Ladies and gentlemen, good morning and welcome to the Alivus Life Sciences Ltd Q2 FY 2026 earnings call. As a reminder, all participant clients will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Soumi Rao from Alivus Life Sciences Ltd. Thank you, and over to you, ma'am.
Good morning, everyone. I welcome you all to the earnings call of Alivus Life Sciences Ltd for the quarter ended September 30, 2025. From Alivus Life Sciences, we have with us Dr. Yasir Rawjee, our MD and CEO, and Mr. Tushar Mistry, our CFO. Our board has approved the results for the quarter ended September 30, 2025. We have released the same to the stock exchanges and uploaded it on our website. Please note that the recording and the transcript of this call will be available on the website of the company. Now, I would like to draw your attention to the fact that some of the information shared as part of this call, especially information with respect to our plans and strategies, may contain certain forward-looking statements that involve risks and uncertainties.
These statements are based on current expectations, forecasts, and assumptions that are subject to risk, which could cause actual results to differ materially from these statements depending upon the economic conditions, government policies, and other incidental factors. Such statements should not be regarded by recipients as a substitute of their own judgment. The company undertakes no obligation to update or revise any forward-looking statement. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. With that, I invite Dr. Yasir Rawjee to say a few words. Thank you, and over to you, Doctor.
Soumi, thank you. Good morning, everyone, and welcome to our quarter two earnings call. Before we get into the company's quarterly performance, just a few words on the broader industry landscape that is influencing our business environment. The global pharmaceutical industry is growing but also evolving rapidly, driven by advances in AI and digital technology, and a growing demand from emerging markets. Companies are strengthening supply chain resilience, local formulation manufacturing, and focusing on patient-centric models and sustainability. While rising costs and regulatory pressures pose challenges, innovation, technology adoption, and government support continue to fuel growth and reshape the competitive landscape. With this, let me draw your attention to our performance for the quarter. We reported revenue of INR 588 crores, registering a healthy 16% growth YoY. This was driven by a very strong performance of our non-GPL business, which grew by 39.7%, backed by mainly successful new product launches.
The performance reflects the inherent strength of our core operations, though overall growth was partly moderated by a decline in the GPL segment due to customer inventory rationalization. As indicated earlier, we anticipate the GPL business to regain momentum in the second half of FY 2026. During the quarter, we saw broad-based growth with regions like emerging markets, Latin America, Japan, Europe, and India ex-GPL, delivering strong performances and emerging as key contributors to our overall growth. Moving on to our profits for the quarter, our gross margin for the quarter was 57.7%, up 210 basis points year-over-year, driven by rationalized input cost and new product launches and favorable product mix. Our EBITDA margin for the quarter was 33%, up 480 basis points year-over-year. The CDMO business has been a mix, but overall, when you look at it, it looks soft. We expect it to rebound.
In the second half, led by the addition of new projects and ramp up across existing projects. With a healthy pipeline and new projects being added, we anticipate a meaningful turnaround in CDMO performance in the second half. Our pipeline remains robust with 586 DMF and CEP filings globally as of September 30, 2025. The development grid remains steady and future-ready with a mix of near-term launches, NC-1 opportunities for the target markets. The high-potent API portfolio remains on the development path with 26 products in the active grid, representing a total addressable market of $66 billion. Of these, 10 products are validated, 7 products are in advanced stages of development, and the remaining 9 products are progressing through lab development stages. Our capacity expansion initiatives at Solapur, Ankleshwar, and Dahej are progressing well and as planned.
Looking forward, we reaffirm our guidance of high single-digit revenue growth for FY 2026, driven by a stronger performance in the second half of the year, led by strong profitable growth in broad-based external sales, recovery in GPL business, and ramp-up of CDMO projects. We remain confident of sustaining margins at around 30%. Despite the absence of PLI benefits, the margins are reinforced by a robust pipeline of new launches and operational efficiency. With this, I hand over to our CFO, Tushar Mistry. Tushar, please take over. Thank you very much.
