Thanks, Sagar. Good evening, everyone. We appreciate you all joining us today to discuss our Q2 and fourth half of 2026 performance. On the call with me today, I have our Executive Chairman, Vivek Sharma, our Full-Time Director and Chief Financial Officer, Himanshu Agarwal, our Pharma CDMO CEO, Mr. Yann D’Herve, our Business Head, API+, Mr. jan Singh . It is our request that Vivek will share his first perspective on the quarter, and then the organizational transition, and then Himanshu will walk through the financials, and the other leaders will walk through their sections. Once we are done with all this, we will open the floor for Q&A. Now, I'll hand it over to Vivek.
Thank you, Cyndrella. Good evening to everyone on the call. Let me start by putting this quarter and the first half of 2026 in context. As we continue our journey of operational consolidation and capability transition for Cohance, we are moving from a phase of integration to a phase of capability amplification, building the organization, science platform, and the governance needed to support our next leg of growth. Considering the leadership changes, the board had approved a revised organization structure better reflecting our multi-business portfolio and expanding global footprint and position, with Cohance strongly on its path forward towards the $1 billion vision. Over the past year, we had established three distinct business verticals, each led by experienced and accomplished industry leaders who bring deep expertise and proven track records in their respective domains, and each has full operational ownership and accountability.
Today, we also have on the call with us Mr. Yann Lehoe, CEO of Pharma CDMO, and Mr. Gunjan Singh , who has API+ business. During the year, we have significantly strengthened our leadership and technical talent base across all three business units, adding senior professionals at Vice President and above level from top global and Indian pharma companies. R&D operations, quality, and business development functions have been augmented, supported by a growing pool of scientists who are PhDs and highly experienced across small molecules, ADCs, and oligonucleotides. These additions have deepened our execution bandwidth across India, United States, and Europe, creating a more agile, science-led, customer-centric organization aligned to our long-term growth vision. We continue to be focused on business, building both the near-term and mid-term. Let me highlight some of the progress made across businesses in the year so far. First, on the pipeline and approvals.
During the quarter, one of our late-phase molecules in the respiratory inflammatory cycle received U.S. regulatory approval, which is an important milestone for our CDMO platform, reflecting our ability to support customers end-to-end for early development through late-phase, bank transfer, and finally into commercialization. Our newly added customer relationship is progressing well with phase two orders and higher engagement discussions. We have successfully added three active biotech relationships in Asia. Second, on customer engagement and market positioning, we had a very active participation at recently concluded CPHI in Frankfurt, where we formally unveiled Cohance's brand identity. Our senior team met with over 340-plus customers, a balanced mix of existing partners and new backups across the U.S., Europe, and Japan. A few themes are very clear. Innovators continue to actively look to deal with supply chains beyond China.
This is also evident from our skills across Cohance, but also across the broader India CDMO player. There is a strong and growing interest in high-potent ADC and oligonucleotide capabilities. Our positioning as a technology-led global CDMO, integrating small molecules, ADC, and oligonucleotide capabilities across the U.S. and India, is resonating well with innovators worldwide, and several discussions are in progress. While these conversations will start with small business, we continue to be positive on the potential here. Early in quality and delivery, we completed four major customer audits across our CDMO facilities successfully. At the same time, we did see some timing-related shipment depravity, particularly in small molecules, two large commercial molecules restocking, and the bio-shipment depravity from early effects of funding winter from smaller biotechs and then the Nacharam FDF by OAI partnership, which are based on the reported growth for age.
Stepping back, our macro read-through has not changed materially from Q1. Demand from large innovative customers remains positive. The early-stage biotech segment is still selective but showing early signs of recovery, and European innovators continue to diversify their supplier base, which aligns well with our capabilities. In parallel, our external advisory board is now fully active and engaged. We have onboarded industry veterans with several of them having past experiences at large global innovators. The EAB is helping to sharpen our long-term capability roadmap, guiding our customer-centric strategy. From a business standpoint, I believe it is important to highlight the challenges we are currently facing. Pharma restocking in some key molecules and delayed reloads of a few phase two and three molecules affecting the U.S. and the world. Nacharam plant shutdown, awaiting audit clearance to ensure best quality and regulatory practices. Order shipment delayed for FDF due to plant shutdown.
Production is now resumed in phase one. Slowdown in biotech funding. NJ Bio has seen some project shipments pushed by two to three quarters due to extended TMG timelines for parts. With that backdrop, I will ask Yann to take you through the Pharma CDMO performance, including the progress at NJ Bio and Sabhala and the latest on small molecules, ADC, and oligonucleotides, followed by Gunjan Singh to give you an overview of API+ business. Yann, over to you.
