Ladies and gentlemen, good day and welcome to the Q4 FY 2025 Earnings Eonference Eall of Alembic Pharmaceuticals Ltd. We have with us today Mr. Pranav Amin, the Managing Director; Mr. Shaunak Amin, the Managing Director; Mr. R. K. Baheti, the Director of Finance and CFO; Mr. Ajay Kumar Desai, the Senior Vice President of Finance; Mr. Nilesh Wadhwa, the Head of International Business and Supply. As a reminder, this conference call is only for analysts and institutional investors. 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 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 Mr. R. K. Baheti. Thank you, and over to you, sir.
Thank you. Good evening, everyone. Thank you all for joining the fourth quarter annual results call for March 2025. I'm sure you would have got all the initials, but let me briefly take you through the numbers. During the quarter, I'm very pleased to inform you that this quarter our revenue grew 17% to INR 1,770 crore, EBITDA is INR 286 crore, which is 16% of sales, and it grew by 9%. PBT grew by 5% to INR 192 crore. It was because of higher tax provision, and net profit is at INR 154 crore. During the whole of FY 2025, the total revenue grew by 7%, INR 6,672 crore. EBITDA at INR 1,053 crore is again 16% of sales and 10% growth over the previous year. PBT grew by 10% to INR 606 crore, and net profit is at INR 583 crore. EPS for the quarter is INR 7.98 per share.
This is for the quarter, and INR 9.07 for the previous corresponding quarter. For the whole year, 2024-2025, it is INR 29.68 per share versus INR 31.33 per share for the previous corresponding year. That is due to higher other income and other tax. Our borrowing side at INR 1,196 crore, and our debt-equity ratio is heavily 0.23. Cash in hand is INR 83 crore. At today's board meeting, the board has announced dividend of INR 11 per equity share. That is 550% for the financial year. We have a par value of INR 2 per share. This is same as was the dividend for the last year, 2023-2024. Of course, this is subject to approval of shareholders at the AGM. I would now request Shaunak to take you through the business part in the business question. Shaunak.
Yeah, so hello. Yeah, good afternoon, everyone. In the India business, we grew by 8% in the quarter, with a top line of INR 545 crore, and 6% for the whole, we are at INR 239 crore. I think within this quarter, we had good growth in a couple of key segments, which is gynecology, antidiabetic, ophthalmology, and dermatology, and anti-infective and cough and cold, which are two large product segments for us, which were struggling this year due to a market slowdown, both towards 7% and 11% for the quarter. We had four launches during the quarter and 14 new launches this year. New launches continue to do well, along with a line of robust new launches lined up for this year. The bright spot for the last multiple quarters has been the animal health business.
It continues to grow by 19% for the quarter and 21% for the year, backed by a basket of strong brands and new launches. I'm also happy to announce that we commissioned a new formulation facility, Pithampur, near Indore, which will help us augment our manufacturing capacity and as well as help it improve logistics. I hand this over to Pranav now for the IBU, the cash business.
Thank you. Our IBU business was pretty relatively strong performance in quarter four, and I'm quite happy with the performance. In terms of that, our ex-U.S. business, which is ROW business, had a strong growth with 43% growth. The U.S. business also grew 20% for the quarter, driven by volume as well as new product launches. The API segment returned to growth. Our focus remains on cost optimization initiatives, improving facility utilization, and targeted investment in R&D as a strategic priority. The R&D expense was 9% of sales, at INR 151 crore for the quarter. For the full year, it was INR 522 crore. We filed five ANDAs during the quarter. We received two approvals and launched four products in the U.S. during the quarter. Cumulatively, we have 220 ANDA approvals. We will launch four to five products in Q1 as well.
All our facilities are fully compliant with ERRs in place. As I mentioned, the U.S. generics grew 20% to INR 508 crore for the quarter and 13% to INR 1,957 crore for the year. The ex-U.S. generics, the ROW generics, grew by 43% to INR 375 crore for the quarter, and it grew by 18% to INR 1,243 crore for the year. The API business grew by 4% to INR 342 crore, whereas it degrew by 9% to INR 1,133 crore for the year. With that, the next year outlook looks good for all three businesses, and then I would like to open the floor for Q&A.
Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their 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 comes from the line of Damayanti Kerai from HSBC Bank. Please go ahead.
Hi, good afternoon, and thank you for the opportunity. My first question is for Mr. Baheti. Sir, can you explain the significant jump in inventory and CapEx for this FY , and how we should look at these numbers in coming years? Also, if you can explain the relatively higher R&D spend during the fourth quarter, and again, how should we look at the trend ahead? Thank you.
Sure. No, very valid observations. Part of it, I'll respond, and part of it, maybe Pranav can supplement it after I finish. You are right. We have built inventories because we have scheduled multiple launches in this. Of course, the previous year and the launch products, or to be launched products, stay at U.S. The inventory at U.S. level is high. We have to keep a backup API and other steps, so that is high. Plus, all manufacturing facilities have now a higher level of utilization with multiple products, so inventory tends to go up. Now, having said that, there are some inventories which have been built in anticipation of some good launches which are coming in the next few months.
Having said that, we are aware that inventory levels have gone up, and there will be efforts to rationalize the inventory as we progress during the year. As far as CapEx is concerned, I think we were in the midst of two large CapExes, or three large CapExes rather. On the domestic side, we have commissioned Pithampur. For 2024-2025, we have spent a good amount of money on the Pithampur manufacturing facility. Cumulatively, about INR 200 odd crores. Not all of that has been spent in 2024-2025. Some of it was carried forward. We also built a new CapEx block for manufacturing that type, API-II , and we have commissioned—not commissioned; commissioning is still pending approval, but we have completed putting up an additional line at 3 for injectable. These have led to larger CapExes. Going forward, I think major pivots are over.
Going forward, as of now, I can emphasize only the maintenance CapExes and the regular CapEx, and I do not expect a significant CapEx. R&D, actually, you cannot look at it on a QoQ basis. Sometimes earnings are more, so expense becomes more. On a yearly basis, we have given a guidance of about INR 500 odd crore, and I think we are in that range. That is from my side, but Pranav can supplement my information.
No, I think Mr. Baheti's answered the question. I think first is I agree that R&D can't be looked at QoQ because it's project to project, and then the filing happens. I think at the start of the year, we had guided about INR 550 crore or so for R&D, so we're around that range of INR 522 crore. R&D is okay. In terms of inventory buildup, yeah, I think we have a lot of launches in the U.S. that we've done, and more are coming up. We've built up some inventory for that.
Yeah. Pranav, this inventory buildup, should we also think in a way that the U.S. administration will shortly come up with the tariff announcement on the pharma side? Is it more to, before that comes, are you also building inventory? We do not know right now what will happen on the tariff.
No, no, no. Actually, no. We haven't. We have actually discussed this with a lot of our buyers, but the inventory buildup is not because of that. The inventory buildup is there were some launches. One particular launch that was going to happen, which got pushed back, and we had some inventory for that. Apart from that, we had a couple of other day-one launches. We built up some inventory for that as when we pick up an account, we like to carry a couple of months of inventory. It has nothing to do with the tariffs and what is going on with the current government policy.
Okay. So most of the launches for the U.S. market, right? Or you are also counting the ROW market? Okay. Just, I think, continuing on that, again, I think coming back to the tariff, we do not know what kind of things will come up. What are your backup plans in case, if we assume the worst outcome, that Indian exporters are imposed under heavy tariffs and then there will be no faster mechanism also? In that scenario, what will be the fallback option for you? Because I think some of your peers have plants in the U.S., but you do not have there. What is your take on it?
To be honest, Mr. Ryan, I'm talking about the whole industry. Forget about Alembic. No one has enough capacity in the U.S. Even our peers who have plants in the U.S., it is a fraction of the volume that they are supplying. I think it's going to be a macro issue that everyone is faced with, and the buyers in the industry. Pass through or no, I don't think there's anyone who's going to be able to take that because you can take a jointly—no one would have more than 5%-10% of the total U.S. volumes. They have capacity of that in the U.S. Let's wait and see what happens. I think right now the governments are trying to work it out.
