Ladies and gentlemen, good day and welcome to the Q1 FY 2027 earnings conference call of Alembic Pharmaceuticals Limited. As a reminder, this conference call is only for analysts, institutional investors. All participant lines will be in listen-only mode, 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Isha Lamba, Head Investor Relations and Corporate Development. Thank you, and over to you, ma'am.
Thank you. Good evening, everyone. On behalf of the management of Alembic Pharmaceuticals, I welcome you to this earnings conference call for the quarter ended 30th June 2026. Present here with me are Mr. Pranav Amin, Managing Director, and Mr. G. Krishnan, CFO. A few other members of the management have also joined the call. I now hand the conference over to Mr. Pranav Amin. Thank you, and over to you, sir.
Thank you, Isha. Good evening, everyone, and thank you for joining us to discuss Alembic Pharmaceuticals' performance for Q1 FY 2027. I will give you a brief perspective of the quarter and the performance across our businesses, key strategic developments, and our outlook for the balance of the year. Then Krishnan, our CFO, will take you through the financial performance in greater detail. Q1 FY 2027 has been a strong start to the year, with broad-based growth across all the businesses and continued execution on the strategic priorities that we outlined at the beginning of the year. The external environment continues to remain competitive, with pricing pressure, regulatory expectations, and geopolitical uncertainties. The quarter reinforces our belief that execution quality, portfolio choices, manufacturing capabilities, and launch discipline are increasingly becoming the key differentiators.
During the quarter, consolidated revenue grew by 26% year-on-year, supported by growth across all our major businesses. India branded business grew 7%, international generics grew 37%, the API business grew 33%. Starting with the India branded business, growth was supported by continued strengthening of focus brands, specialty therapies, and the animal health division. Animal health delivered a particularly strong quarter, with 24% growth, while key therapies such as gynecology, gastroenterology, and ophthalmology continued to perform well. We are also seeing encouraging trends in field productivity and operating metrics. Our strategic priorities for India business is anchored on building a robust chronic portfolio, generating high-quality prescriptions, deepening engagement with specialty physicians, and driving sharper, more disciplined commercial execution across the field force. With the appointment of Mr. Ramesh Juneja as Sales and Marketing Head for Human Health Business, we have strengthened the execution leadership.
These initiatives are likely to position the India branded business to accelerate towards market-level growth over the coming quarters. Moving on to the international business, the standout feature for the quarter was the continued strength of the U.S. generics business. U.S. revenues grew 49% year-on-year, supported by volume growth, new launches, especially bosutinib, and improving utilization of our manufacturing assets. Pricing pressure remains in the environment, growth during the quarter was predominantly volume-driven. During the quarter, we launched seven products, filed four ANDA, and received 10 approvals, further strengthening the launch platform for future growth. Let me talk about the branded specialty business. The first three months were more of a soft launch, and we are encouraged. This is the branded specialty business in the U.S. I'm talking about.
The first three months were a soft launch, and we are encouraged by the good reception to both the product and its messaging. In parallel, we are adding new products to strengthen our women's health franchise. As the U.S. branded specialty business scales up over the next few quarters, we will see a positive contribution to profit, which should consequently drive a broader enhancement in consolidated margins. Coming to the ex-U.S. markets, they performed very well, supported by growth across markets. The API business also delivered a strong volume-led growth despite ongoing pressure in the market. Beyond the quarterly performance, we continued investing behind the long-term growth drivers of the company. We advanced our pipeline through additional filings and approvals, progressed our peptide development program, expanded partnership-led opportunities, and continued building the U.S. branded business platform.
We also continued investments in manufacturing capabilities, debottlenecking initiatives, and capacity enhancement programs that will support future growth and improve operating leverage. Turning to the outlook, the first quarter has provided us with greater visibility into the trajectory of the business, particularly the U.S. generics segment. At the beginning of the year, we had indicated that the U.S. generics could grow in the low to mid-teens. Based on the performance and the trends we're seeing in Q1, the launch outlook, and current volume trends, we now expect the U.S. business to grow mid to high teens in the year, subject to normal market conditions and continued execution. Growth guidance for the other businesses remains as indicated earlier.