Thank you, Vivek, and good evening, everyone. I'll cover the performance of our Pharma CDMO platform and then comment on visibility as we go ahead. On the small molecule side, performance continues to be anchored by late-phase and commercial programs for global innovators. We are very pleased to see one of our late-stage molecules receive U.S. regulatory approval during the quarter. This milestone is significant, especially because we are delivering four key starting materials for these molecules used in pulmonary applications. Not only does it reaffirm our ability to support late-phase and launch programs from a regulatory and quality standpoint, but it also opens up a multi-year commercial revenue stream as the product runs post-launch. Beyond that program, our pipeline continues to broaden and mature.
The reasons why clients come to us is our long track record in high-potent chemistry, complex chemistry, and ability to scale and accompany the molecule from phase one to commercial. We are currently executing nine phase three molecules, of which four are expected to transition into commercial supply over the next 12-18 months, and two have already moved into launch stage delivery. Many phase two programs are progressing through our validation and scale-up, many of them across high-potent and complex chemistry. Our on-time delivery rate remains above 95%, underscoring the operational maturity of our team, which was praised by many customers at CPHI. The RFQ funnel remains strong, with many new proposals received in Q2, spanning phase two, phase three, and commercial supply.
Importantly, the share of late-phase RFQs has nearly doubled in the first half of 2026 versus last year, and many are reloads from existing large innovators, a strong signal of customers' pickiness and confidence. The remaining share is driven by new biotech and mid-size innovators seeking reliable partners for complex high-value intermediates. These are exactly the kind of projects that deepen customer engagement and enhance mid-to-long-term visibility. We remain focused on ensuring progress across all requisite input metrics to ensure sustained mid-to-long-term growth, given the lead time in the business. On ADC, customers come to Cohance and NJ Bio for the science, the know-how, the technology which enables their IND filing. We have a large base of loyal customers that is growing. The product offering already used in commercial products, a payload from India, for example, brings confidence that we can scale.
In ADC, the ability to develop and to accompany our customers as their drug products move through clinical phase is a strength, and this allows us to build a strong business. All that we do here is based on customer-centricity. We are building a conjugation suite to accompany our customers in phase two in the United States at NJ Bio. We are executing a complete business continuity plan for EdTrion, a key intermediate used in commercial ADCs. We are offering this key intermediate from a second site with the support of our customers. We are developing our portfolio of payloads, with three new payloads being launched this fiscal year. We have opened new high-potent capability in India up to OEB 6 for customer projects, and there is a good response from the market with new projects.
What we can see at the moment is that customers are coming to Cohance and NJ Bio with challenging scientific problems to solve as they understand better what we can do for them with a combination of NJ Bio and the commercial payload capability. Across customers, we continue to see healthy traction from both large innovators and biotech, many of whom are consolidating suppliers and prefer to work with integrated partners capable of managing better linker synthesis, conjugation support, and analytical characterization under one umbrella. Our India-U.S. model gives us a distinct advantage here, with NJ Bio handling early development, conjugation support, and analytical methods development, and our India facilities focused on payload and linker synthesis at scale. We can offer an end-to-end reliability with cost efficiency, something increasingly valued in the ecosystem. On oligonucleotides, we are still in the early build phase.
The progress in FY 2026 so far has been encouraging. Our larger scale oligonucleotide building block, CGMP and non-CGMP facility, has now been inaugurated. We are working on more than 35 active molecules across building blocks and drugs. We have repeat orders from key customers in the U.S., EU, and Japan, and our first GMP audits from customers are scheduled between October and November 2026. We also initiated work on specialized chemistries, including GalNAc and certain modified backbones, which should further differentiate the platform over time. In the broader market, there has been encouraging validation for next-generation oligonucleotide chemistries, particularly tricyclo DNA-based antisense platforms, which are gaining recognition under industrial scale initiatives in Europe. This reinforces the growing relevance of such chemistries in rare and orphan indications and aligns well in the direction where Cohance has built its own oligo capability build.
Let me now specifically talk about NJ Bio and Sabhala. At NJ Bio in the U.S., we have added 17 new biotech customers as of yesterday's date. We have completed three ADC project conversions, early phase, and we have audits from three large innovator companies scheduled in the second half of this. We have successfully completed a GMP conjugation project for an ADC program, validating the site readiness for commercial execution. At the same time, as we have flagged earlier, a number of projects at NJ Bio have seen shipment timelines move out by two to three quarters, largely due to extended CMC timelines, funding dynamics, and reprioritization on the customer side given the biotech funding situation. These are timing issues. In fact, many of these customers are deepening technical engagement, even as their internal timelines shift. We feel very good about the capabilities, customer engagement, and ability to scale.