I don't believe it will be such a drastic step because, as I said, only about 10% of the volumes can be manufactured in the U.S. The rest of it, it's going to be a huge shortfall.
Okay. Okay. Before I get back into the queue, Mr. Baheti, can you just point out what will be the maintenance CapEx or regular CapEx going ahead since we do not have anything major coming up in, say, 2026 or at least for 2026?
Roughly, I'm budgeting about INR 400-450 crore. This should include some spillover of expenses which will come from the existing projects, rather Indore and other things related.
Okay. Thank you. I'll get back in the queue.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Rashmmi Shetty from Dolat Capital. Please go ahead.
Yeah. Thanks for the opportunity. Just a follow-up from the earlier participants. This year also, our executable DAs will almost remain at the high level only, right? Whatever is at the current state.
You are talking about the inventory?
Inventory days and the executable days also.
Inventory days, as I said, going forward, will taper down. In terms of days, it will go down because, A, my business will grow, so my denominator will be higher, and inventory will come down from these levels. The impact on inventory days will be higher. Executable days for a long time, they have been around between 70-80 days. This has gone up slightly on account of last quarter sales and some new launches, where the collection days will be a little higher for the new launches. That would also go back to about 75 days or so in the next few quarters.
Okay. Sir, your short-term borrowings have also shortened. Is it because of the same reason of working capital requirement, which has gone up?
Absolutely. You are spot on.
Okay. Will it reduce in FY 2026, or will it remain at that level only?
I hope to reduce the borrowings out of the cash flow which I generate from the use of working capital and the profit I make.
Okay. Got it, sir. Just from the quarter perspective, what we are seeing is that despite a very decent sales growth, we are still seeing that gross margins are pretty low during the quarter. If you can call out the reasons behind it, and how should we see gross margins for the entire year of FY 2026?
I will not call it pretty low. Yes, they have fallen from a high of 73%-74% to about 70%+ . If you have been attending my calls in the past few quarters, I have always said that we are happy, or rather, we know that it will come down to 70%. Rashmmi, it is largely because of product mix. In a quarter when you have a high-volume product where the realization is a little lower or margins are a little lower, the impact would be on gross margin. We are not concerned as the volumes build in and as the new product chips in. We are okay. We should be okay with it.
We should assume whatever for the full year, whatever is the current gross margin, within that range only, we will be able to maintain next year also.
No, I won't say that because too early for me to say that because we have a large number of.
Mr. Baheti, what he had said earlier, Mr. Baheti, is that margins of around 70% is what we find acceptable. I think this is what we will look at privately around for the even last year, we had a few quarters where it was a little higher because of some one-time opportunity. By and large, our internal target is about 70% because of all the new launches and the pipe erosion and the higher volumes that we are pushing.
Okay. What I'm trying to understand is that from the last three years, our operating margin is at 15%. We are doing a flat EBITDA margin from the last three years. What is the scope that in FY 2026, there could be some operating dividend and everything would play out, and we would be able to see a good 100 basis points or more than that improvement in the EBITDA margin? If you can give some comments on that.
Yeah. Sure, sure. Yeah. Actually, in terms of this, I think a couple of quarters, right, I have given a call. What are our levers? At that time, we were at about sub-15%. How do we go back up to 18%-19%-20% kind of EBITDA levels? I have not given a timeframe, but how that will happen is we have these three new facilities, four new facilities, out of which two of them are relatively new or the injectables. As we get more capacity utilization in those facilities, as we start getting more volumes out of those facilities, that will automatically give a lot of operating leverage because these are not fully utilized right now. That is creating a drag on the EBITDA. Number two is the R&D also. We have optimized the R&D spend. We have come from a high of 14%.
We've come down to about 9%. That is the second area where we'll get operating leverage. With all this in place, we will see EBITDA margins going up over the next couple of quarters or the next couple of years.
Okay. R&D expenses, can you guide in the absolute term what you have guided earlier in FY 2025?
Yeah. I think for FY 2026, I would say R&D, we have done about INR 522 crore this year. Our guidance was INR 550 crore. Next year, again, we would look at about INR 600 crore-INR 650 crore. Depends how the project goes.