As a result, we believe the overall growth outlook for the company can improve from the low double-digit range we had discussed earlier to closer to the mid-teen range for FY 2027. Importantly, this improved outlook is not being driven by any change in our investment agenda. We will continue investing behind R&D, the U.S. branded platform, manufacturing capabilities and future growth opportunities while maintaining discipline on capital allocation and profitability. Overall, the quarter reinforces our confidence in the business, the quality of our growth platform, and our ability to deliver strong growth while continuing to invest for the future. With that, let me hand over to our CFO, Krishnan.
Thank you, Pranav. Good evening, everyone. Before I begin, I would like to mention that during this call, we may make certain forward-looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties that may cause the actual results to differ materially. With that, let me take you through the financial performance for the quarter. We had a strong quarter from both growth and profitability perspective. Revenue grew at 26% year-over-year to INR 2,150 crore, reflecting broad-based growth across businesses and continued momentum across the portfolio. Importantly, profitability also improved despite continued investment behind the future growth platforms. Reported EBITDA grew at 21% year-over-year to INR 348 crore, with EBITDA margin at 16%. The performance reflects higher volumes, contribution from new launches, and better utilization of our manufacturing network, while also absorbing planned investments in R&D and the U.S. branded platform.
As planned, we continue to invest behind future growth opportunities. Our R&D expenditure during the quarter was at INR 186 crore, representing about 9% of revenue, driven by peptide development activities, exhibit batches, and higher regulatory filings and portfolio development initiatives. These investments are aligned with our strategy of strengthening the pipeline and expanding our participation in complex and differentiated opportunities. We also continued investing in building the U.S. branded platform. While these investments have a near-term impact on profitability, they remain strategic in nature and are directed towards expanding market access, strengthening commercial capabilities, and building a scalable specialty franchise in the U.S. Profit before tax grew at 17% year-over-year to INR 223 crore, reflecting the strength of the underlying operating performance and better operating leverage across the business.
At PAT level, the quarter reflected a higher effective tax rate of about 22%, compared with around 19% in the corresponding quarter previous year. As mentioned in our previous call, we migrated to the new tax regime. Consequently, profit after tax grew at 12% year-over-year to INR 173 crore, underlining the resilience of the business performance. To summarize, the quarter demonstrates three things. First, growth remains strong and broad-based with revenue growth of 26%. Second, the business continues to deliver resilient profitability, factoring strategic investments as reflected in 21% EBITDA growth, 17% profit before tax growth, and 12% profit after tax growth. Third, we continue to invest meaningfully in R&D, manufacturing capabilities and U.S. branded platform consistent with our growth strategy.
The improved FY 2027 outlook that Pranav discussed, that is closer to the mid-teen growth, is supported by stronger execution and operating performance while our investment priorities and long-term strategy remain on track. With that, we can now open the floor for Q&A.
Thank you, sir. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. If you wish to withdraw 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. Participants, if you wish to ask a question, you may press star and one. The first question comes from the line of Damayanti Kerai with HSBC. Please go ahead.
Hi. Thank you for the opportunity and congrats for a very good set of numbers. My first question is on the U.S. business. Pranav, you mentioned volume expansion as well as opportunities like bosutinib were the key drivers for the quarter. Just wanted to confirm, you have 180-day marketing exclusivity on two strengths of bosutinib, which has helped the 1Q number?
Yes, that is correct. We have the exclusivity on the 100 mg and 500 mg.
Okay. Apart from that, any other meaningful launches which were added to U.S.? Because your, I think, U.S. run rate for launches have picked up significantly in first quarter.
Yeah. Actually, Damayanti, what's happened is, as I've said is Okay, let's take two parts of it. I think ex of bosutinib, also our business has grown over 20% in the U.S., closer to 25% that we've grown. That is predominantly due to the new launches. As you know, with Alembic, what we do is we actually pick up shares. New launches, when I say pick up share, it's what we would have launched in Q4 as well as Q1. We had about six or seven launches in Q1 and some in Q4. I think both of those put together have also added a little more momentum to the U.S. sales going forward.
Okay. As you revised up the outlook for U.S. sales in FY 2025, we can assume new launch momentum should continue in the coming quarters as well?
Yes. I think for the rest of the year, we should be launching another 15 odd products.