At Sabhala in India, we have upgraded the analytical infrastructure with platforms such as supercritical fluid chromatography and high-resolution mass spectroscopy. We are transferring methods from our U.S. and Hyderabad teams into Sabhala to create a seamless early phase and intermediate backbone for the CDMO franchise. Putting it together, the CDMO portfolio today has deeper late-stage and commercial visibilities than a year ago, even though some revenues have moved out of FY 2026 on account of shipment deferral. This position is better for 2027 and beyond. With that, I will hand over to .
Thank you, Yann, and good evening, everyone. I'll begin with the API+ business, including our FDF operations. The API+ platform continues to be driven by steady innovator demand and a structured new product development and filing pipeline. In the first half of FY2026, we have completed five regulatory filings, which include BMF and CEP types. We have added seven new products to our active new product development program. We are targeting 10 filings for the full year. We have completed two validations already, and another four are in progress. Our API site at Jajjapet faced the USFDA audit and cleared it with zero observations. This plant contributes a larger share of the total revenue. Additionally, we also secured commercial orders from two big pharma customers as part of our product lifecycle management office. On the FDF side, our Nacharam unit has moved past the most acute phase of disruption.
While this had an impact given the shipment delay, we have now resumed production and shipment. The order and shipment cycles are still in the process of normalizing. We have five launches planned for FY 2026 and another 10 formulation projects in the pipeline, which we expect to phase in over the next few years. We are adding capabilities of liquid and topical corticosteroid formulations backed by active customer demand. We expect gradual improvement through the second half as remediation work progresses and customer confidence further strengthens. With that, I hand over back to Vivek.
Thank you, Gunjan. This week, I concluded meetings with one of our large ADC innovator customers. I would like to share a few key takeaways. The sector continues to show long-term structural growth through near-term pressures from excess capacity. Near-term pressures from excess capacity and Chinese generics are heightening the need for cost leadership and supply reliability. At Cohance, we are strengthening collaboration with leading innovators, participating in new active ingredient RFQs, and gaining traction with customers across Europe and Japan. Seven promising projects are now at landscape. While near-term consolidation is expected, we remain confident of sustaining growth in our specialty chemicals segment through innovation-led partnerships with different institutions. On the ADC side, we continue to see the gradual macro recovery as expected. This quarter, we received four RFQ projects from a large global innovator.
Our innovation challenge program to the leading global agro major is on track. Recently, we onboarded a new Japanese innovator that has deepened our customer base in this segment. A few more key molecules in our portfolio have transitioned to a genericized phase form, while its combination product remains commercially active. We continue to see price pressures from Chinese competition and are pursuing participation on the active ingredient side. The initiative has experienced temporary delays due to pending innovator registrations, which are expected to normalize in the coming quarter. On the performance chemistry side, our folded intermediate portfolio continues to gain momentum. We have deepened our engagement with an established discipline technology innovator, and we are in active discussions with two new customers for the FY 2027 supply program.
Across both API+ and specialty chemicals, we are driving value engineering initiatives, including catalyst recovery and solvent recycling, which support our margin profile. From a forward-looking lens, we expect H2 to be better than H1 for these businesses as different projects, validations, and new launches begin to continue more meaningfully. With that, let me hand it over to Himanshu to walk you through the financials and our updated outlook. Himanshu.
Thank you, Vivek, and good evening to everyone on the call. Let me walk you through the key financial highlights for Q2 and the first half of FY2026, and then I'll share details about our updated guidance and scenarios. On the quarter two of FY2026 and H1, our revenue per quarter stood at INR 5,556 million, a decline of 8% year-on-year, primarily due to deferred shipments at our CDMO and FDF sites and some key molecular restocking, including timing of certain project starts especially at NJ Bio. Adjusting for the restocking, the quarter reported a growth of 14% year-on-year. The material margins improved to 74.6% compared to around 71.3% in the same quarter last year, driven by both the business mix as well as ongoing efficiencies and yield improvements.
We adjusted EBITDA for the quarter to INR 1,289 million and adjusted EBITDA margin of 23.2%, reflecting the low volume as well as the upfront investment in employee cost and certain transition and remediation costs. For H1 of FY 2026, the revenue was INR 11,049 million, representing a 1% growth year-on-year. Adjusting for the restocking, the first half reported a growth of 20%. The adjusted EBITDA was INR 2,630 million, and adjusted margins, EBITDA margins being 23.8%. Adjusted PAT for the first year, first half, sorry, was INR 1,302 million, translating to a margin of around 12%. On the balance sheet and cash flows, we have maintained discipline on working capital, even with shipment deferrals in the quarter two. In H1 of FY 2026, free cash flow generated of INR 1.69 billion during H1. Cash on goods stood at INR 3.91 billion, maintaining a healthy liquidity position.
