve the 2, 3 years. So in 2, 3 years time, good optimized capacity utilization. Got you. So at least FY 2027. Yeah. You were saying something. No, that's it. Yeah. So at least FY 2027, we should be able to do INR 1,000 crore of revenue from xanthine. No, in 2027 or 2028. In one of the years. Of course, it depends on the raw material prices, final price. Sure. All that. So we have given three years, we will have the capacity utilization of 80%-90%, with 50% of sales going to beverages and regulated customers. So that's what is the target. Ultimately, out of 9,000, we may optimally utilize 7,500 to 8,000, out of which 50% will go to the beverages and export customers. Okay. That will be a better margin plus more regular sales kind of business for us. Yeah, the products are different. The product for beverage is a different product and the product for API pharma requirement is different. Okay. Sir, any comments on the pricing? How the xanthine prices are currently? Have we seen the prices bottoming out? Has there been any increase in the pricing for the xanthine products? No, I think prices are stable on spot market also. Yeah, we are seeing stable pricing. We have not seen any further drop of pricing. With the overall, I think raw material costs have also come down. Overall, that is what has resulted in the pricing pressure in past. But now I think everything is stable. Got you. Last question was on the CDMO segment. We are expecting to get around 35%-40% kind of growth for this year, given how the pipeline is shaping up. Can you talk about how do you see, given how the pipeline is currently and we have seen significant increase in our molecules both on the development as well as commercial stage, as well as we have added new customers also over the past 2 years. There's been significant jump in that. 2027, 2028, do we see this segment continuing to grow at least 30%, 40% or even higher growth rates with new capacities that are coming in later half of this year? As I have mentioned in past, in 3, 4 years, we want all segments to grow up to 100 million or INR 1,000 crore, whichever reaches faster. That's what the target is. Yeah. It depends on a year and how the approvals come. How our customers are doing. We have seeded the project. We have 60 projects which are ongoing and how the approvals are coming and how commercially the products are faring in the marketplace. How fast we are able to get approvals as additional source in the current commercial product for the regular requirement. All these factors are in hand of our customers. We are doing hard work in terms of supplies and development work, but ultimately, we will get there because all these products are currently in the patent phase. Customer has fair bit of idea of how the growth is and how it is going there. Let's say in FY 2029, we can expect at least INR 800 crore of revenues from CDMO segment. That's the target. Got you. Okay. Thank you, Nishant. Thank you. Thank you. The next question is from the line of Anil Desai from Turtle Capital. Please go ahead. Hi. Good afternoon, everyone. My first question is, you have mentioned that by Q2, Atali project mechanical completion will be over and by Q4 the commercial revenue will start. Will two quarters time be sufficient to do validation and everything? Even if I assume effect terms of 1.3, 1.4 times, essentially, we are looking at INR 500 crore kind of a revenue from the phase one. From start to reaching that kind of a number, what is the timeline that we are envisaging? Yeah, basically, whatever we are going to do there is going to be earlier stages, production, as well as the product which will shift from our current manufacturing site to this site, where we are having additional orders. All this together will be able to fill up the plant slowly. Overall, I think we expect the plant to get utilized. We have earlier mentioned that every second year, after two years, we will put up additional blocks. With this optimally getting occupied, we will put up newer facility. Of course, the top line in EBITDA, we are basically not tracking top line to that extent. We will ensure EBITDA growth, basically, due to this addition of this manufacturing facility. Okay. When we say that we will move some of the existing products or production from existing site to new site, does this mean that the revenue generated from new site will not be incremental in nature? That is how we should look at it. No. Overall, we have multiple sites which ultimately feed into the CDMO business as well as the intermediate business, and I think you will see an increase in both top lines. Anyway, as we have projected growth in CDMO, CMO this year and next year also, going forward, we expect growth to happen. That will be driven by the additional capacities that we have put up in Atali that will help us achieve those growth targets. Okay. And sir, our aspiration to reach, let's say, INR 1,000 crore number in a given timeline. To reach that