That's helpful. My second question is your investment towards the U.S. branded portfolio, where you have added another product. What kind of investment you foresee for your efforts to really scale up this business? You mentioned this will be eventually contributing positively to the profitability part. In your initial experience with PIVYA, what kind of timeline we can assume when these products will start contributing positively to EBITDA? Like, what could be the gestation period before we see benefits flowing in?
As I mentioned, it's soft launch and the other two products are much smaller and we've just gone into them. PIVYA also has been a soft launch. I think we will gradually start seeing a trend towards the end of the year. I expect that this will start contributing positively next financially onwards. As we move forward quarter on quarter, we will gradually see a reduction in the drag that this business is causing us. My goal is that next year onwards, we should start seeing a positive contribution.
In terms of investment, if you can call out any amount or where you have invested basically, the SG&A team or you need to invest in, say, building the marketing platforms, et cetera.
The investment is there's no hardware investment at all. The only investment that we have is the field force and the marketing expenses that we have. The product comes from a CMO, there's no manufacturing, there's no facility. It's only a pure play branding exercise and the expense that you see is only the marketing and branding and promotion costs.
This cost should trend in line with how the top line picks up, right?
Yeah. I think it'll be the revenue will scale up. It won't be linear, it'll be more like a J-curve. I think initially we will have investments for the first quarter. I think we've seen one full quarter where we've been investing. Second quarter also we'll invest. I think gradually we'll see the sales pick up towards the end of the year, and that's why I am saying that we should hopefully try getting to breakeven as a trend towards the end of this year, and we'll see positive contribution next year.
Got you. My last question is, as you revised up your FY 2027 top line numbers, how should we look at the EBITDA margin trajectory while the investments continue?
Yeah. Okay. Krishnan, would you like to take the EBITDA question?
Yeah. Thanks. Damayanti, the EBITDA margin will broadly reflect the operating leverage that we have seen in the first quarter. If I look at the underlying business, ex- U.S. branded business, we have seen operating leverage playing out. Like we guided in the first Q4 results last year, when we spoke in May. We said that there will be good operating leverage that will play out on the core business, which will partially get offset by the U.S. branded, and we hold on to that view at this point of time. We should see a similar trajectory of operating margin getting maintained at a overall level as we see operating leverage playing out. U.S. branded business like Pranav mentioned, right? It should scale up as we progress in the subsequent quarters, which should build up the margin profile.
Okay. It's safer to assume margin should be in the high teens, right? Towards the high teens.
Yes.
Okay. Thank you. Thank you for your response.
Thank you. The next question comes from the line of Chirag with DSP Mutual Fund. Please go ahead.
Sir, thank you for the opportunity. Multiple small questions, sir. Is the PIVYA cost in the base in the first quarter of 2027 and we should now see flattening or similar levels going forward? How are we thinking?
Krishnan, you want to take that?
I'll take that. Yes, Q1 was the first full quarter of U.S. branded business launch, we should see the margin profile should get better from here. For the full year, if I have to remind, in the previous call, we guided about 150 basis points of dilution in the margin for the full year. We hold on to that view at this point of time. Obviously, in a ramp-up phase, you will have the first few quarters of higher impact, as the sales picks up, it should moderate, the margin impact should moderate. We still stand on that view.
In Q1, the impact on margins is even higher than this 150 basis points is what you're trying to allude to?
Yeah.
Understood. Fair point. On the base business in the U.S., you talked about 25%+ kind of growth in the U.S. business ex-bosutinib. This implies that the base business is now upwards of $75 million- $76 million a quarter. Is this the new base? This versus, let's say, $60 million-$65 million, that we've been seeing in the past few quarters. Is this the new normal, new base that we should think about?
Chirag, I would like it to be the new normal, I think as you see, we have to balance that out with the erosion that we see and if we may lose some share. I'm confident that the momentum that we have going forward, we should be able to continue some of it. Let's see how much price erosion we see for the next few quarters. At least for the next quarter or two, I see that this trend should continue.
Understood. Fair point. On bosutinib, have we seen full quarter sales impact come through in the first quarter or-
No. One thing about bosutinib is that the volumes of bosutinib are quite small. The indication is small indication, while pricing is good. We saw in the quarter only one month of sales. That was launched only in June, so you only have one month of sales.