Okay. Okay. Thank you. That's it from my side.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Rashmmi Shetty from Dolat Capital. Please go ahead.
Yeah. Thank you for the follow-up. Sir, on the U.S. segment, despite we have seen a strong growth on YoY basis, but QoQ , there is a dip despite we have done four product launches. The reason behind that, are we seeing any pricing pressure still in the base business level? If you can explain that and on the pricing pressure for the entire year also.
Yeah. The pricing pressure remains in the U.S. market, and it's still there, product to product if you look at it. One of the reasons why this is lower, and actually, you have to put into perspective is that QoQ , in my opinion, the volume growth in the U.S. would be far higher. While the revenue growth is 20%, the volume growth would be far higher. The reason is because last year, we had a few one-time buyer opportunities where there were some products in shortage. That really gave a little bit of an outlier kind of a performance. That is one of the reasons.
You mean last quarter we had some one-time opportunity, right?
Last Q3, we had some, not much. Q4, I'm talking about more. Q4 of last year. Q3 also, we had some. That was just the QoQ shift. Because what happens when you have a new product launch, sometimes the buyer takes a lot of the quantity right on day one. They take a couple of months' supply. That is what happened to us in Q3. We had a little higher sometime Q3 of some new launches.
Okay. Last, you already gave the guidance that FY 2025, we will be showing a double-digit growth in the U.S., which you have already achieved. Now, in FY 2025, you have already lined up more than 15 product launches in FY 2026, which has been highlighted in the presentation. Should we still continue low teens growth or mid teens growth in FY 2026 also?
Yeah. To be honest, for all the businesses, if you see the way it's going, I expect the U.S. business to grow on mid to high teens. It should grow for FY 2026, depending on how the launches pick up and what kind of erosion, which I don't know, but I expect that from what we're seeing, a mid-teen, like a 15-odd % should be a good growth for the U.S. market. The ROW business will continue between 12%-15%, somewhere around there growth. The API should be about 10% or so.
India business also, we will be able to see we'll come back to that 8%-10% growth, or still we might see some struggle in anti-infective segment, antibiotic segment, and it could be a single-digit growth only.
Shaunak or Mr. Baheti, you want to take that?
Yeah. Shaunak Amin.
Yeah. I think for India business, I think we're quite positive to get a double-digit growth for the whole year. There might be some QoQ variability based on things like onset of monsoon. X of that, we're quite confident that we have a plan in place to drive a 10%+ growth.
Okay. Okay, sir. Thank you so much. That's it from my side.
Thanks.
Thank you. The next question comes from the line of Bharat from Equirus Securities. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. I just wanted to pick your mind. What exactly is happening in the domestic market, largely in the anti-infective? Why is the growth not picking up since the last two years? How do you see it going forward for FY 2026?
Yeah. Are you talking about us, or are you talking about the industry in general?
For Alembic as well as for the industry, if you could give some.
Yeah. I think the answer is in if you go back, take this number back to 2000, 2001, 2002, 2003, there was a significant ramp-up in the antibiotic base. What you're seeing right now is more of a moderation of the base effect that's coming into it. At some point, it needs to balance out. I think we're quite hopeful that the market should start growing from this point on.
According to you, is genocide or geneticization something which is anti-infective at all?
No. No, not really. The IMS data does not say that, no.
Okay. On the U.S. market, we have around 15 launches for FY 2026. How many are you considering to be high value and going to be less competition for FY 2026 sectors?
It's tough to say on those launches. I'd say about 20%-30% could be interesting opportunities. Depends on how many people launch. Yeah, about 20%-30% should be interesting.
Does FY 2026 include bosutinib as well? That is bosutinib?
Bosutinib, it is not, it may be there. I think we have technical issues that may come because I'm not committed to that yet.
How about edaravone? That is riociguat?
Riociguat, we are not there on day one. Nilesh, you have the data with you?
For which product?
Riociguat, edaravone.
Yeah.
We'll get back to you offline.
You are looking it to be a sizable product for you?
These will be.