Thank you, Dr. Yasir. Good morning, everyone. Welcome to our Q2 FY 2026 earnings call. Before we take questions from you all, I would like to take a moment to highlight the key performance updates for the quarter and half-year ended 30 September 2025. For second quarter FY 2026, revenue from operations stood at INR 588 crore, a growth of 16% year-on-year.
Gross profit for the quarter was INR 339 crores, up 20.4% year-on-year. Gross margins for the quarter stood at 57.7%. This is towards the higher side of our given guidance. EBITDA for the quarter was at INR 194 crores, up 35.7% year-on-year, and EBITDA margin for the quarter was 33%, up 480 basis points year-on-year, driven by better product mix and new launches. PAT for the quarter stood at INR 130 crores, with PAT margins at 22.1%. For first half FY 2026, revenue from operations stood at INR 1,190 crores, a growth of 8.6% year-on-year. Gross profit for H1 was at INR 671 crores, up 15.1% year-on-year. Gross margins for H1 stood at 56.4%. EBITDA for H1 was at INR 375 crores, up 21.9% year-on-year. EBITDA margin for H1 was 31.5%, up 340 basis points year-on-year. PAT for H1 stood at INR 252 crores, with PAT margins at 21%.
Looking at the therapeutic mix, CVS and CNS continue to lead the growth during the quarter, with both therapies contributing 55% to the top line. Chronic therapies contributed 69% to the top line in Q2 FY 2026. R&D expenditure for Q2 FY 2026 was INR 22 crore, which was 3.7% of our sales. For H1 FY 2026, it was INR 43 crore at 3.6% of our sales. On the balance sheet and cash flow moment, speaking of capital expenditure, CapEx for the quarter was INR 61 crore, and for the first half, it was INR 113 crore. I would like to reiterate that our CapEx items, we have a CapEx approval from the board of INR 600 crore, including carryover of INR 190 crore for FY 2025. We continue to remain a net debt-free company, and we have generated strong cash flow from operations of INR 148 crore in Q2 FY 2026.
With cash and cash equivalents, including short-term investments of INR 653 crore on the books as of 30 September 2025. In closing, we remain confident that the strong demand momentum coupled with improved visibility for the second half of FY 2026 will position us well to deliver a steady growth performance for the year. With that, let us open the floor for Q&A.
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 touchstone 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. The first question is from the line of Ahmed Madha from Unifi Capital. Please go ahead.
Good morning, Doctor, and thanks for the opportunity. I have three questions. First, on CapEx part, we have done INR 110 crore-INR 115 crore CapEx in the first half. How do you see the overall this year's CapEx in realistic terms? Is it fair to assume the budgeted amount will be able to utilize for the CapEx? Is there any change in the timelines for the solar power plant? That was the first question. Our second question was regarding the CDMO business. Can you give some granular sense? How do you see all the new as well as existing projects? I believe with the new one we left overall five. How does the second half look like, and how do we end the FY 2026 year? Lastly, when we say in press release, we have better visibility in terms of the GPL business, can you give some granular sense?
Thank you so much.
Okay. Thank you. So CapEx has been slow in H1. I would say that. I mean, R&D, we expected to close R&D this first half, but it has moved out slightly. We had planned around INR 90 crore-100 crore on R&D spend for the R&D center, but this year we probably will end up spending half of that. So that takes away half of what we had planned to spend on R&D. Solapur is on track. From the spend perspective, we probably will spend a little less in Solapur. While the second half will pick up, we will not spend the remainder of that INR 600 crore this year. Okay? More likely we'll end up spending around INR 250 crore in the second half. Of course, projects are on track. Ankleshwar and Dahej are very much on track. Okay?
We should have Ankleshwar coming up, the new projects getting completed by June of next year. It will be operational from Q2 of next year. Dahej should be operational from Q1 itself of next year. Sholapur also, we are targeting a start of Sholapur from April. We are on track, but on the spend side, we will not spend the entire INR 600 crore this year. As far as CDMO goes, CDMO has been doing well. I mean, the new projects are picking up really nicely. Project four, the commercial, we have already achieved close to 50% of the commercial potential, and it is going very nicely. The reason why the numbers are still a little muted is because on the existing projects, there is a bit of slowdown, which is only temporary, right? It will pick up in the second half.
