This is a test run. Welcome to Cohance Lifesciences Limited Q1 FY 2026 Earnings Conference Call. As a reminder, all participants will be in the listen-only mode, and there will be no opportunity for you to ask questions after the presentation is concluded. Should you need assistance during the conference call, please email an operator by pressing star zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Cyndrella Carvalho from Cohance Lifesciences Limited. Thank you, and over to you, ma'am.
Thank you, Yusuf. Good evening, everyone. Thank you for joining us today for Cohance Lifesciences Quarter One FY 2026 Conference Call. This month, our first full portal operating as a unified platform under the Cohance title state. Following the formal integration of our acquired entities and rebranding earlier this year, we appreciate your continued interest and support as we begin this next chapter of growth and execution. Joining me on the call today are Mr. Vivek Sharma, Executive Chairman, Dr. Prasada Raju, Managing Director, and Mr. Himanshu Agarwal, Chief Financial Officer. Let me now invite Vivek to share a shared overview for the customer.
Thank you, Cyndrella. Good evening to all. Q1 FY 2026 has been an important start to the year, not only from an execution standpoint but also from strengthening the foundations we have put in place over the past year. This was our first full quarter of Cohance Lifesciences, and I'm pleased to share that the transition has been on track, both internally and externally, with increasing alignment across teams, customers, and platforms. We remain focused on our core identity with the technology-led global CDMO and enter the tactical partnerships, speed, and reliability. Our three-pillar structure, pharma CDMO, specialty chemicals, and API Plus, continues to provide a resilient foundation for growth. In line with evolving global core team strategy, we have seen continued growth of RFQs, reflecting both China's platform and E.U.'s platform's multiple interactions.
During this quarter, we responded to a healthy set of RFQs under the team, particularly in API/CI 112. These requests are coming from established customers, expanding the scope of their equipment further and reinforcing our positioning as a dependable CDMO partner for innovators looking to build supply security. Among our many ongoing partner engagements, our recent visit to Japan stands out as a key highlight. We strengthened our long-term partnership with the leading innovators in ADCs, with discussions progressing towards broader express recognition. We are also growing interactions with other Japanese innovators across niche modalities, including oligonucleotides, small molecules, and our agrochemical and specialty chemicals partners. During the past quarter, we saw encouraging momentum across our CDMO business, particularly in lateral engagements and differentiated modalities such as ADCs and organoids. Our capabilities in payload linker synthesis and bioconjugation continue to resonate strongly with global innovators.
At NBE Bio , our U.S.-based subsidiary, we received a significant new order from an existing customer for full ADC supplies in early-phase payload linker synthesis to bioconjugation one. To support this and to meet future demand, we have commenced the expansion of a dedicated ECME suite in bioconjugation at the Princeton facility by committing an investment of $10 million. This will significantly enhance our capacity, enabling supply of full ADCs to clinical studies. We are pleased to share that our first existing payload program is under discussion, further strengthening our position in the ADC payload market. There are two leading payload categories to bear account for nearly 80% of currently finalized programs. Our PTFP oligonucleotide building block, FPT-S MAXARA, backed by its INR 230 million investment, is progressing on schedule and expected to be fully operational by the end of Q1 2025.
Relationship engagements with innovator partners are advancing well, with planned orders anticipated for the coming quarter. Otherwise, excluding the temporary impact of inventory destocking in our pharma CDMO segment, we delivered over 30% year-over-year growth supported by robust demand across key customer programs in five value modalities. Our new technology revenue share has risen from the spike in FY 2025 to over 20% in Q1 FY 2026 and is on track to approach the mid-20% by the end of FY 2026. This segment delivered growth well ahead of the broader pharma CDMO business, excluding inventory destocking, underscoring our differentiated capabilities and strong execution in complex modalities. We secured another U.S. FDA approval from our partner program, leveraging priority review and breakthrough therapy designations to fast-track its market entry. Two additional products from our small molecule portfolio are expected to transition to commercial retail over the next 12 - 18 months.
We are also awaiting responses from existing customers on branding and reliability, which will translate into additional opportunities in commercial products. During the quarter, we secured a lifetime skill management supply mandate from a leading global innovator for a branded product API, underscoring our position as an integrated CDMO partner of choice. I would like to take a moment to reflect on the broader organizational evolution underway at Cohance. As part of our expected journey to build a best-in-class innovation-led global CDMO, we are pleased to announce the formation of the Cohance External Advisory Board. We have inducted five highly respected industry stars into the External Advisory Board, each bringing decades of leadership experience across R&D, CMC, commercial, and supply chain roles at leading global innovator companies. Their diverse perspectives and deep domain expertise will meaningfully shape our strategic direction and customer partnerships as we shape.