Our working capital at 121 days shows a significant improvement versus FY 2025. Deployed CapEx of INR 1.06 billion has been deployed in a targeted manner, primarily towards high potent and linker chemistry, oligonucleotide scale-up, and debottlenecking and reliable investment in API and specialty chemicals. Our adjusted ROCI stood at 21.7% as of first half of the year, despite our higher investment and consolidation phase of recent acquisitions. Coming to the guidance and the key drivers. Given the development over the last two quarters, we are revising our FY 2026 guidance based on the current outcome. We now expect our FY 2026 guidance of revenue to be broadly flattish versus the FY 2025.
The key drivers of these revisions are the ongoing challenges, as highlighted the other days, some of these being the restocking of our large commercial products that we have discussed earlier, petroleum shipments, and the biotech funding winter impact on NJ Bio. Temporary impact due to FDF Nacharam unit consequent to the Nacharam audit, which we have discussed earlier. Finally, the deferral and the AGCEM new product approvals. Looking ahead, we believe that our H2 will be stronger than H1, driven by execution of deferred shipments, new program activations, and regulatory normalization in key sites. From a midterm or a rather near-term FY 2027, we do expect the growth to come back in FY 2027. The growth will be backed by new wins and existing business supported by restocking as well as reloads on the CDMO side of business, which has been impacted negatively this year.
Given the fact that higher visibility on the same could emerge in the next one to two quarters, we will provide a more informed guidance by quarter three or quarter four of the current financial year. We are maintaining our midterm long-term guidance of $1 billion with mid-30% EBITDA margin, given the sharp investments that we have done and the building blocks of our business. Coupled with the high-risk technology, where we believe we have a head advantage. We believe that we will be able to recoup these operating leverages from the upfront investments made over the last 12 to 18 months. With that, I'll hand it back to Cyndrella.
Thank you, Himanshu. I want to first apologize to everyone for a little delay because we were facing technical difficulties to upload our presentations and results this time. We sincerely apologize for the same. I now request the operator to open the floor for Q&A.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchstone phone. 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. Again, to register for a question, please press star and then one. Our first question comes from the line of Varun Bank from One Up Life. Please go ahead.
Hi, thanks for the opportunity. I have some feedback to share. Can I go ahead?
Yes, sir, please go ahead.
Yeah, I think this organization was on a strong trajectory before, but I think under the current ownership, the execution has clearly derailed. There has been a consistent gap between what was guided and what has actually played out, not just on the delivery front, but also in areas like timing and communication of the stake sale. The lack of clarity and follow-through has eroded both the culture of the organization and also the external credibility. Frankly, the execution discipline seems to have collapsed, and it shows across multiple fronts. I have been tracking this company for many years. Even before Advent's acquisition, I have never seen this level of decay. What's happening now is clearly a reflection of Advent's failure in managing and steering the business. The nature of the business calls for a steady and patient execution.
It moves through cycles, and sustainable progress takes time. I think Advent's approach, however, has been more like running on a treadmill, push for a speed without corresponding structural readiness. That is showing in the outcomes. Unfortunately, shortcuts will—
Operator, can you request Varun?
I'm sure.
If he has a question.
I'm sure Pankaj and the entire board will take this in the right spirit.
Just give me one moment, ma'am. Varun, sir, just give me one moment. You were not audible to the management.
No, he was. Can you please ask him if he has a question? He would like to take the question.
No, I just have this feedback to share, and that's it. Thanks. I hope this management will—sorry, the board and Pankaj will take this in the right spirit. Thanks.
Thank you.
Thank you for your feedback, sir.
Our next question comes from the line of Ahmed Mada from Unified Capital. Please go ahead.
Thanks for the opportunity. I just wanted to understand the value chain of ADC business a little better and how is Cohance as a whole participating in it. I have a few basic understandings. I'll try to explain, and then you can correct me and explain how you are thinking about the business, right? In ADC, be it any product, right, you will have certain key starting material and then a few intermediates, and then that will go into payload linker, and then there will be bioconjugation. That's the simplified value chain as far as I understand. Can you explain as of now what part of the value chain we are catering? Is it just the building block or something ahead? How do we build our capabilities and expand our part of the value chain which we cover?