number, do we see the visibility based on current commercial and in pipeline products to reach that number, or you think that we need to get many more projects to actually get to that number? It depends on how our customers are doing, and when they are getting the approval. I think anything can happen. We are doing currently hard work of getting more customers, more projects, and every year we will add those. I think combination of both will work towards achieving growth in future. Okay. Lastly, if you can talk more in terms of what are the white spaces in terms of our capability on the CDMO side, which either we on our own or from the slight feedback from the customers that we are trying to develop or work upon, which can help us in the longer term. If you elaborate on two, three such areas where we are spending money and effort on the CDMO side. As mentioned in the presentation, we have given the broad capabilities that we have. We have now cyanation also as a part of our CDMO program. We are also doing continuous manufacturing which we have added, which we can offer for CDMO also. All these are newer offerings that we have added. We can also do cryogenic reactions and hydrogenation. We can do high pep. Basically, anti-cancer kind of finished products also. All these capabilities have enhanced our profile and offering for the innovators. Okay. Anything new that you think is going to be more relevant, more futuristic that you are spending time and effort on? I think as in past, I think world is moving towards peptide biologics, and I think we will like to attempt that in future, going forward. Okay. Awesome. Thank you. That is it from my side. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Madhav from Fidelity. Please go ahead. Hi, good evening. Thank you so much for your time. Sir, first question on the xanthine business. Just wanted to clarify, you said that our capacity will be going from 5,000 tons to 9,000 tons. We are adding roughly 80% capacity. Even on the 5,000 ton run rate which we are at, we are tracking about INR 700 crore-INR 720 crore top line. If the capacity here is going up by, let's say, 80%, why will the peak revenue be only INR 1,000 crores? It can be higher, right? Especially since we are targeting some better priced contracts as well in regulated markets or maybe with pharma beverages, like you mentioned. Just wanted to understand if on a fully utilized 9,000 ton block, what could be the peak revenue potential, ballpark, on current pricing maybe? Yeah, Madhav. We have guided. See, currently our revenue from export and beverages is 65% and 67%. Going forward, we have guided that revenue from these beverages can go up to 50% plus. Of course, currently, we are on a higher side of that, but that will normalize with the additional capacity. Still, it will grow from current base. That has one impact and depending on how fast we are able to secure more pharma customers, it depends on that and that will define the top line because the spot price and the pharma price is, of course, there is a differential also. If we are able to capture a reasonable market of, say, 10%-15% of our total demand in the pharma, then of course we can expect higher top line. If we have to offload the product in spot, then it can be little bit on the lower side. It all depends on how the approvals are coming through. Luckily, xanthine and caffeine is in the Annexure II of the list, so we are not impacted by the tariff. Which is a good thing that we have. Okay. Sir, could you just clarify what is the pecking order for prices? Is it beverages is the best price, then pharma and then spot like that? Or is it pharma, beverages and then spot? I think pharma has best price. Yeah I think beverages and then spot is the always. Spot used to be higher, but now spot is lower. Spot is spot. Right. Okay. Because the beverages we can't supply. It's a market where, of course, the approvals also matter and the distribution network that we have now established over a period of time, that also helps us push the product. There are certain geographies where we can enjoy some better pricing also. Okay. Just to clarify, you are saying that in the current mix that we plan to sell into pharma, beverages, spot, the total 9,000 ton capacity, we expect INR 1,000 crores of top line. Is that the way to think or could it be a bit higher or lower? Am I understanding INR 1,000 plus. It can be anything. Yeah. Okay. Got it. The second question, just wanted to check was on the CDMO business. Did I hear right you were saying that by FY 2028 or 2029, this current INR 200 crores, there is potential to be INR 800 crores to INR 1,000 crores. Is that right? Did I get that understanding right? Yeah. Three, four years. Okay. And sir, is it from the existing commercial, the 33 molecules we expect very good scale-up or is it the pipeline which makes us more sort of bullish on the segment? Whatever color you can share on the growth drivers, that will be