Understood. How are you thinking about sustainability of this revenue product going forward beyond the exclusivity period?
I think it's tough to say. I do know that because it's such a low volume product, I can't really foresee what's going to happen after a few months. I know this exclusivity is there till November. You'll see Q2 and part of Q3, you will hopefully have some sales from bosutinib. Over and above that, I think if there is competition, it'll be quite drastic because the volumes are very small.
Any sense on the incremental competition that you see?
As of now, no, I haven't seen. I think the other incumbent who's got the other strength may come in, and we may get for the strength that we don't have. I think that's what may happen. As of now, I'm not seeing anybody else in the market so far.
For some time to come, this can be a two-player market is all you're thinking about.
Till November is what I know for sure. I really can't guide about beyond that.
Understood. Fair point. The other bit is on the gross margins with having bosutinib. Gross margins are flattish, quarter-on-quarter, at least. Can you give us a sense, and this is with these new currency rate, et cetera. Just what is happening over here? I understand that there's a PIVYA cost as well in this one, but I was looking at the gross margin more so.
Can I take that, Pranav?
Yeah, please.
See, gross margins quarter-on-quarter was pretty much similar. If you remember, we had a guidance of about 70%-75% range for gross margins, and it sits well within that. There have been a couple of factors which has influenced the gross margin. One is, of course, with bit of the Middle East issue going on. We had seen solvent prices going up. That has had a bit of impact. Second is, of course, the product mix itself has played a part. Third is, we had taken a preventive de-bottlenecking maintenance upgrade in one of our facilities, especially the Ophthalmic line. That has now expanded the capacity without any incremental CapEx investment. That shutdown was taken in the first quarter, which has resulted in a bit of under-absorption in the cost.
These are the two, three factors where you would see the gross margins a bit diluted, otherwise it's still within the range that we had guided earlier, we are comfortable with that.
Understood. Can I ask more questions? I have a few.
Yeah, sure, go ahead.
Sure. Animal Health business now is bigger than Acute. This has grown very well for us. How long can we keep continuing to grow in this 15%-20% zone? Incrementally, this should help report overall their India business as the Acute becomes smaller and smaller. Just how are you thinking about this piece? I know you've guided towards better performance going forward, but just on the Animal Health piece, how is it?
Krishnan, you want to take that?
Yeah. Just to correct, Animal Health is about 22% of our overall revenue in the India business, and the Acute is about 37%. It's the other way. Yes, there has been good growth in Animal Health. We continue to grow at about 20%+ . We see that it's a combination of two, three factors, again, expansion within the existing portfolio that we have got in the Animal Health, which is around farm animals and poultry. We see that as continuing the momentum. Along with the field force driving better volumes, better productivity, focus on operational efficiency measures. That's continuing to help us build the momentum in Animal Health.
Understood. Yeah. Helpful. There is the last bit on the non-U.S. global exports piece. For the past few quarters, we have been in this $40 million kind of range. Past couple of quarters, actually.
Yeah.
Prior to that, we were in this $45 million zone. Just your sense of, is this like a linear thing? How are you thinking about
The ex-U.S. business has been a strong business for us if you see over the last five years. I think there may be some quarterly-to-quarterly variance because this is majorly a B2B business, right? There may be some quarterly-to-quarterly variance in terms of supplies, but at the end of the year, we stick to the guidance. I think about 15% is what I have guided for that the business will grow, and I think we are quite confident about that.
This is in USD terms, Pranav?
This is in INR terms.
Okay. Fair. Thank you, sir. I'm done.
Thank you.
Thank you. The next question comes from the line of Rahul Jeewani with IIFL Securities. Please go ahead.
Yes, sir. Thanks for taking my question. Sir, on the India business, you pointed to some management changes which you have implemented. While on the animal health side, we continue to do well. When do you see our growth picking up on the human formulations business in India?
It's a good question, Rahul. I think yes, two separate things. The animal business, we've left it as is. I think that is going on. On the human health side, we've got Ramesh Juneja, who's joined us recently and who's working at it. I think it'll take a couple of quarters because it's a work in progress. I think we're going grassroot down to each territory, the non-performing territories, what is happening with the new launches. I think let's wait for a quarter or two to start seeing. I think we will start seeing some positive trends within another quarter or two.