This is Yann, and thank you for the question. As you indicated, right, ADCs are complex modalities. They are composed of monoclonal antibody, a linker, and a payload. Those three elements have to be bioconjugated, right? That's how it works here. The way we look at that value chain, where we are participating, right, and that's the uniqueness of the offering of Cohance and NJ Bio is the following. We have a product offering. The product offering is essentially one of payloads and also starting material for payloads, right? That's a product. And the payloads that we have in our portfolio are computation-based, fully back-integrated in India, which means that's offering a tremendous supply security for our clients. That's one of the offerings, the product offer. The other offering that we have is based on the intellectual property, the IP, and the know-how that is located in NJ Bio.
With this IP, which is essentially the know-how on customization of payloads, customization of payload linkers, proprietary linkers and payload linkers, and know-how in bioconjugation, we are able to offer R&D services to our clients as well as manufacturing services. From pre-IND to commercial. Really, when we talk about the value chain, where we are participating, right, we are an IND enabler, right, with more than 100 customers, I would say, that have been served by this service, right? From these IND enablers, we enable essentially the innovators to develop drugs that are life-saving. The more we enable the innovators, essentially, the more we participate in the value of the drugs through the different value pools that I just mentioned. We call this as well the value diamond: product, IP, R&D services, manufacturing services with the ability to scale. I hope that it clarifies the offer.
Yeah, just one.
The unique value.
Yeah, just one follow-up on. When you say you are catering the S-trend building blocks, so for example, say a product like NR2, which Daiichi has an—I'm fine if you don't explain the product wise, but just for a reference, I'm taking a product name. For that product, you'll be doing a building block and then passing on to the payload linker manufacturer. Is it the right understanding?
I will not comment exactly on the total value chain specifically because it is confidential information. Your understanding is not wrong.
Sure. That is from my side. Thank you so much.
Thank you. Our next question comes from the line of Shreya Chatterjee from Ageless Capital. Please go ahead.
Hello.
Yes, ma'am, please go ahead.
Yeah, thanks for taking my question. My question is more from a strategic viewpoint of understanding Cohance's scientific capabilities and how it translates to its earnings or the revenue growth. If I see the ADC capabilities that Cohance has and it caters to various innovator companies. In the past, for example, historicals if we see, 2023 and 2024 had seen some of the ADC molecules perform very well in their sales front, but we did not see the growth coming in in those years for Cohance. What am I exactly missing over there? Also, there are certain indications that some of the ADCs have gone further approval or some of the ADCs have failed some of the first-line trials that have come out recently. How does an analyst or from the investment perspective, how do we see the impact on Cohance's sales going forward?
Let me give a broader perspective here. Computation-based payloads for commercial drugs, right, there are two out of the 12 ADC approved in the world that are using this technology. As you may imagine, with the offerings that we have, these are essentially products that we are participating into, right? That's point number one. Now, as part of the development and launch of new drugs in the market, essentially I'm talking about those two drugs, it is clear that pharmaceutical companies build stock and destock in order to ensure that they have enough products to manage the upside in their launches, right? As the starting material provider, this is what we are essentially delivering here in that case.
That means that there may be also some destocking elements here depending on how those drugs are doing in the market and how optimistic or pessimistic, right, the pharmaceutical companies have been in their supply chain. That is one element of the answer on the comments related to the sales development. Now, what is more important, and that is not necessarily seen in the numbers, is the pipeline of customer projects that we are essentially working with at the moment, right, with the combination of NJ Bio and the combination of the ability to scale in the payload and payload linker with our facility in India, right?
May I ask one question?
If I may ask as a follow-up, when do we see the inflection point for the niche technologies in pharmaceuticals going forward?
Are you talking specifically about ADC or in general? I was asking a clarification question. Are you talking specifically about ADC or in general for the CDMO business?
I'm asking for ADCs and all the niche technologies in the CDMO business. When can we expect an inflection point for this pharmaceutical?
Okay. When can we expect essentially an inflection point for the ADC in the CDMO space? That's the question.
Yes.
Okay. So again, we know that we are participating in more and more drugs being developed. One thing we cannot influence is the ones that are going to be coming commercial, right? I mean, we can influence with our service, but we do not know exactly which one will become commercial. What I can indicate is we are participating in more and more drugs, and our offering, with especially the OEB 6 capabilities that we have installed in India, allows us to essentially participate in the future in the commercial drugs that will come. That is what I can comment. As indicated as well in my previous answer, we are already part of two payloads, right, that are commercial.