The External Advisory Board, EN as we call it, will function as an independent panel of experts providing a trusted council to Cohance leadership, motivation, customer-centric growth, and operational excellence. The initiative reinforces our commitment to long-term value creation and deep collaboration with global innovators, aligned with our vision to reach $1 billion to finish its FY 2020 revenue by 2030. Dr. Sudhir Singh , who was running the CDMO business, has decided to step back from active executive responsibilities. On behalf of the board and the entire Cohance team, I would like to extend a sincere appreciation to Dr. Sudhir Singh for his foundational contributions to building our CDMO platform and positioning it for sustained growth and global relevance. We wish him continued success in his future endeavors, and he will continuously work with his team and family.
With our ambition to build a global technology-led CDMO in India, we have appointed Mr. Yann D'Herve as CEO of our CDMO business, a strategic leadership move aligned with our global growth agenda. Yann brings over 30 years of experience, including nearly 15 years in senior CDMO roles, and has constructed relationships with leading innovators across the U.S., E.U., and Asia . His presence in the UN, together with our expanding global leadership team, enhances our ability to operate as a unified platform. In parallel, we continue to strengthen our CDMO leadership, deepen our techno-commercial expertise, and expand the modality-specific capabilities to stay ahead of evolving customer needs by scaling with agility, quality, and speed. With that, I would now like to invite Dr. Prasada to take you through this segment of our honors and key operational updates. Dr. Prasada.
Thank you, Vivek. Good evening to everyone. Q1 FY 2026 has progressed across our limits in line with our expectations. We continue to strengthen our key customer engagements and advance our platform readiness in high-growth modalities, reaching large and 10 subdivisions. Across this technology platform, we are now working with more than 19 global innovators, including our NBE Bio and Upperton customer network. Regarding pharma CDMO, Lakes is actually a differentiated program that continues to drive scale-up traction today. We span several new CTAs and massive service agreements by adding top four large innovator customers across our platform, apart from a few mid and small biotech companies, which indicates growing confidence from global innovators in our integrated model. I'm happy to share with you some of the prominent wins and key developments across the business line.
As shared by our Chairman, Vivek , we have secured a licensing management opportunity from a leading innovator for a branded product API. Despite its long-term sustainability and market-accretive nature, this collaboration has immense potential to scale up in the years to come. We are considered as a high-potent project which is going forward by a global innovator, validating our infrastructure and regulatory maturity. Commercial contracts for intermediates are under discussion with a large innovator customer under a new platform sourcing strategy. A continued effort of payload linker programs across both in-house and partnered platforms. Our ADC platform continues to gain momentum across both payload and bioconjugation modalities. At our Nacharam facility, we also have finalized designs for the addition of a new containment, which is capable of demonstrating industry-having studies up to OEB 6 levels to support a customized payload program for a large U.S.-based innovator.
This expansion aligns with our increasing flexibility for growing demands of development commercial supply quantities under this engagement. It reinforces our high-potency competitiveness from a global regulatory-approved site in India. We are also deepening our engagements with a few additional large innovator companies beyond two ongoing commercial programs, which is a unique value proposition to strengthen trust in our payload linker capabilities as integrated. Cohance's program in the existing payload family is under discussion, expanding our payload portfolio and strengthening our position across payload linker and bioconjugation workflow. In parallel, we continue to engage with both existing and new customers' teams, growing interest in RFQs received for payload linker interface. These partners are also actively evaluating our India-based linker manufacturing capabilities, along with our Princeton-based bioconjugation tools, predominantly as a part of their long-term supply chain strategy.
They are expanding our offerings to next-generation modalities, such as cryoelective antibody quantitatives, mRNA quantitatives, and antibody oligonucleotide quantitatives, which are a polymerase-based antibody drug quantitatives. Our ongoing development of a verification payload linker program for ADCs supports this capability. We continue to invest in digital talent, compliance systems, and capacities NADML could deliver from a repeat business and deepen strategic collaboration with leading ADC innovators. We have announced INR 230 million for the GMP oligonucleotide building block at Nacharam facility. As we explained in our last phone call, it is expected to receive commercial by the end of CY FY 2025-2026. This leverages our expertise in modified nucleosides, block hosting testing to scale up these chemistries from R&D to commercial manufacturing up to multiple hundreds kilos blocks in a pick-to-purpose GMP facility. Overall, product implementation is progressing as planned, and the qualification is near completion.
It's important to notify that early customer interest remains robust, and the platform will be vital to our future modality needs. Coming back to the specialty chemicals segment, as we have alluded during our last call, customer engagement remains very positive. The action is continuing to have improving sequential recovery, and the usability is in line with our communicated expectations. Pharma chemical shipments are expected to ramp up in the latter part of the year. Overall, we remain confident of delivering fully on growth targets. We are also focused on adding two more customers in this segment while we deepen our existing relationship with a large innovator company. Regarding API/FDA business, we have delivered a strong performance backed up by a deeper business fundamentals, scaling up of existing product portfolio, and a healthy pipeline that's by securing orders in hand.