helpful. Thank you. I think it's going to be effect of both, and I think we have more promising under development pipeline also. Okay. Yeah. That's why it depends on how the growth happens in the approvals once the customers get the approval. Sure. Of course, there are a variety of factors depending on the competing therapy and how they are effectively able to capture the market share. Understood. Sir, of the 27 projects in development, how many would be in phase III or late stages of development? Could you give some sense there? We do more phase II, phase III work. I think phase I will be very limited. More phase II, phase III only. Otherwise, you would have seen much higher number of projects that we would have done. But we are marketing ourselves as a manufacturing specialist, which does good manufacturing optimization and cost optimization, route of synthesis selection, and having large capacity to match the requirement of customers' needs in case a product hits jackpot. All those things are giving us a good customer base. Got it. Just last question. In case if you are able to get to this mix of, let's say, INR 1,000 crore plus top line in xanthine, CDMO reaching, let's say INR 800 to INR 1,000 crores and API growing at a reasonable pace. How does the margin profile of the company move from current 25%? My sense would be that the margins should improve. Is that the right way to think, or you think margins could be stable if this business mix plays out the way we are thinking? Percentage margin, I think EBITDA should grow reasonably. I think top line is all dependent on the foreign exchange and raw material prices and all that. Top line and-- See, ultimately we try to tag per kg margin we try to maintain in most of the products. Yeah. That's how it works. So a lot of factors are there. So I think margin should be, from the current level, it can go plus or minus 2-3%, I think. Okay. But CDMO is probably the highest margin segment, then xanthine- Yeah. Is that correct? Yes. Okay. All right. Okay. Thank you. The next question comes from Vivek Gautam with GS Investment. Please go ahead. Yeah. Sorry, sir, I joined the conference late. If you can just go to the repetitive, then please excuse me. How much is the exposure we have to the U.S. and what could be the tariff impact for our company and pharma sector in particular, sir? Yeah. Currently our U.S. sales would be around 8%-10%. But I think we don't have any tariff impact currently. Only 8% to 10%. How come no tariff impact, sir? Basically the pharma is exempted by the U.S. government? Yeah. Pharma in Annexure II, yeah. Is there any risk of it being a temporary sort of a thing, and CDMO is also sort of covered under that only, sir. I think CDMO work more. Of course, we have U.S.-based customers also, but largely U.S., Europe, it's multi-geographical. So there also, I think our U.S. concentration is not very high. Okay, sir. What are our CapEx plans, sir. H2 will be much better especially with respect to high-margin CDMO business, no? Yes. Yeah. The CapEx plan, as we have mentioned that in the second half of this year, we will have the Atali new site operationalized, and in the second half of this year, we will have the caffeine capacity addition also will happen. Next year, of course, we will have much higher capacities to produce more products. Of course, this year also, in the second half also, we may have partial impact of this. Okay, sir. A few words about your xanthine and API business piece, sir. Basically, xanthine, we are facing competition from China and much more, and API comparatively less or because China is strong in both those segments, sir. As with the APIs that we are doing are more complex APIs, and they are only targeted towards the regulated markets. With that, I think the China overall presence in those products is little limited. Whereas in xanthine, of course, China has large capacities and they compete. But our value proposition to our customers is that we are the only backward-integrated independent of China source from India who can offer them xanthine products at a reasonable price. With that, we are able to get market share in xanthine. Any plans for us to reduce the exposure to U.S. market due to the overhanging risk for President Trump's administration? No. Are we looking at other geographies to diversify our risk, sir? We don't have any major exposure in U.S.A. 2%-10% is very reasonable, and that too, Pharma being exempt on the list, I don't think. We are largely present in Europe and all the other geographical locations. Okay. Thank you, madam. Thank you. Thank you. The next question comes from Shubham Agarwal with Verum Capital. Please go ahead. Hi. Thanks for the opportunity. Sir, can you give us some quantitative context over the segment level margin across the three segments? Sir, where do you see the quantitative pattern shaping up in the medium and long term as the CDMO revenues rise? Thank you. We are not giving the segmental