The third aspect is, as I started three months ago, we have increased our business development capabilities, especially in critical locations such as Boston and San Francisco, in order to be able to attract additional customer projects in order to maintain and have these inflection points as quickly as possible.
Thank you. Thank you.
Maybe another comment as I mean, I was explaining a little bit the diamond with the product, the IP, the R&D services, and the manufacturing services. One of the aspects is that on each of those elements of the diamond, we are increasing our offering. Example, on the product offering, we are launching three new payloads this year. This will allow us as well to participate in more drugs that are commercial and in development in the pipeline. Think about it as a platform that we are expanding and that allows us to participate more in the value generated as the products are developing through clinical phase.
Thank you. Our next question comes from the line of Abdul Qadir Puranwala from ICICI Securities. Please go ahead.
Hi. Good evening. I hope I'm audible. Just in terms of your FY 2026 guidance, when we talk about the second half being better than the first half of fiscal 2026, I mean, how should we look at this number from the second half of fiscal 2025? Is there some bit of a decline we should expect in the guidance we are providing now?
Hi. As I said earlier, that we're looking at FY 2026 to be flattish in comparison with FY 2025. I think my sense is it's easy to decipher how the H2 would look like.
Okay. And how about margins? I mean, previously, we were talking about around 30%. First off, we are a little lower than that, but on second half, do we expect some kind of a rebound?
Yes, absolutely. There will be a rebound in H2 as some of the operating usage will come given that H2 is expected to be better than the H1 from a revenue perspective. We do understand that we have been steadily investing ahead of the curve, and the operating leverage will kick in with the higher revenue coming in.
Sure. In terms of the commerciality from a 2027 perspective, could you highlight a couple of projects on the CDMO side, on the pharma CDMO side, which could get commercialized, say, from a one- or two-year perspective at least?
I think we have a healthy pipeline, right? I mean, that is starting to delivering, right? I mean, I think each quarter now in Q1 and now in Q2, we announced that one of the drugs for which we were providing KSM, key starting material or intermediates, right, has been commercialized. This is important because that means that we are at the early phase, right, for those products in launch, and that allows us to expect some ramp-up for volume moving forward for commercial drugs. At the same time, we are participating in numerous phase three programs that will also deliver in the next 1-12 months to 18 months, right, ramp-up quantities for pre-launch requirements.
At the same time, also, we are currently seeing an influx of RFPs that are with the late-stage program, phase three, and also commercial program as the customers are de-risking some of their supply chain and are orienting RFPs towards India, right, and towards Indian CDMO in the small molecule space. As such, this will help as well in the building and further building of the pipeline.
Understood. Just last one from my end. Have we already submitted our replies to the OEB for the Nacharam plant? Talking about launching five new products, is it from the same plant and is it for the U.S. market?
Yeah. Hi, Abdul. Good evening. This is Gunjan here. No, this is not from the Nacharam plant.
Okay. So in terms of our correspondence with the USFDA, have we filed our replies?
Of course. Within the stipulated time, the first response to the USFDA was shared. This was followed by two further submissions, which were additional efforts that we had gone over and beyond the commitment there, which was also submitted within the timeframe.
Got it. Thank you.
Overall, just to hear you, Nacharam FDF plant contributes a very small share of our total revenue. As for the OEB status, we are allowed to ship the commercial products as we have been doing in the past. Those products can continue in the future as well.
Got it. Thank you.
Thank you. Before we take the next question, a reminder to all the participants, you may press star and then one to ask a question. Our next question comes from the line of Rahul Jivani from IIFL Securities Limited. Please go ahead.
Yeah. Hope I'm audible. You indicated that NJ Bio has been impacted because of, let's say, the mutated biotech environment. Can you also talk about, let's say, when we had acquired this asset last year, it was analyzing around $32 million of sales. What kind of revenue recognition have we done from NJ in the first half of this year, and how do we see NJ playing out in going into the second half?
Rahul, this is Himanshu. The revenue at this stage is looking flattish from a performer perspective. We are expecting that NJ Bio in 2026 will deliver a similar revenue as our 2025.
Okay. Is there a change between first half and second half?
Sorry, your voice is not coming out clearly, Rahul.
Yeah. Sorry. I was saying that while NJ might remain flat this year in FY 2026, but is there a seasonality for NJ's business as well? That second half of the year tends to be better than the first half.
That is correct. There is a seasonality in NJ Bio as well. So H2 will be better than H1.
Can you quantify that in terms of, let's say, the split between the first half and second half revenues, ballpark?
I mean, that would be difficult to communicate, Rahul. I mean, you have the subsidy results which is there. And you know the full year number. My sense is that it will be easy for you to decipher that.