We are pretty confident that our existing, our earlier three projects will come back commercially, and we'll be well on track. On the fifth project, we also expect most regulatory approvals to come in the second half, and so hopefully we'll be kicking all five projects in the second half, and that would contribute to a much higher CDMO contribution. Now, with respect to GPL, yeah, I mean, we expect the second half to be better. Okay? I can't say how much better, but it will definitely be better because the outlook is good, right? But it remains to be seen. We expect GPL to do much better than what we've done in H1. Given the fact that CDMO and GPL will both pick up, right, I'm expecting the second half to be much better than the first half.
Just one follow-up. In terms of CapEx, you said second half is a few crores. Are we considering anything else in terms of inorganic or any other capital deployment opportunity in near term, or we are happy to wait and wait for the opportunity in mid and long term?
We are evaluating various things, okay? In terms of capital, like Tushar just said, we are sitting on more than INR 650 crore of cash, okay? Obviously, sitting in the bank, it's not going to give us that kind of return. The business is doing well. It makes sense to reinvest back in the business. We have to be smart about it, and we would much rather take our time and evaluate opportunities across the board to try and figure out what is the best fit for our business. I mean, mind you, the one thing that I have always said, and I'll continue to say it, is that one of the strongest elements of our business is our portfolio, okay? With 160+ molecules, very good molecules, right? Not vanilla molecules, right? We.
Are well positioned not only in the API business, but if we go API Plus, okay. We could end up doing a lot more with this portfolio. So whatever we do will be aligned very closely with this portfolio that we have built up over the last six, seven years. Okay? Yeah, we are actively evaluating opportunities, and this is something that makes a lot of sense, right, in the current situation.
Thanks for your participation. All the best.
Thank you.
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Tarang Agarwal from Old Bridge. Please go ahead.
Hi, sir. Good morning. A couple of questions. One, how are you looking at the API business environment? I think it's been, what, 12 quarters probably where we feel that the pricing on the raw materials as well as end market continues to remain benign. Is that something that you're also facing? Number two, you're currently now at a consistent clip of about INR 600 crore per quarter. When do you think you'll be able to get to about INR 700 crore per quarter on a consistent basis?
Okay. Hi, Tarang.
See, the API business environment, I would say, is a bit mixed. Okay? If you look at the commodity side, right, then yes, prices are under pressure. Okay? At the same time, raw materials are also not going up like crazy. Okay? That is helpful. There is the other side where we have the newer products getting introduced in various markets. There, it is much more advantageous, the pricing scenario. Okay? Obviously, we mentioned in the commentary as well that we had launches, and good launches. We have been able to secure on the newer projects that have launched good prices, and we have been able to control costs at the level that we had planned. Again, both the R&D effort on that as well as the manufacturing efficiency has helped us to keep costs under control. For the newer portfolio, that certainly applies, right? And.
I believe that will continue. Now, with respect to 600-700, I mean, in this quarter, it's only our non-GPL business, API business that has fired well. It's most of the regions except the U.S. that has done very well. Japan, we've had a fantastic turnaround, which will continue. Japan, as you recall, I had said about a year back, has only four commercial products, and we are building the pipeline. That pipeline now is beginning to work for us. In Japan, we have close to eight to nine commercial products that are kicking in, and it'll continue that trajectory. We'll continue to move north. For Japan, Latin America has also turned around very nicely. You remember the Argentina currency situation, which had slowed down our Latin America business, and that has turned around completely.
In Latin America, we have Brazil, Argentina, Mexico firing pretty well for us. Again, it's a nice broad-based turnaround. India has been consistently doing well, but Europe and Rest of World also have turned around, I mean, have done much better than in the recent past. Overall, the only, I mean, the big lever here for this performance has been our non-GPL API business. When we look at, and I answered this earlier, that the CDMO is going to turn around well in the second half. Even GPL business has, I would say, we are at the lowest point, really. It can't get worse than this, right? It'll turn around in the second half. I don't know whether we will hit 700 this year. Given the fact that we have a very strong pipeline with new launches coming up, and CDMO is also.