margins. As I mentioned in past, the margin profile in CDMO/CMO is the highest, followed by xanthine and then API. They are closely neck and neck. Whereas, overall, I think we have guided for the EBITDA growth, and I think we are maintaining the current guidance. Okay, sir. Thank you. The next question comes from Ankit Gupta with Bamboo Capital. Please go ahead. Yeah. Thanks for the opportunity. Sir, in the past, we have spoken about some of our molecules reaching to a scale of $20 million-$30 million for us in the CDMO segment. Given we have 33 commercial molecules as of June 1st, as of first quarter, do you think some of these molecules over the next 2-3 years themselves have a potential of reaching this scale of, let's say, $20 million-$30 million? Or some of the under development molecule projects have those potential? If you can talk about that. It will be a mix of both. I think we shouldn't pin only two because it's ultimately the final molecule that requires multiple products. We may supply all the chemistry also to the innovator. Combining all the chemistry or single product final, we may be able to reach in some product that kind of number. It will be mix of both. Some of the commercial molecules also that we have currently have those potential over the next 2-3 years. Yes. Okay. In this 33 commercialized molecules, will there be some molecules where we will be the largest supplier and our market shares in those molecules will be, let's say, 40%, 50%, and there will be some other CDMO companies who will be the second supplier? Or we are mostly the second or the third-source suppliers on the CDMO sector? Yeah, I think more later is true because I think a lot of products have shifted from China to us, and that is where still the validations are happening, and once we become a full-fledged supplier, each innovator has also multiple partners to manufacture this product, and they have multiple partners from China. The market share starts from 20%, 25%, and then it can go up to 50% also. Sure. A lot of these molecules are still under validation and the scale-up will happen post the validation. Every year the campaign may not come. It depends on the size of product. Suppose certain products may be your regular product, certain products may be a campaign product for the API manufacturer, of innovators. Sure. the segment has largely been second half heavy. Every year we have seen significant scale-up in our CDMO revenue. Is that expected to continue? Is that lumpiness expected to continue or with more molecules- Yeah. It will continue. I think more sales will come in later quarters. Okay. It will continue after Atali starts operations and contributes significantly, let's say, from FY 2027, FY 2028 onwards as well? I think Atali-- Overall, we can guide for the business. Atali is a capacity. Basically we are increasing from 1,100 KL to 1,500 KL. Yeah. Where we are going to manufacture what will be dependent on overall supply chain planning that is being done and how the approvals are achieved. If any product has five, seven stages, we may shift three, four stages at Atali and do final stages where if customer is not giving us the approval to shift. Whereas the new projects will directly go to Atali. But of course, we will have multi-site flexibility, so that is a good thing, which it will also have risk mitigation overall. Sure. Okay. Thank you, Nishant Prasad. Yeah. The next question comes from Dr. Neha Karodia with Abacus. Please go ahead. Yeah. Hi. Good evening, everyone. Thanks for the opportunity. My question was on the API and intermediate piece. Just wanted to understand, sir, you mentioned in the initial remarks that in this business segment, it was more of a conscious decision about the intermediate business that we had more focus on the CDMO side. Probably the decline which is seen is because of the intermediate business coming down. But just wanted to understand why was that. As in, were we facing any capacity constraints? Yeah. That is the reason why we are going to start the Atali site so that we can have our intermediates also validated and the intermediates which require for captive consumption can be validated faster so that we can free up our older capacity to start catering to the customers. Along with the CDMO earlier stages, which Russell mentioned earlier. Yeah. Okay. On that, just to understand it more qualitatively. If we talk about the capacity being free on that also in Q4, combined revenue of, let's say, the API intermediate and CDMO business was about INR 350 crore and this quarter it is significantly low. I did not understand that part. Like, how exactly is it Was it-- Yeah. Yeah. As I think Russell mentioned earlier that for our CDMO businesses, we have lot of stages to be manufactured. We start little early so that six, seven stages or early stages were under production and that is still continuing in current quarter also. And most likely in H2, you will see the bump of sales