Sure, sir. Within the acute segment, have we started seeing some sort of a growth pickup for our acute portfolio? Whatever happened with respect to Azithral during COVID, post-COVID, et cetera, is that largely in the base now as far as the acute segment is concerned?
Yes, Krishnan, do you want to recap?
Yes, Rahul. Yes, we are seeing that trajectory improving, especially on Azithral. In the overall portfolio of acute, around cough and cold, we are seeing the traction building up.
Okay, sir. Sure. Coming back to margins for FY 2027, at one point in time, you indicated that the operating leverage on the base business would get offset by the investments on the U.S. branded side. At another point in call, you referred to high teens margins as well. I'm a bit confused in terms of what's margin guidance for FY 2027.
Sure. See, the margin guidance is intact in the sense that let me reiterate the guidance again. We did about 16% margins in FY 2026, and we believe that the underlying core margins will improve. My comment was about the core margin improving to high teens, which will partially get offset by the margin dilution from U.S. branded business, which we said will be about 150 basis points. Right. That remains intact. We are seeing the operating leverage playing out in the first quarter as well on the core business, which we believe will continue to happen in the rest of the quarters as well, as we see better utilization and good volume-driven growth across U.S. and ex-U.S. markets. Does that clarify, Rahul?
Sure, sir. Versus FY 2026 levels, would we stay largely flat on a full year basis? If that is the case, ideally, this year, we are also benefiting from the FTF exclusivity on bosutinib, while the operating leverage on the base facilities was anyways playing out. Are you talking about reported margins being flat in FY 2027? If that is the case, where, as I said, ideally, bosutinib should have helped us to significantly improve margins this year.
Yes. We are also seeing the gross margins a bit diluted in the first half relative to the last year, right? Overall, the margin profile, you're right, in the sense that it should improve slightly better than the last year. We are trying to see how the U.S. branded business will play out in the rest of the quarters as we see the ramp-up, right? It is about whether we are breaking even in quarter four or the next year first quarter, and it depends on where we land, whether we are better than the previous year, or we flattish, it may be few percentage points here and there and a few quarter here and there.
Sure, sir. The last-
Directionally-
Sorry.
We are in the trajectory of better operating leverage. Yeah. That is clearly visible for us.
Sure, sir. On the branded business, while we obviously are scaling up PIVYA, apart from PIVYA also, are we looking at any other opportunities for the U.S. branded portfolio?
Yeah. We are constantly searching for them. There are two other smaller ones which we've already added. They also go with the same therapy in terms of doctors who are treating UTIs. That is something that we're going to add. We've just recently licensed them. That will also go along with that. Scouting for new opportunities as well. For right now, we want to take these three products and get them off the ground.
Sure, Pranav. These would be, let's say, competing in the same women's UTI market in U.S. like PIVYA.
No, not competing. They would be complementing PIVYA.
Yeah. That's what we meant. Thank you. That's it from my side.
Thank you. The next question comes from the line of Rashmi Shetty with Dolat Capital. Please go ahead.
Yeah, thanks for the opportunity. Sir, what will be the outlook on the API segment?
Yeah. The API segment has been performing well for us. I think at the beginning of the year, we had given a guidance that it will grow about 10% ± . Seeing the trend, I think Q1 has been quite healthy. Moving forward, I think at the end of the year, we will be above that 10% level, around the 10% level that we had mentioned. I think we'll continue doing the next couple of quarters as well.
Okay. In your India business, excluding the vet business, we are a bit underperforming the market. Like you mentioned that there were some changes in the management, and it will take some time to get back on track. For full year, what will be the guidance on the specialty and the acute segment or as a whole domestic business piece, if you can explain that?
I'll just give a brief, and then I'll get Krishnan on. I think so in the India business, as we said, yes, animals are doing well, so let's keep that aside. In the human health side, we've got a new leader, Ramesh Juneja, who's heading the team now. Within that segment, if you see, there are some which we are still doing quite well. I think gastroenterology, ophthalmics, and cardio are doing well for us. I think those are growing in double digits anyway. It's few of the acute and some of the other divisions which are dragging the business down. I think our goal is to rectify that and see how we're going and get it up. I think, as I said earlier, to a question earlier, that we should start seeing some positive trend in the next couple of quarters.