Doing well, I would say, right? Even though the number, like I said in the commentary, does not really reflect that. The outlook for CDMO being very good, I would say that even if we do not get to 700 this year, we will be very close to it. Okay? I mean, overall, the outlook is very strong.
Got it. Now, just two follow-ups. One, you spoke about Japan. I mean, four has moved to eight. Where do you see the potential given that you've got about 160, 165, so to say, unique molecules? And, sorry, yeah, that's about it. Yes. Thanks.
We are actively filing in Japan, Tarang. Okay? I mean. There will be more commercial launches happening in this next year, okay, and in the following year. For the next two, two, even maybe three years, we have a reasonable uptick on the Japan business, mainly on account of new launches and new customers.
Could we fathom a situation where, more customers obviously getting added in Japan, but probably four new molecules getting commercialized each year from here on? Is that something that it's prudent for us to bake in?
Yeah. Yeah. We are good for four every year.
Okay. Second, in your initial address, you qualified that. Perhaps the benign environment is—I think you specifically called out for commoditized APIs. Was there a reason why you did it, or it's actually only for commoditized APIs and not the case everywhere?
Okay. Let's understand what's your definition of benign. Are you talking only on the cost side or even on the pricing side?
I'm saying margins overall in all of these businesses. Clearly, we've seen a situation where finished good prices have come down, and so have raw mat prices. But same percentage margin on lower realization effectively results in lower absolute profitability per ton or per kg, correct? I think that's something that we've seen play out in most of the players, if not all. That's what I mean by a benign environment. Essentially, for you to continue chugging in the same absolute profitability, you have to increase your volumes materially, right? That's where I'm coming from.
Yeah. Okay. Let me address only the more mature APIs because we have them as well. I mean, it's not as if everything is new. On the more mature APIs, our volumes have been growing. Okay? What you said is true, right, that yeah, prices are not going up.
I mean, prices are stable or even declining slightly. But then the cost environment is also reasonable. Okay? So it's not like we are getting pressured. That downward pressure on the cost side. So that is also being managed. And then whatever sort of delta is coming, negative delta is coming, is being offset by slightly better volumes. So that part of the business is stable. Okay? And the margins—not the percentage margin, but the absolute margin on the overall business—is growing slightly as a result of the volume increase. Got it.
Sure.
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of [Chintan Chheda], and retail investor. Please go ahead.
Yeah. Hi. Good morning. Thank you for the opportunity. Dr. Yasir, in one of the previous responses, you just mentioned about the API Plus. Could you please expand what we mean by API Plus and how much is that contributing to our revenues in the current scenario?
Okay. Kaithan, see, this whole concept is something that basically comes from our CDMO platform, but also basically extends to our generic business. Right now, we do not only give API to our CDMO customers. We are giving a whole range of solutions around the API. That basically helps our CDMO business by offering customers more of a one-stop shop. This support that we give on the documentation side, the regulatory filing side, the analytical support, and so on, is something that really goes well with customers. In CDMO, it has been a big hit for us. I mean, it is working very nicely. What we have done is that we have started extending this model to some of our key generic API customers as well, where they see we give them a lot of value in terms of the other elements.
Around the API, mainly on the regulatory support, the analytical support, and so on. What that does, basically, where that is value creative, is that it basically speeds the development for the customer end as well. Okay? This is a model—obviously, we would have to sort of build some capability in terms of R&D around this in order to sort of push the API Plus business. Okay? Which is something that we are doing. We're not greatly accelerating it, but as and how customers get interested to not only get API, but even get API Plus data and more data. Okay? That helps. The other thing is the other place where it has really proven to be beneficial is on the complex API development. In complex APIs, what happens is that a lot of the work is done.
At the API level instead of at the formulation level. Here again, this kind of support on the API is a big help to generate interest with the customers who are buying complex APIs.