going in. A bump in the CDMO segment? Yeah. Yeah. Overall, yeah, for the CDMO. Okay. Is it fair to assume that going forward, let's say Q2 onwards in API and intermediate business, the growth will again catch up or will it again be, let's say, more of tilted towards H2 in terms of this API segment? I think year on year there will be growth in both the segments, API intermediate as well as the CDMO CMO. CDMO CMO specifically, we have anyway guided the growth and I think we are quite positive with the new capacity coming in. I think there will be growth in the API intermediate segment as well. Understood, sir. If one assumes, let's say mid-teen kind of growth, will that be a fair assumption still in, let's say FY 2026 or maybe on a FY 2026, FY 2027 which is in the API intermediate segment? Basically top line. What happens is that as I earlier also mentioned on earlier conference calls is that we have regulated market customers, we have rest of the world customers and non-regulated customers. If we do not get the capacities available then we cut the non-regulated market. But we still cater to high margin regulated market as well as the ROW customers. Basically, practically you have to see the EBITDA growth overall, which really makes the difference in the API segment as well as the xanthine segment also, I can cut the spot sales. Ultimately, if the capacity goes down by 10%, still the profit may not go down by the same amount. The profit may go down by only few percentage points. And vice versa is also true because we are anyway capturing all the high margin market. Even if I have much higher capacity, the growth may not come significantly higher because we are anyway capturing all the important profitable market and then we go after the non-reg market. Got it, sir. In terms of capacity utilization for the quarter, can we get some color on that? How was the capacity utilization for intermediates and CDMO capacity? Yeah, we were 80% plus utilization, 80%, 85%. Which is optimally utilized because we are doing so many products at a time. Understood. We are fully occupied. Yes. The next question comes from Yash Lahoti with SOIC Research. Please go ahead. Hello, hello everyone? Yeah. Yeah, good evening. My question was related to the CDMO part where we are guiding 30%-50% kind of growth. First of all, will the margin this year expand on the consolidated level? Also, what is our vision for the CDMO segment for the next three, four years? Can it be 30%-50% of the overall business for the company? Yeah, I think we have guided 30%-40% growth this year on the CDMO, CMO margin. I think overall, we aspire to do the numbers that I mentioned earlier in the call, where we want to reach in three, four years. I think overall, it depends on how the overall market plays out and how we are able to ramp up the other products. It can go anywhere between 25%-33% of overall sales. Okay. The other question was related to the solar plant that is coming. What kind of cost savings can we get from that? Yeah, I did mention earlier that annually it will have INR 25 crore-INR 30 crore cost saving for the current plant that we have operationalized. Then, of course, we have one more plant which is coming up, which is going to be the plant with the power purchase agreement that we will have with the joint venture. That will also have more savings. Okay. Last question was related to the base business, how we are seeing the growth this year in the base business as we are almost near to the full utilization level, and also the newer capacities that are coming up into even xanthines side and API side are later into the year to- I think second half is not far. Yes. I think second half we will have the capacities and that will allow us to grow further. We are also adding one additional debottlenecking of API line also. There are a lot of, I think, debottlenecking areas which keep on happening in the existing sites also. I think overall, we will have additional capacities which will get freed up in the second half of this year or maybe towards last quarter, which will allow us to grow this year and of course, next year as well. Okay. That's it from my side. Thank you. Thank you for the opportunity. Thank you. Thank you. The next question is on the line of Kumar Saurabh with Scientific Investing. Please go ahead. Hello. Sir, my question is regarding the two CapEx which will be coming live in the next 6-12 months. Usually whenever a new CapEx comes live, some of the centers are front-loaded, and then once we reach maybe 40%, 50%, 60% capacity, then the operating leverage play happens. Coming to these two businesses where we are coming with CapEx, how does it look like? Do you feel it will impact some margin for one year and then we will have operating leverage? Or do you feel there should not be a lot of margin impact given the existing business should take care of that? Yeah, I think the two CapExs are of different types. One of the CapEx is greenfield