We have validated two new products in API and are also on track for seven to eight new product validations and subsequent regulations. The summarization of four pharmaceutical projects is delivering expected results. Please let me now hand over to our CFO, Himanshu , for the financial overview. Thank you, and over to you, Himanshu.
Thank you, Dr. Prasada , and good evening to all. Our Q1 FY 2026 comment is aligned with our expectations and strategically applied earlier. As always, we encourage you to evaluate our performance on a full-year basis and totally depend, if not fully recovered, the underlying momentum of the business. Let me walk you through our Q1 financial performance. We quoted a revenue of 30% growth around Q1 and Q2. Let's add performance in specialty chemicals to Q1. Excluding the inventory destocking in pharma CDMO, revenue growth for the quarter exceeded 25%. While revenue recognition was accurate this quarter with a shifting trend to inventory destocking, operating indicators remained healthy and aligned with our expectations. The pharma CDMO segment posted a year-over-year 1% revenue growth in Q1 FY 2026. However, adjusting for the inventory destocking in the commercial products which we had outlined earlier, the segment delivered ahead of a 30% growth.
Growth demands across key programs and high-value brands. We also want to highlight that our niche technology revenue share has advanced, from a mid-teen revenue share in the highest style to about 20% in Q1 FY 2026. It went on high to approach mid-20% share by FY 2026. Growth in this segment was well ahead of the pharma CDMO business, reflecting scale-up in ADCs and oligonucleotides. We expect this segment to be a meaningful driver of our growth trajectory. The bioconjugation capacity expansion is ensuing. The GMP oligonucleotide building block facility in Nacharam and the customized payload linker synthesis ramp-up in the U.S. and India together in the coming two to three years will deliver significantly higher contents. We adjusted EBITDA margins to push ongoing investments, direct payout, and the integration of incentives while hybrid growth efforts.
During the quarter, we adjusted to reflect the INR 539 million in CapEx, the money towards capacity expansion and NBE Bio financial valuation and after-hours workstreams, as the regime was seen across four unforeseen platforms. The other generated INR 2.3 billion in free cash to reopen the quarter, a healthy cash running across INR 2.4 billion on our books, underscoring our disciplined approach to capital allocation and operational execution. We continue to maintain a healthy balance sheet, and our capital allocation remains strongly focused on scaling differentiated platforms, enhancing modality readiness, and capturing operating leaders over the medium term. We maintain our FY 2026 guidance, and we continue to maintain our long-term guidance for reaching INR 1 billion EBITDA per quarter by Q2 or Q3. As we scale up further, our medium-term plans to achieve net profit and return margins remain intact.
In closing, Q1 has really laid background work for the rest of our FY 2026 pipeline. We remain focused on delivering execution excellence, scaling differentiated platforms like ADC, oligo, and bringing a global CDMO platform. With that, I hand it over to Cyndrella .
Thank you, Himanshu. With that growth-focused mindset, we are happy to open the floor to questions. Yusuf?
Thank you very much. Yes, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handshake while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Avnish Burman from Vaikarya. Please go ahead.
Hi. Good evening. Thanks for taking my question. My question is specifically on the pharma CDMO side. The APIs that you would be making for innovator big pharma companies, I wanted to know whether you are exporting these APIs into facilities in the U.S., or are they majorly being exported into some European countries like Ireland, and the formulation is happening there. Which is the major export country for your APIs under the pharma CDMO?
Avnish, thanks for your question. A major portion of this is going to Europe.
Okay. My understanding is this is regarding the tariffs. My understanding is that APIs do not come under the definition of pharmaceuticals as defined by Section 232 Investigations. Is this understanding correct that APIs that are being imported into the U.S. are getting tariffs as of now?
We don't make APIs. We do intermediates, and they are, you know, they are right now not part of the tariffs that are being talked about. As far as we are aware, pharma is exempt, and right now we are exempt from any tariffs.
Okay. Right now, whatever intermediates you are producing, you are exempt. The exemption is, are you exporting any of these intermediates into the U.S., or is everything going into Europe?
Predominantly Europe for me.
Okay. Just one more question. This is a hypothetical one. Let's say tomorrow something comes out of the Section 232 Investigation, and you know there is a tariff number that is being suggested. Is there an agreement or an understanding on how it will get passed on in the supply chain, whether your customer will bear it or whether you will have to bear a part of it? Is there some color on that?