Sure. And then second, in terms of guidance, while we stated that the overall revenue will remain flattish in FY 2026, it would be helpful if you could also comment in terms of how do you see the margin trajectory playing out this year while second half would be better than first half. In terms of full year margins, our earlier expectations were low 30s. Some clarity there would also be helpful. Thank you.
Yeah. I think as we had guided that our investment continues to be higher. As both Gunjan and as well as Yann have articulated, the aim that we are getting into the business and the way ADC and oligo both are shaping, if we continue to invest into BD, and in fact, we have added BDs both in the U.S. as well as in Europe, and we have also added BDs who are specialists in the niche technology area. The investment in the business continues, though we are experiencing headwinds from a DEFRI perspective as well as the funding of biotechs, which has impacted NJ Bio. Net-net our sense is that with the COPS initiative that we have taken, we would not be able to reach to early 30s EBITDA that we had guided earlier.
We are most likely to be in the range of high 20s as the EBITDA margin.
Sure. So that's it from my side. Thank you.
Thank you. Our next question comes from the line of Chirag Shah from White Pine Investment Management. Please go ahead.
Yeah. Thanks for the opportunity. Again, sticking back to the guidance for the first question, what kind of confidence do you have in H2 and 2027 guidance? Because it appears from the tone that there is more downside risk to the guidance that you are indicating. Given what has happened in the recent past, you are in a better position to take an assessment. Why I'm asking this question? If I look at the last three, four transcripts, your granular commentary always looks to be very good in terms of molecules, in terms of where we are in the cycle, the phase two, phase three, etc. The near-term guidance seems to be missing by far. I don't think this would have been your expectation in which case.
If you can just summarize it and help us understand the confidence that you have in your guidance, that's the first question.
Hi, Sir. This is Vivek here. Guidance is based on what we have, the traction we have seen with customers. The investments that we have made with the commercial team, the pipeline that we have, the RFPs we are seeing, the meetings we are having with customers, all of those are early indicators for us to base our guidance on. That is giving us high confidence on what Himanshu just shared with you with the guidance for the second half of this year. I think that will also reflect in how we start thinking about next year because all of these things will translate into our guidance for next year. Overall, we are seeing very positive traction right now. All different businesses, our filings are increasing, our customer traction, as I said, RFPs, all these indicators are positive.
That is giving us confidence in the second half guidance. Also, as you know, the CDMO business, normally Q4 is a better quarter generally after the year. That is giving us a positive indication.
Secondly, based on the information that we have today or that you have today as a board, can we assume fiscal 2027 would see around the 20-25% kind of growth, that kind of visibility you have? I understand a lot of things can change, but there is a reasonable confidence that for the unforeseen events, it is possible given the way the spillovers you have been indicating. Can we assume that kind of confidence is there, say, 70-80-85% kind of confidence that it is possible to achieve 20-25% kind of growth next year?
I mean, I will say it as a yes and no, okay? The reason I say yes and no is that we are, as Yann mentioned, there is traction in the RFP. There is traction in the RFPs both from phase three as well as commercial, okay? However, at this stage, we have said that we are expecting growth to come back in FY2027. Now, what you asked me is very specific. That specific, for that, we do need time for our customers to revert and give us better clarity of what we are winning and what we are able to get as rewards. Also, we would want to wait to get a sense of how the biotechs are coming back because a large part of the business in NJ Bio is biotech-dependent.
That's why we have said that you have to allow us for the three quarters, four of the current year to come back and give you more clarity and a better visibility of how we are looking at FY 2027. At this stage, it would be difficult to say yes or no to the number that you give.
The second question was on the four molecules that you indicated are likely to go into commercial or launch over the next 12-18 months. If you can help us understand that, how should we look at the ramp-up now of those? If you can get educated on that side, generally, what are the time frames that one should look once the product gets approval? That would be helpful. The ramp-up part also. Is it a year three, year four that matters? Initial ramp-up is generally very low and volatile, or if you can help guide us or educate us over there.
Yeah. It's a good question. Of course, we always try to model these kinds of questions as well in our portfolio. What I can say is one of the molecules, right, that should launch in 2027 is a molecule that requires quite a large volume as well of key starting material for which we have been chosen by the originator. It's very difficult to say when the quantities will be asked to be delivered. Is it still within FY 2027 or at the beginning of FY 2028? It really depends on when the originator will actually see the success of their launch. We modeled this, and we are fairly optimistic, I would say, for the launches coming for the small molecule portfolio that we have.