CapEx, where I think whatever you say it is true, whereas the second CapEx is brownfield. In brownfield, I think the cost will not go up as much. So we will have advantage with the higher capacity costs also remaining low. Whereas in the greenfield, we will have more OPEX, which will have to be covered over a period of time with the utilization. So I think we are going to have a mix of both. The xanthines will be more brownfield, and the Atali project is going to be more greenfield of nature. Yes. Also we have done almost INR 150 crore to INR 200 crore of infra spend. Which is for future. Currently we have just started with block one, which mechanical closure we have done. With that still, with the other blocks coming in, we have capacity to do 10 blocks. That also, once we have more and more block, it will more go in the brownfield expansion. So I think we have to bite the bullet once. That's what we'll do in Atali. Got it, sir. My second question is on if you can give some visibility in terms of the granularity of revenue in terms of the API and CDMO business, how granular it is. I know there could be restrictions in terms for competitive reasons, but if you can give some color to that, how granular these businesses are. In API business, in next 2-3 years, we have good patent expiries which are coming in and with the products that you can see our website and the expiry is we will have a good potential if our partners are able to gain the market share. It's all depending on the partner's ability to gain the market share and how competitively we are able to support partner in manufacturing the product that they desire. But we have good pipeline. I think in that anti-cancer and some of the general products have promising sales. I think I see a lot of billion-dollar plus products in our pipeline which are going to expire, multi-billion dollar products which are going to expire. We expect, if we are able to get 10%-20% market share in few of these products, we'll be able to get a good growth in API. I think intermediate segment also same, too. Basically, where we are seated with multiple vertically integrated players, we end up supplying intermediates to multiple 5-7 customers in each product. Even if one or two of them are successfully able to get their products launched in U.S. and Europe, we can get good volumes. I think even the validation quantities and all that also can be meaningful. There, again, the game is how competitive you are remaining in total, and that's where the constant efforts to remain cost-effective, create capacities for meeting the customer's demand and all that is important. That's why we have proactively invested in Atali to have that possibility of growth in the future. Okay. Sir, either now or in future, do you see any of these API intermediate products having more than 20% and a high double-digit revenue share of their segment? Yeah, that is what our overall aspiration is, that any product that we do should be at least 10% plus of market share of the global. No, sir, I am not asking for market share. In the API intermediate, our revenue mix, are there products which are contributing in high double digit? Like 20% of overall API intermediate revenue or 30% of API intermediate revenue. Do we have such products? Just to gauge how granular our mix is. No, we have more than 140 products that we offer as API intermediates. Of course, some of them are very big. So a few products have a $5 million-$6 million sales also. And of course, we have captive sales, internally consumption also. So with that, I think overall these products are larger products, but not very heavily dependent on any few products. So it is a mixed basket of many products that we do. Right. That is all I had. Wish you all the best and looking forward for next quarters. Thank you. The next question comes from Abhishek with Padmaja Investments. Please go ahead. Am I audible, sir? Yes. Hello. Am I audible, sir? Yeah. My question is on the Ganesh Poly. My question is on the Ganesh Poly, since the capacity is now running from July, is there possibility for larger profit potential from the joint venture? That's my question. I think longer term, the capacity we have grown, and I think overall the modification that we carried out was to enable ourselves to meet more demand of the customer. That is what is the endeavor. It may not happen in this year, but I think longer term, we will have higher capacities which will be able to meet more customers and more markets. There are multiple products that we have, and few of them have application in aerospace also, and which is growing quite nicely. With that, we will have good growth possibility. Okay. As of now, the profit contribution from the joint venture is close to INR 40 crores or INR 60 crores, you said. Piyush, can you answer this? Sorry, what is the question? Can you repeat? The joint venture contribution to the profit, because now you will not be adding it to the revenue