Avnish, this is Himanshu. Most of our current agreements with the customers are on an SOB basis. We do not have the liability to pay the tariffs when the goods reach the shore of the U.S. Hopefully, that addresses the query that you have. Only hypothetical question is pharma work requests tariffs.
It does matter. Thank you so much. I will get back in the queue. Thank you.
Thank you.
Participants, if you wish to join the question queue, you may press star and one. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Next question is from the line of Dhawal Khut from Jefferies . Please go ahead.
Hi, thank you for taking my question. I wanted to know, you know, we have been investing.
Sorry to interrupt, Mr. Dhawal. Your voice is very low. Request you to please speak a little louder.
Yeah. Hi, we have been investing into building teams and building talent. I wanted to know, what is our current BD team strength, especially overseas, and where are these teams located? What is the future plan? Do we still see a lot of aggressive hiring within these teams? That's the first question. Proceeding to my second question.
Sorry.
Go ahead.
Dhawal, can I answer that?
Yeah, sure, sir. Go ahead.
Thank you for your question. Yes, you're right. We've been investing in front-end capabilities in major markets: U.S., Europe, Japan, and Southeast Asia. Today, in North America, we have four VDs. These are all experienced CDMOs that go through my PhDs that we have hired in the last nine months or so. They are PhDs, postgraduates. We also have added resources, a very experienced ex-pharma executive in Europe, as well as one very seasoned executive to the Japanese market. In addition to that, NBE Bio also comes with a 3D capability. We have ADC specialists, and they have two VD resources that are focused on ADC. We also have resources in Japan, as well as one resource based in India that has traveled. A combination of all of that is about 10 resources, 11 resources that are really helping our brand and growing our customer relationship and integrating with.
Do you think we are, you know.
I'm sorry. I want to clarify. This is a CDMO business, right?
Yeah, yeah.
In addition to the API Plus, it has its own separate specialty, kind of its own separate team.
Do you think we have the right team size, or you think there is some room to augment it further on the CDMO side?
Yeah. Listen, I mean, we are also not about quantity. I think it's the quality of people that we focus on. In the U.S., we will announce some more people, I think, as time progresses, to really add people with some unique experiences as well as unique capabilities. I'm actually very excited about this customer advisory board that we have really engaged with. These are very experienced people. With the combination of the customer advisory board, our BD team, and the DR coming in, and several of us really putting a lot of time on the front end, I'm very excited, I think, with the team that we have. This is a process of evolution. We may add one or two resources here and there, but we are not looking for major expansion in the quantity of the team.
We may add one or two people if required, but there's no major expansion plans there. There's a lot to be done with the team that we have, and we are excited, I think, with the potential CPI crowds coming. We're already blocking our calendar. A lot of meetings are lined up. Other events are coming that can start in the U.S. in a few weeks. The team is really excited. There's a lot of effort going on with the existing team. If we feel the need, we'd be happy to integrate some specialist people to help us accelerate the growth.
Understood. Very helpful.
Dhawal, does that answer your question?
Yeah, it does. It was helpful. Secondly, you know, there are many payloads where, you know, our payloads are going to other global CDMOs. In those cases, does the end innovator know where the payload is coming from, or is it completely at the discretion of the global CDMO where the payload and linker is coming? Or, you know, the innovator is just informed about it, but again, the final decision is with the CDMO? Or is it the other way where the innovator mandates the CDMO to use payloads from certain, you know, manufacturers? How does that supply chain and decision-making work?
That's a very good question. The final decision is only with the innovator, and the innovator is fully aware and is part of the decision-making process on selecting the products that we supply. Our product is a key part of the end-to-end supply chain that is required for the end molecule that the customer is presenting. Even as recent as a few months ago, I've heard pretty much the end customer, the final customer. Yes, they are fully aware, and they're fully integrated, and they're fully aware. They're fully involved with us in the decision-making process and the future plan for that product and the other product they might want to launch that requires that material or that similar material.
Got it. One last question. As a firm, do you think MAB manufacturing or antibody manufacturing looks for an area that you would like to explore if any inorganic opportunity comes up or whatever, even trying to build it organically? Or do you want to focus within the peptide/small molecule space and other key chemistries which are highlighted within the PPP?
Yeah. Dhawal, I mean, listen, we are a customer-centric organization. Our focus is to grow with customer and invest with customer. Even the investments we have announced are very customer-focused in terms of where the customer needs it and where customer is growing. Our test sessions with customers have reflected that they want to consult in our supply. They have enough resources. They want to do it themselves. We haven't seen, from our perspective, the length that we go with, we haven't seen much need and desire, actually, for customers to really partner with us on that stage, the customers that we work with. In the capabilities that we have invested in, you know, whether it's the small molecule CDMO, whether it's oligonucleotides or the ADC, we see a lot of potential to really grow.