Thanks for that explanation, Doctor. Just a small follow-up on that. When we talk about this additional value that we provide to the customers, while it will be incremental, does this also help us improve the margins upwards? In other words, would this be a higher margin as compared to a pure API?
Yes. Yes, sir.
Yeah. Doctor, I'm not sure if you heard my question. Shall I repeat?
Oh, I did. I said yes. I don't know if you heard.
No, no, no. I understand. Okay. Okay. Yeah. Thank you. Thank you so much. Yeah. Thanks. That's all my questions. Thank you. Wish you all the best.
Thank you.
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next follow-up question is from the line of Tarang Agarwal from Old Bridge. Please go ahead.
Yeah. Hi, sir. Just a couple of things. One on CapEx, right?
I'm sorry to interrupt, Mr. Tarang. Your voice is not audible.
I audible now?
Yes, sir. Please proceed.
Hello.
Yeah. Better, Tarang.
Thanks.
Yes. Just a couple of them, sir. One on CapEx, I understand that getting the right land parcel approval, so on and so forth, can take its own time. And there are things and exigencies which are out of our hands. What I wanted to probably get a better handle on is, is it in any case, does it in some sense, be an impedance for you to grow next year or in the next one and a half years because of the mismatch in the timing of cash flow deployment that we've seen in FY 2026 and to some extent, which we saw in FY 2025? That was one. I mean, we're okay if the deployment moves around by a quarter or two as long as it's not really impeding the broader growth trajectory of the business. That's where I'm coming from. The second question is.
About two years back, specifically in FY 2024, we've seen this reasonable bout of cost increase when it came to the employee base. What we understand is that the operating environment generally in the industry was quite aggressive, which led to that cost increase. How have things changed now, two years later? Because we've also seen some element of capital withdrawal in the industry. Two years, three years is generally a long time, even for the new capital that came into the industry to realize how important it is to have prudent operating metrics. I just wanted to get a broad sense in terms of how are you seeing broad inflation or competitive dynamics when it comes to employees and workforce in the API industry?
Okay. Let me take the second question first. Okay? There was an increase two years ago, but that was largely because of some performance-related long-term performance incentives that were basically planned for key employees. Okay? That has sort of leveled off, obviously, right? With respect to the environment. Right. See, we remain a high talent intensive industry, right? This is. Of the 2,200 people that we employ, a good 25%-30% of that workforce is a high talent workforce. In fact, even a little more. I would say even close to 40%. Okay. We need to be competitive, which we continue to be. When we evaluate our pay scales, we are close to the 75th percentile because we want to continue to retain good people and attract good people to come and work for the company. Okay?
Having said that, we also are balancing it out with a flatter structure than we see in most other companies. This not only helps us maintain better cost, but it also has a shorter chain of command and a tighter chain of command when it comes to solving problems and dealing with issues. It has served us well. I think we will continue to operate along those lines. We will try to maintain our employee cost at around 10.5%-11%. Yes, we will have to attract good people, and if it does inch up a little bit on account of that talent, we would continue to do that because we are still well below the industry average in terms of our employee cost. Now, coming to CapEx, right? See.
Basically, R&D continues to work in our current facility. The idea of having our own R&D center, owned by us, right, is simply that we know we are on a growth path. Okay? We will continue to be on a growth path, at least for the next five years. Okay? Now, given that situation, right, we continue to add new levers in R&D for that growth. Okay? We need the space. We need to add more infrastructure from time to time. Having our own place with enough expandability is something that will serve us well. Yeah, we've been, I would say, very picky in terms of where we select our R&D new center and how much space we need for that. That's taken a bit of time, but hopefully, we will close in this quarter itself, right?
We have our design for the first phase of R&D ready. That will continue. It is not impacting business. We would like to move ahead as soon as possible. With respect to other projects, Sholapur is where there has been a slowdown, not by a lot. We are building this facility. It will be a state-of-the-art facility, where we have built in a lot of continuous manufacturing infrastructure, plus some high capacity infrastructure for backward integration. Given the fact that we have a different kind of site that we are building, at the same time, it should be an FDA-approvable site. Given these dynamics, the planning continues, and we want to be sure that we have the right kind of fit. Again, is it impacting business?