Sorry? I didn't get. I'm sorry. I didn't catch you. Hello?
Sorry. Can you repeat the question?
Is it going to be a sizable product for us, edaravone?
Decent size.
Right. On injectables, we have not seen some exclusive or big launches coming through. When will be the time when we will start seeing those niche ones or the complex ones start appearing for us?
I think it's still going to be a new area for us. That's something we're trying to do or attempting to do. Hopefully, let's say next year or so, we will see some limited competition, interesting ones coming up.
Next year, is it? FY 2026, right?
FY 2027. I'll say towards the end of 2026, early 2027.
That's great. Okay. Thanks a lot. I will get back in touch with you.
Thank you. The next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services Ltd. Please go ahead.
Thanks for the opportunity. Sir, this is on the API side. At the industry level, are you seeing the inventory getting normalized? Which is where now we are sort of seeing the revival in growth? That is the question.
Yeah. On the API side, it was not a question of inventory per se. It was just pricing pressure and erosion. We lost out on some business because of a lot of pricing pressure. I think the Chinese are back in the market and even from India. A lot of pricing pressure. That is one of the reasons we lost out. We made it up by existing relationships and some of the older products that we had and some new ones. That is what compensated for it.
Okay. As far as India business is concerned, we've been pretty stable in terms of number of MRs. So safe to assume that this will be the number like 5,500 for FY 2026 as well? Or do we intend to add any more MRs?
It's pretty much the same. There might be some incremental balancing, but no major expansion is expected. Maybe it might be 100 odd people we will add. That's it.
Got it. Maybe I missed the remark, or maybe I heard it wrongly, but anything you commented in the opening for the peptides as a product category?
When I talked about the peptide blocks, manufacturing blocks is part of CHoTox . So obviously, we'll be doing some pilings, and then it will take some time for products to go to the market.
Okay. Okay. All right. Thank you so much.
Thank you. The next question comes from the line of Damayanti Kerai from HSBC Bank. Please go ahead.
Hi. A clarification on R&D outlook for FY 2026. Pranav, you mentioned INR 600-650 crore. First, can you explain where the majority of spend is going? I understood earlier that your intention is to keep your R&D somewhere at the INR 500-550 crore level. This seems higher than what you earlier spoke about. If you can also talk about this, please.
Yeah. I'd say at the start of the year, we'll do R&D about INR 550. We've ended up at about INR 522 or so. Next year, as I said, INR 600-INR 650. Depends on how the products go. Amongst that, I would say about 30%, yeah, about 30%-35% would be towards peptides and complex injectables. If you add ophthalmics, complex ophthalmics, also about 40% would be towards complex products and peptides. That would be the API and OSD R&D. In terms of pilings, I would say.
That's it.
Sorry.
Yeah.
In terms of filings, we'll say roughly half would be on, almost half, about 45% of the new filings would be on injectables. So that would be OSD and a little bit on derm and ophthalmic.
Okay. I think you mentioned about this peptide opportunity etc. And then you have peptide blocks coming in. Is it more to address the semaglutide sort of opportunity which is coming up, or what is?
Yeah. So we've actually—I'll be honest. Yeah. We're attempting a couple of peptides, not just the GLP-1s. GLP is one class, but there's a couple of other peptides that we have in our pipeline as well. I said in the call earlier that semaglutide, we'll be a little late for the U.S. launch. We don't have the Day One. We will be there in some of the ROW markets, whereas tirzepatide is the one we hope to be there on Day O ne.
Day One in the U.S. for tirzepatide?
Yeah. It's just the piling still has to happen. It's still time. Let's see why and why it hasn't happened. Yes, we would like to be there on Day One in all markets.
Okay. Okay. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. R. K. Baheti for the closing comments.
Thank you all for joining the call. It's a pleasure as always talking to all of you. If anybody has any follow-up question, you can always reach out to me or Ajay on a mail or phone call, and we'll be happy to respond. I look forward to seeing you again next quarter. Thank you all for joining the call.
Thank you, sir. Ladies and gentlemen, on behalf of Alembic Pharmaceuticals Ltd, that concludes this conference. You may now disconnect your lines.