A lot of pipeline discussions, a lot of early-stage discussions that can move to advanced stages. We want to remain focused in ADC in those spaces and then penetrate these and expand and extend our relationship with customers. Right now, we're not hoping any MAB capabilities to require this.
Okay. Thank you. I have a few more questions. I'll probably join the queue.
Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Harith Ahamed from Avendus Capital . Please go ahead.
Good evening. Thanks for the opportunity. My first question is on the destocking, which you alluded to. Is this specific to a particular product or one or two products, or are you referring to a destocking situation which is more general across the portfolio?
Harith, this is Himanshu. The destocking that you referred to is specific to a few products. In fact, I think we had mentioned it earlier as well. Just to mention, it's related to two large commercial molecules that we are experiencing the destocking right now.
Got it. The second one is on this new expansion that you've announced at Nacharam facility for oligonucleotides. We're just trying to understand how exactly this expansion enhances our offering on the oligo side. You know, what exactly are we capable of supplying now versus what will be our enhanced capability going forward post the expansion?
That is the requirement here. Our starting point of oligo is predominantly research-driven, and the important requirement for us is the ability to have CGMP capabilities. That's where we have started looking at it. We also have mapped what would be the potential subsegment of these modalities where needs immediate scale-up based on the customer interest. We have figured out nucleosides is one modality subsegment they are looking for. Long nucleic acids, not many companies in the world can actually make it to the extent of purity what they make. These are the few decision drivers which are actually triggered for creating a CGMP capability. We are pretty sure with the customer interest what we have received, we should definitely be able to expand our R&D capability to a CGMP level of manufacturing.
After then, there is also a logical extension, and we have clearly laid down our internal thinking process as well. These are the first steps of our business progression. Once we lock in some of the customers, we also have a further capacity expansion to make the final oligonucleotide at scale. This is the broad plan that we have, which cannot happen unless you have a molecular level CGMP manufacturing capability. Last but not least, it's also important to understand these capabilities have to exist in a regulatory-approved plant. This particular block is coming in in a U.S. FDA-approved site, which gives the comfort for the innovator companies to come and qualify. I hope this answers your question, Harith.
Yes, sir. That's helpful. The last one is on the expansion at NBE Bio . Your release talked about, you know, post-expansion, supplying phase one to clinical quantities. When I look at our payload capabilities, we already supply commercial at commercial scale. How do you think about our, you know, further enhancing our bioconjugation capabilities to, you know, commercial scale?
Harith, you know, at NBE Bio , as we move, we are adding capacity on conjugation suites. As part of the acquisition of NBE Bio , we also have a facility available very close to Princeton and NBE Bio , which can be converted at a very fast pace to build commercial capabilities. As customer progresses, as I said, we are investing behind customer. As customer makes progress on the molecule that they go, we can convert this facility, especially a stem cell-based facility that is already ready in a pharma farm with a lot of basic infrastructure. The time to make this existing site to a commercial is very fast. However, we are investing where the customer needs it.
With this customer that we are working and the others that we are talking to, as the molecule progresses from the space that we are working, if we see the needs, we have plans ready that we can very quickly expand into commercial capabilities and then, you know, work accordingly. Right now, our focus is to really finish this site quickly and then take the molecules forward and deliver what we have and then see the results and then accordingly invest capital behind our customer group.
Understood, sir. Thanks for taking my questions.
Thank you.
Thank you.
Next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Good evening. Thank you for taking my question. I'm on the road, so just some background noise. Just one question was on the Q1 performance and related to what the FY 2026 outlook is. Margins are coming lower, and even if you adjust for the one-off expenses, 23%, 24%, we are guided for a low 30% kind of margin. What gives us the confidence? You also mentioned about this destocking. I personally like the CDMO. Sorry, I missed some of your opening comments. I just want to understand how should the rest of the quarter pan out and what gives us the confidence of the guidance for FY 2026 .
This is Himanshu. As mentioned during the call, we have retweaked our guidance, both for FY 2026 and, more importantly, for FY 2030 for $203.01 billion. We remain committed to delivering the $1 billion or INR 85 billion in 2030. If you notice, we've kind of carved out the impact of the destocking molecules. As we know, the CDMO business has these peaks and troughs. We had called out that there are two commercial molecules where we are experiencing destocking. If you isolate that and peel the onion, you realize that pharma CDMO has grown at around 30%. All three engines are actually performing because you look at [ Exxon], it's growing at 28%. HS is growing at 98%. We have always maintained that this is a business which we should not look at quarter to quarter, and that's what I will say firmly with you as well.