Thank you. Or at least if you can educate us, that one respiratory approval that has got approved, the respiratory drug, plus the four new molecules that you are referring to, what is the opportunity size, either at the drug level or at our level, whenever it happens? Say what could be the potential peak opportunity that is available? I'm not asking for each of the drugs, but all of them combined, if you can indicate that it would be helpful. It could be year 2030, year 2031, year 2032, depends.
I will not provide numbers here. I mean, we see the pipeline becoming better, right, on that end with more commercial drugs that are part of the pipeline that we are delivering, right? I will not comment on the exact value here because our clients do not know either, right, at the moment.
Okay. Thank you, Aiman.
Thank you. Our next question comes from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Thank you for taking my question. Just one, trying to interpolate your guidance for 2026 versus 2025. INR 2,600 crore last year. They're at INR 1,100 crore now. So we need to probably do about INR 1,400-INR 1,500 crore for the second half. When I look at quarter two exit, it's about INR 550 crore, right? I'm just reading out. Given deferred shipments from one H and project wins, we expect two H to be one H. Is there a way to kind of quantify what the deferred shipment amounts could be that is slipping into two H so that we get some comfort around what is our straight for just the organic part?
Shyam, your voice was a bit muffled. I think I gathered part of the question only. Would it be possible for you to repeat?
Yes.
The second part.
Yeah. I was just saying shipments from one edge into edge two is something that is something that's driving some of the second half growth, right? I am just seeing where the deferred shipments are.
Okay. There are two aspects to the question that you're seeking. Part one is we do have FDF March around, which we had taken down, and it is coming online over a period of time. That's one DEFRI which is here. As Gunjan articulated, we are fully entitled to continue to supply to our customers. That's one part of it. The second part that we also experience is that on one of the commercial molecules of CDMO, I think the innovator suggested that they would want to wait for the summer to get over for us to send the dispatches to them. Those are the two DEFRIs that were being referred to.
Understood. Himanshu, you're not quantifying what those DEFRIs are, right? Just for us to get comfort on the organic part of what we need to grow for the second half.
Yeah. I mean, you have to excuse me for not being able to quantify them all.
Understood. Okay. Thank you. Just the second question is on material margins. Despite all this decline, we have seen material margins actually improve. Gross margins are up 200 to 150 basis points on Q2. Just if you could double-click on what were the drivers. It said product mix, but I thought everything is declining. API probably, sorry, AGCAM has grown. I am just trying to see which part of the product mix was the one that led to the gross margin beat. Thank you.
Shyam, broadly, I mean, if you look at it in our portfolio, and you understand that as well as me, that we do have Nishtec, which is a higher margin business for us. A growth there would certainly help us from that perspective. I think both, I think NJ Bio during the quarter as well as the other Nishtec contributions have assisted in the margins to be better than what we have experienced in the previous year.
Thank you. All the best.
Thank you. Our next question comes from the line of Jash from Dalal & Broacha. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. I just have two questions. The first one is a lot of our competitors have been highlighting that they have been seeing a lot of squeeze on the biotech funding side. And we are highlighting it now. Why is it that we are seeing it right now? I mean, specific reason for that?
This is Yann. Could you please repeat the question? I could not exactly understand it.
Yeah. A lot of our Indian competitors have been highlighting that they have been seeing biotech funding pressures for quite some time now, right? We are highlighting it right now. What is it that has changed for us, I mean, for the NJ Bio business?
Yes. I think this is our understanding of what NJ Bio has experienced. As I said earlier, a large part of NJ Bio's resource is biotech funded. There are others which have been referred to next year by the biotech. Some of the others are large others for phase two. Our understanding of the engagement with the customer has been that there is this reduction in the NIH funding from a U.S. perspective. I think some of those subsidies would have flown into the funding of the business that was being given to us. I think that is one of the reasons. Not the only reason, but one of the reasons that is being considered at this stage on the payments that we are experiencing. This is Yann. I'd like also to add on to what Himanshu is saying.
What we see is a very healthy influx of RFPs showing as well that the mall is improving in that space, and there should be additional spending coming in the upcoming quarters. That is what gives us quite a bit of hope in the business related to biotech for NJ Bio. This will also maybe another element. It is not only the biotech funding here. We have also coming next year our new bioconjugation suite that will allow us as well to have a significant revenue stream from customers moving to phase one, phase two with bioconjugation. That is what I would like to highlight.
Okay. Okay. Thank you.
Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Ms. Cyndrella Carvalho for closing comments.
Thank you, Sagar, and thank you, everyone, for joining us today.
Thank you.
Thank you, guys.
Thank you.
Thank you.
Thank you. On behalf of Cohance Lifesciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.