and straight to the profit. How much will it going to be following this year or next year? There will not be any impact on the profit per se. It will be still counted as part of the profit after tax. There will be an impact only on the revenue and the expenditure. Last year, there was- Yeah, that is what. I am asking you- I got that part. I am asking what was that number last year? Was it INR 40 crores or INR 60 crores? It was INR 60 crores EBITDA. EBITDA was INR 60 crores, so our share was 50% of that. Okay. Okay, sir. Thanks. That is all. The next question comes from Prakash Kapadia from Kapadia Financial Services. Please go ahead. Yeah. Most of the questions are answered. I just had one question. On the CDMO side, obviously we've seen good growth, and you commented the trajectory will continue. Given that growth in CDMO shouldn't EBITDA trend higher than the 12%-15%, which we, I think, mentioned at the AGM? Yeah, I think as we mentioned, with the new plants coming in, we will have higher OPEX also and all that. With that, I think we have to see how our overall utilization happens and next year we can definitely have higher growth. But this year, with the half year, we'll have to see how it goes. Yeah. Also along with CDMO, we have other businesses also growing. Overall that will be combined, if we see. It will be as guided earlier. Okay. Thanks. Thank you. The next question comes from Avaneesh with Arkaja. Please go ahead. Yeah. Hi, good evening. Thanks for taking my question. I just have a quick one. This is regarding the CDMO business where you make products for the big pharma, the on-patent products. I just want to know that the APIs or the intermediates that you make, are they getting exported to the formulation plants in the U.S. or are they getting to Ireland? I mean, which is your major export country right now for that business? I think they are getting exported all around the world. Largely, I think Europe is quite concentrated for manufacturing of API and formulation. Of course, some goes to U.S. as well. Sir, the goods that are getting shipped to U.S., as I understand, APIs doesn't form in the definition of pharmaceutical as it applies for the tariff. Yes. Are your APIs that are getting shipped to U.S., are they getting tariffed right now? No, they are not getting tariffed. Basically, API are also exempt from tariff as of now. Yeah. Okay. And let's assume for a second that Section 232 investigation does lead to some tariff. Is there an understanding on how that might impact our business? Who's going to take on these tariffs? I mean, what are the contracts like? Are they FOB or are they DDP? Can you give some color on that? Some of the contracts are FOB. I think largely FOB. Is there an understanding that whatever number that comes from the investigation, whatever the number that would be, is it partly absorbed by us and the customer or fully absorbed by the customer? Is there any clarity on that? I think 50% tariff, if it becomes applicable, I do not know what will happen. But currently, anyway, we are safe from this, so we are not speculating what will happen. Currently, they are under the exempt list. So we hope that the things resolve and we have a much better tariff situation in future. Even if something were to come, I think if it comes to 50%, I think there will be some impact. Because even if we directly may not sell, I think our customers will eventually sell to U.S. market, because U.S. is the biggest market of formulation of generic products. What is the stance of President Trump on the generic, whether they want to apply tariffs or not, and how he wants to take it. It is more speculative. I think today the tariffs are not applicable. That is what we can say. Okay. Basically when that number comes, that is when you start having discussions with your customer on basically how this gets split or whether the customer absorbs it or not. Yes, because lot of customers are India-based also, which ultimately end up exporting the regulated market API customers. This could be based in India, and they ultimately export. There are a few customers which are U.S.-based, but largely the manufacturing has shifted to other countries, right, from U.S. Just one clarification here. Some of the other players have said that the APIs are actually not exempt from the Section 232, and it applies to only the final formulation. So you are indicating that you are paying the tariff on the API exports to the U.S. I think the product that we are exporting, our sale condition is CIF, so we are not paying any tariff. Okay, thank you. And of course, the xanthine is under Annexure II list, so it is under exempt. The caffeine and its salts are under exempt list. Understood. Okay. Thank you. Thank you. Thank you. Yeah, I would like to thank all of you for attending the call. Thanks. Thank you. This concludes the conference call. On behalf of Nuvama Wealth Management Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.