We should not interpret anything from a quarter to quarter basis. The most important thing that we've also called out during the quarter is the contribution coming from the niche technology. As we have mentioned, the niche technology share of the total revenue has steadily grown from mid-teens in last year to early 20%. We are expecting it to be mid-20% at the end of FY 2026. That should also give us confidence of how the niche technology, which is where we are building our platform, and we're calling that out very category 3 for 2030, is going. I believe that we remain firm on our 2030 guidance of a billion dollar as well as mid to bigger issues called out.
Himanshu, thank you for that. I was more looking at FY 2026 only. If you could just rehash and tell us what the current year guidance only is, because maybe there was some confusion on the previous call. What are we calling for organic growth for fiscal 2026 full year? What is the margin level that we're expecting for full year fiscal 2026?
I think it's important, and thank you for this question because it helps me clarify our position very clearly. For us, the organic and inorganic are two sides of the same coin. It's about capital allocation. What we as an organization believe is we have created this platform in the last five, five and a half years based on a mix of organic and inorganic. That's the way we have been. We do believe that we have the secret sauce of integrating, first finding out, leveraging those assets, buying them, and then integrating to create a niche technology platform. That's what we've been doing. For us, inorganic growth is a core part of our thesis. You will see that we continue to add value-operated high-quality businesses. I think we should consider this as an appropriate use of our capital to acquire capabilities, geographical presences, and for the customer.
Worst is, other organic models of doing CapEx and building the same over a long period of time. For us, inorganic is a way to scale up business. Ultimately, the investment in CapEx will yield the right results for us. I would urge you guys to kind of think about it in the way we look at and not separating it as an organic or inorganic. It's just a capital allocation philosophy. Maybe our philosophy may be slightly different in the way we run our business.
Thank you, Himanshu. I'm not got the answer, but I'll take it offline.
Thank you. Before we move to the next question, a reminder to the participants to ask a question. You may press star and one. Next question is from the line of Abdulkader Puranwala from ICICI Securities. Please go ahead.
Yes. Thank you for the opportunity. My first question is with regards to your brief remarks on your interaction with the Japanese customer. Where are we in this discussion now? Do we have any visibility of certain onboarding of certain clients or certain new projects coming in in the near term? Hello. Was that audible?
Thank you. I don't know if you were audible. Thank you so much for your question. As in nature, since it is very strong, we are heavily committed to that part of the world. We have a full-time, very experienced, dedicated resource set for the CDMO business in addition to the oligo resources. All different parts of the businesses that we have, all the engines, that's a very unique thing. CDMO, API, FSMC, ADC, and oligo, all five of them are seeing traction from Japan and Asia. This recent trip that I did, we met with a lot of existing customers and a lot of new customers, along with Dr. Prasada Raju. We met with some very large innovators, very exciting meetings. I'm happy to share Dr. Prasada Raju is actually going back again because customers want to see him. It's a customer-important thing.
In addition to the existing relationship, we have onboarded a new customer, which I talked about in my opening remarks. It is also from Japan, a CDMO. That's a commercial molecule that is backed up, but it's going on that is scaling. We expect it to reach its full potential, at least based on our prediction, in the next year, year and a half timespan. That's happening. On its back scale, we have onboarded a Japanese customer last quarter, and we are doing very early-phase work with them. That's looking very, very promising. We have multiple relationships with Japan. We continue to invest time, and I am personally committed to seeing a lot of growth coming from that area. The relationship with customers is very strong.
We are excited with the potential with existing products with the same customers, with new products with the same customers, and the new customer pipeline that we are developing in that area.
Got it, sir. Just one more on your API business. How does this fit into the entire scheme of things when we are approaching innovators and at the same time we have this generic business? I mean, what is the perception that the innovators would have when we are into a generic kind of a business or this model?
I'll let Dr. Prasada answer that. I have my own views, but let Dr. Prasada answer and be happy to.
Thank you for this question to clarify ourselves. The very fact that we have defined our thesis for API Plus is not to compete with the innovator companies on paragraph four filing. It is more of a matured product with a deeper cost leadership position, whereby securing global capacity where we can gain a market leadership position. Those are all the products that we always play. The concern is, you must have followed our commentary in the early quarter Q1 call where we mentioned one of the branded products was qualified by the innovator company, which API belongs to them. What it implies is we become a lifecycle management solution provider for the innovator companies for their mature molecules. In fact, it actually complements our strategy of CDMO by complementing our overall skill set about API.
As you understand, the skill set and the regulatory environment that is required for making intermediate to API is completely different. We have that unique competency, and that complements and propels the growth of both the engines of CDMO as well as API. I just want to add that.
I think you complement it. We are seeing good traction as well as in addition to the one that Dr. Prasada talked about. I actually had a discussion with a different customer recently. They were looking at different businesses. When they looked at our product, they were very excited, and they wanted to immediately start inquiring about two APIs that we do because they are acquiring it from a very high-cost area. It could very well be what you guys. Our partnership is very complementary. It's helping our customers and the innovators actually optimize their cost, accelerate their speed, and even have organized sources in the second place.