No, because you've seen our market is more than 80% regulated market. It's happening out of Mohol, out of Ankleshwar, out of the region. Okay? Because these are US FDA-inspected sites. That would be our way of looking at it. Solapur, even if it takes a bit of time, is not going to impact business. Okay? We want to, again, just like I said for R&D, we want to get it right. Okay? That is what we are working towards.
Perfect, sir. Thank you. All the best.
Thank you, Tarang.
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Vijay Karpe, an individual investor. Please go ahead.
Yeah. Thank you for the opportunity. Good morning. My question is, the spend on CapEx has been reduced for the second half. In spite of that, we are seeing that the plans are on track. How are we making that possible? That is the first question. The second question is, on the Gujarat State Pollution Board. I think we have gotten into a small issue for the second time again. In spite of having good compliance with the other agencies, why do we keep on getting in trouble with the Gujarat State Pollution Board?
Okay. On the Pollution Board. This was not sort of a regular issue. We did have an incident, okay, where we had a flash fire in the factory, okay? And so they penalized us for that. It has not caused any major damage, but then that is the view of the board, the Pollution Control Board, and they fined us. It is not like we are in trouble with them. I mean, end of the day, we work with authorities closely, and we try our best to comply. But then it is a manufacturing environment, and things do happen. I would say it is a one-off. It is nothing to really worry about, okay? I mean, our factories are working at the highest level. I mean, you would have tracked that we had US FDA come into two of our facilities this year, okay? In January, the US FDA visited Ankleshwar, okay?
We had only one 483 observation. We answered that. We got our EIR with a VAI status. In Dahej, FDA was there in May. Okay? There was no observation, so it was an NAI status. We have our EIR for both these facilities. I mean, the compliance level at Alivus in all facilities is very high. I can assure you that. Yeah, I mean, sometimes authorities take a view, they take a view, right? We continue to work with them. Coming to CapEx, right? CapEx reduction and projects still happening on time is as a result of getting better credit as well. Okay? I explained on the R&D part, right, that yes, there is a slowdown and why. We also are getting better credit from our suppliers. While work is progressing, the cash outflow has not been that big in H1.
Obviously, we'll have to, after the credit period goes away, we'll have to pay our vendors. We're going to do that. That will happen in H2, and then there will be a spill in the next financial year as well.
Great. Thank you for answering my question. Last question is on the working capital. What was the working capital for the quarter? What best can we do with the working capital? How low can it go? How low can we manage?
Yeah. I'll request Tushar to take that question, please.
Yeah. On the working capital, we remain stable as far as the working capital is concerned. We were about INR 1,300 crore. We remain in that same range as of now also. You would recollect we had reiterated that the receivables had gone up because of the new arrangement that we had with GPL. While that continues, that has now stabilized as far as the number of days is concerned for receivables. We are roughly at around 148 days of receivables. Compared to March, the current quarter also or the current September numbers are also at 148 days. There is a slight increase on the inventory number of days. Again, that is because of the buildup of inventory that we need to do to service our customers. There is nothing one-off there. It is in the normal course of business.
The payables also remain stable. Overall, the working capital that was around INR 1,250 crore is about INR 1,322 crore in the current, as of 30th September.
Okay. Can you talk about the overall number in terms of days? What number can we bring it down to?
Bringing it down conservatively, as I mentioned earlier, also is not, we are not seeing that. There might be some ease of that may happen. Again, if you refer to our earlier transcripts, we have maintained that the receivable days are going to remain where they are. They may not significantly come down. On the other inventory as well as payables, we are at par with the industry levels. There is limited scope there for bringing it down.
Okay. Okay. Great. Thank you so much and best of luck.
Thank you.
Thank you very much. Ladies and gentlemen, that was the last question for today. On behalf of Alivus Life Sciences Ltd, that concludes this conference. Thank you for joining us today, and you may now disconnect your lines.