Krishnan, you want to take it?
In terms of guidance for the full year, for the whole of India business, what we said is we'll be aligned close to the market growth and maybe few percentages here and there, but directionally, we should be more aligned to the market growth.
You mean to say, it should be in the low double digit sort of growth this year?
Should be in the range of high single-digit, we will bridge the gap. Last year, the gap was much visible around market growth versus what we had seen. We believe that this year we should be able to bridge the gap and be closely aligned to the market growth.
Okay. Again, on this U.S. business, while this year, what you call the contribution of the bosutinib will be helping to deliver a higher growth. In FY 2028, when the CGT will not be there and there will be a price erosion also in the existing portfolio, do you see that we'll still be able to do a high single-digit growth led by any new launches? Do you feel that probably it would be more or less flattish over FY 2027?
I think the main thing for the U.S. business to grow, you have to have meaningful launches coming up. We believe we have a decent pipeline to continue with that. I think even ex of bosutinib, as I mentioned. Actually, the start of the year, I had mentioned that the U.S. would grow by about 10%-15%. We've just changed the guidance, it'll go higher because of bosutinib and the momentum we're seeing in the new launches. For the second half of the year, for the next nine months of the year, we're seeing about 15 more launches that we will do. Even next year, we will see a similar number of launches. I think the new launches will continue, and that will help offset the erosion. As regards bosutinib, yes, I don't see that opportunity over six months.
What will happen is, gradually you will see the branded bit also starting to contribute next year onwards. You will have the new launches as well as the branded business starting to contribute towards the growth going forward.
Okay, you expect that FY 2028 over FY 2027 also there will be a growth.
Yeah. I hope that I mean, that's our goal. I think we'll get a better idea in the next couple of months to see how the branded pans out.
Okay. The growth guidance which you're giving in the U.S. business, that growth guidance is in the INR terms, right?
Yes.
Okay. Thank you. That's it from my side.
Thank you. The next question comes from the line of Parth Sodha with Trinetra Asset Managers. Please go ahead.
Yeah, am I audible? Thank you so much for the opportunity. My question is like, ex-U.S. continues to deliver healthy double-digit growth. Which geographies are contributing the most today, and where do you see the largest incremental opportunity over the next three years?
Okay. I'm not sure I heard all your questions. You're talking about the ROW business. Yes, the ROW business has been consistently growing for us. We've been opening up new territories as well. I think we've opened up some Latin American territories. Moving forward, you've seen from the releases we're doing a JV in Saudi Arabia, we're doing in Canada. There's a lot of other opportunities we see in the ROW business. I expect the ROW business over the next three to four years will continue growing well. In terms of opportunities, we're seeing it across the board. I think it really depends. I think some of them are B2B opportunities where we work with partners. Some are B2C, the newer ones, where we're going directly in the market.
Okay. Got it. Thank you.
Thank you. The next question comes from the line of Eshita Jain with Motilal Oswal. Please go ahead.
Hi. If you could just quantify the U.S. sales in USD million for the quarter.
We had reported about 49% year-on-year growth in rupee terms.
Yeah.
I think directionally, we don't intend to break up the rupee depreciation part because that is going to support us on the pricing. Right? It is not right for us to break it down. Purely for the purpose of giving a number, you can take out the currency impact of about 10% year-on-year. Right? The underlying constant currency growth is about 37%, 38%.
38%. All right. Thank you.
The way you should see is the total reported growth because rupee depreciation is going to help us in supporting the pricing.
Thank you.
Thank you. The next question comes from the line of Foram Parekh with Bank of Baroda Capital Markets. Please go ahead.
Thank you for the opportunity. My first question is on the domestic business. In our opening remarks, we mentioned that we want to focus on increasing the chronic segment. If you can just quantify what is the current chronic segment and where do we envisage to go, I mean, take up this chronic segment in next two to three years?
Yeah. Can I take this, Pranav?
Yeah.
Okay. See, the specialty business is roughly close to about 60% of our total revenue. I'm talking about quarter one numbers. When you look at the breakup of this, we are very closely aligned to the market growth on Gynaecology, gastro, and ophthalm therapies. The way we are looking at is, in terms of driving the growth trajectory is a combination of two, three aspects. First is about increasing the quality of prescriptions that we have got from the practitioners, and that is more about how you are driving the operational execution, focusing on the initiatives around consolidating the prescriber base and improving the quality of prescriptions. Second is increasing the field productivity, which is again an operating lever. Essentially, the point boils down to effective operational execution across these therapy areas.