Got it. One final one if I may. Your capacity expansion at Nacharam and Upperton, when does that come on board? When you talk about the niche specialties, scaling up to, say, 25%, is that going to be driven by the new capacities where you're building up?
The expansion of oligonucleotide sites at our Nacharam site is actually in the late stages of construction. We expect validation and other things to happen next quarter. I think by the end of this calendar year, we should have it live. We are actually already having some active discussions with customers to really bring some products there. ADC sites, the work has already started, and the timeline for that could be early in calendar next year, somewhere in that timeframe. A lot depends on, I think, some of the other factors there. We are aggressively pursuing and trying to push the contractors to finish it before the end of the period. We should see some traction this year. Our hope is that is on both of them. We are having exit discussions. We should see sign up some contractions, but next year is the full-fledged impact of both.
Thank you for answering my question.
Thank you. Next question is from the line of Chirag Shah from White Pine Investment Management. Please go ahead.
Yes. Thanks for the opportunity. The first question I have is this one-time expenses that we have. When can we expect them to not appear in P&L? Because the way I look at it, the more we do M&A, the more the one-time will keep on coming. If you can throw some light on this one-time expenses that you classified, is this the last year, assuming there are no further M&A, or is there a last quarter? That's one because that's a significant part of our EBITDA bridge. That's why I'm asking.
Chirag, Himanshu this side. For us, what we do is we classify the non-operating related expenditure into the one-time expenses. The nature of business is such that we have an employee in exports and that we categorize as one-time expenses. These appear as whatever you wish to call them. These are the adjustments that appear there. For us, in the current quarter, we've also inserted certain professional and legal services, which is associated with talent acquisition and contractual compliances. These are actually part of our ongoing commitment to secure top talent and protecting the company's intellectual property as well as competitive position. In the auditor's view, this was considered as a one-time expense, and it was classified as such. That's what they are pertaining to this quarter. I think it's very difficult for me to answer a question about when they can disappear.
I would be as interested as you to let them disappear. That's the current nature of the business.
Because in 2024, we had a reasonable amount. In 2025, we had a reasonable amount of one-time. Your EBITDA bridge really changes simply because of this number. I understand Forex is a different thing altogether, and I appreciate that. That's one. Second question is, just again coming back to FY 2026 outlook, is the way to look at it is there has to be a significant ramp-up in H2 CDMO for us to have a 30% kind of margin given the way that Q1 has played out. Is this the right understanding or assumption, or has to be closer to 30% margin? H2 has to be a significant ramp-up in pharma CDMO. The relevant question is, this 30% adjusted growth in pharma CDMO you called out, any indication from customers by when this inventory destocking will get over or at what stage they are? Because that.
Chirag, I think, two points. One, we have reiterated our guidance for FY 2026. Number two is commencing that we are a long-term business. We are investing in the business to deliver a $1 billion by 2030 and meet 30% EBITDA. I think that's the guidance we would want to look into and consider.
No, sir. I understand.
As inventory destocking is concerned, allow me to finish my second part of the question.
Yeah.
As far as destocking of the commercial molecule is concerned, we had mentioned that it is a year phenomenon. At quarter one, it is very difficult for the customer to share any appreciation more than what they have shared at this stage.
Okay. That's very helpful. Thank you. Okay. Thank you very much .
Thank you. Next question is from the line of Vivek Agrawal from Citigroup. Please go ahead.
Hi. Thanks for the question. In the opening comments, you talked about an API or branded product, right? It would be helpful if you can throw some more light on what kind of the product it is, what is the overall market size at innovator level, and when you can commercialize this product.
Repeat the question.
Hey, Vivek, can you please repeat the question?
Yes. The question is related to the API supply contract that we got for a branded product API. You have mentioned in the opening remarks. We just want to understand what kind of product it is, what is the overall market size of this product at an innovator level, and from your end, when you can commercialize this product? Thank you.
Thank you for the question. It's a commercial product for us, and we are not making for customers. Based on our experience of making these products with long-term stability and our proven track record, customers actually qualified us, which enables us to increase our market share from what it is now to a substantial level. At this stage, we can scale up to this extent. We will definitely be the dominant market player for this particular product with this new addition of the innovator as a lifecycle management solution. We can be one of the largest in the bureau for this molecule.
Okay.
This product is already commercialized by the innovator in the market, actually. It's already commercial for the innovators, and they have been sourcing from one of the European counterparts. Because of their strategic change, they are looking for a long-term sustainable partner outside of Europe. That's how it's a long process. It took almost six quarters' time to reach the stage we are talking about. Otherwise, it's a fully, fully commercial product for the innovator under their own brand.
Understood. What would be the overall market size of the product at an innovator level?
It's difficult to put that number attached to it right now.
No problem at all. Just one more question around this destocking. It's quite common in the CDMO business side. Is it possible for you to highlight what is the reason for the destocking by the innovator? Is it possible you can see some kind of ramp-up in the coming quarters from these couple of molecules?
Vivek, I think it's a customer-specific point which is there. I'm assuming that it would be an option of many subjects, including inventory management and the commercial demands from their side.
Understood. For these two products, whatever the supplies that you made in this particular quarter, these are likely to remain more or less similar for the rest of the year. Is it the right way to look at?
Sorry, Vivek, your voice is not clear for us. Could you please repeat the question?
No problem. I will take it from Cyndrella. Thank you.
Thanks.
Thank you. Next question is from the line of Dhawal Khut from Jefferies. Please go ahead.
Hi. Thanks for taking my question. On the 2030 guidance, which is a billion dollars, how much do you think the current platform can get you up to? Very, very, very ballpark, because let's say in FY 2025, we were at almost $335 million, and you need to reach a billion. That's almost a delta of $665 million. How much of this delta can the current platform bridge? Very, very, I won't hold on to those numbers because I know it's ugly things, but do you think like 80% - 90% of it is achievable by the current capabilities, and you just need to invest into the capacities and maybe inch up on the capabilities? Or do you think there are big missing gaps, and the current platform can get maybe 50% - 60% of it, and there are other capabilities that you need to really get into the market?
Post that, you will probably be able to get into the rest of the delta of this 2030 guidance.
Honestly, you know we could go for an hour on this particular subject. Obviously, for us as an organization, there is very deep work that has been done before we've articulated this. Genuinely, struggling as to where to start and where to end the answer to this question. Let me give you a pointer, okay? One of the reasons we've called out the niche tech and the share of revenue is for the very reason for the investors to appreciate and understand how we've been investing behind niche tech and how that share of revenue is growing. If I mention what we've articulated, we were at mid-teens on FY 2025. We've increased the share of revenue to early 20%, and we're guiding to mid-20% in niche tech.
If you look at some of the earlier materials we've shared, niche tech is slated to grow upwards of 22% - 25% in the market. We believe that we can get a dominant share there. I would like to end it there because I think this is a subject where we could spend a lot of time working together on this and helping to relate to the entire strategic direction of the company.
Got it. Secondly, from a [Spanish] standpoint, how does the math work on the Spectrum action? Is it exposed to the U.S., or you think the exposure to the U.S. is extremely low and that's not really an area to be looked into?
Our supplies in Axiom are through LATAM, so we are not exposed to the U.S. In the Spectrum, on the oligo, our customer is specifically willing to pick up the tariff if and when the tariff were to get implemented. We are not having an exposure on either of the two segments on the tariff side.
That is helpful. Just a few bits on the, you know, a bookkeeping side. What was the reason for other income, and how do you see that going forward? Secondly, on ESOP charges, still, what year do you expect them to hit our P&L, and what would be the ballpark quantum? Will it be sort of a static number next two, three years?
ESOP charges is not a static number. I think it has been variable in FY 2025 versus 2026. In all fairness, we've been waiting for completion of the merger. There will be further ESOPs which have to be granted, and hence the charge will increase on the ESOPs.
Okay. What kind of charge are we expecting for 2026? Any expectation for 2027 as well?
No, it's too early. I have to work with our HR colleagues. I don't have visibility to share with you at this stage. Please allow me some time.
Sure. On the other income, how do we see that shaping up into the next few quarters and for the year? From a Q2 standpoint, there is a significant fall. Was the payment for some of the acquisitions done in Q4, or is there something else? Was it PLI income, something else?
I think we need to, okay, a majority part of the other income was the treasury residual income, which was invested when we acquired the assets of NBE Bio and Sapala . That's what has led to the decline in the other income, apart from other minor elements of it.
Got it. This is the sort of number that we can look forward to in the next few quarters. Is that right understanding?
You'll have to really excuse me for these kind of questions.
No problem.
I mean, that balance will determine the other income, right? This reporting helps you cash in the balance sheet.
No problem. Okay. Lastly, I wanted to understand the math behind.
Sorry to interrupt, Mr. Dhawal. We will take that as the last question due to time constraints.
Thank you.
Thank you. Ladies and gentlemen, we will take that as the last question for the day. I would now like to hand the conference over to the management for the closing comments.
Thank you, everyone. We look forward to our next call. Thanks for giving your time and joining us.
Thank you, all of you.
Thank you, all of you.
Thank you, sir. On behalf of Cohance Lifesciences Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.