With Ramesh Juneja joining in, I think we have expanded the leadership bandwidth to focus more on this execution front. Does that help?
Yeah, it does help. My second question is on the EBITDA margin again. We said that EBITDA margin in the core business has improved to high teens, but it's been diluted by 150 basis points because of the marketing in the branded business. Can we take 18%-19% kind of EBITDA margin for FY 2028 as this operational leverage in the branded business will play out?
FY 2028, we will guide for FY 2028 when we get there. Directionally, I would like to say that the operating leverage in the core business will play out. Like Pranav mentioned, the U.S. branded business is expected to scale up in the next few quarters, and that should contribute to profit. Today it is diluting the margins, and if it starts contributing to the profit, then it should as well expand the overall margin profile. Right? Exact numbers, I think we will guide when we get there.
Okay. My third question is on the ROW side. We guided for 15% growth in INR terms, but historically, if we see, we have grown largely closer to 20% growth. Are we under-guiding it, or can we expect to surpass this 15% growth? Any outlook there?
Listen, I think when we give a guidance, we only give a guidance that we 100% can achieve. That's one thing. Number two is you have to understand that next year also was on a high base. Let's see how this year goes.
Okay. Thanks. Those were my questions.
Thank you. A follow-up question from the line of Chirag with DSP Mutual Fund. Please go ahead.
Yeah. Thank you for the follow-up. Sir, what is happening with depreciation? There is a sharp increase.
Yeah. Depreciation is actually the intangible assets that we acquired because of, driven by the U.S. branded business expansion, the product acquisitions that we did. That is getting amortized over the life of the asset. I think around seven or eight years is what we have considered. That's giving the depreciation year-on-year. It got capitalized in quarter four. Right? You would see the higher depreciation levels year-on-year from there. And of course, we've added about INR 400 crores of CapEx in the last year, that also will add on to the business.
What is the absolute amount of amortization and the intangible assets?
I don't have the exact number. We can touch base offline.
Does the large part of the quarter-on-quarter shift be explained by the amortization?
Not fully. We have invested in CapEx also. That also will have an implication. yeah, so around 70%, 75% of that increase would be due to intangibles.
Understood. Thank you so much.
Thank you. The next question comes from the line of Rashmi Shetty with Dolat Capital. Please go ahead.
Yeah, thanks for the opportunity again. One question on the interest cost also, that has also gone up compared to the previous quarters. If you can give us the gross debt figure as on June compared to the March level, and what is the outlook for the interest cost for the remaining part of the year?
Yeah. Gross debt, we are at around INR 1,600 crore of gross debt. Two things have happened. One is while the debt levels have a bit higher than the March numbers, it is purely towards additional receivables that has increased because of higher sales. It should unwind as we progress. And second is, it's a combination of increase in debt, but a reduction in interest rates. That's the net impact that you're seeing in the finance cost.
Sir, the remaining-
Yeah, to your second question about how this will progress during the rest of the year. I think what we guided is at the beginning of the year that this working capital should get optimized as we progress. The increase is because of higher sales and the receivables. We should unwind as we progress during the year. We should be in a position to reduce the debt levels by a meaningful amount.
Sorry, sir. Come again. You said the working capital will be at the similar level.
Working capital. See, the increase in debt compared to March is because of higher working capital driven by higher receivables during the quarter. That is coming from higher sales. Typically this receivable should unwind in the next quarter and the following quarter. As we progress during the quarter two and quarter three, we should see these debt levels moderating.
Okay. By how much level, if you can quantify that?
At the minimum, we should go back to the March levels and our intention is to scale it down further so that we are able to maintain it at a reasonable level, close to 1x of the debt.
Sir, we should expect that the interest cost should also come down in the subsequent quarters?
Yeah.
Okay. All right. Thank you, sir.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments.
Thank you everyone for joining. If there are any follow-on questions, please reach out to us. Thank you.
Thank you.
Thank you. On behalf of Alembic Pharmaceuticals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.