Ladies and gentlemen, good day and welcome to the Indoco Remedies Q1 FY 2026 earnings conference call hosted by Dolat Capital Markets Private Limited . As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference has been recorded. I now hand the conference over to Ms. Rashmi Shetty. Thank you, and over to you, ma'am.
Thank you, Anushka, and good afternoon, everyone. I'm Rashmi Shetty on behalf of Dolat Capital. Welcome you to the Q1 FY 2026 earnings call of Indoco Remedies. We thank the Indoco Remedies management for giving us this opportunity to host the call. Today, we have with us the senior management of the company, represented by Ms. Aditi Panandikar, MD, Sundeep Bambolkar, Joint MD, and Mr. Pramod Ghorpade, CFO. I will now hand over the call to the management for the opening remarks. Over to you, sir.
Thank you, Rashmi. Good afternoon, everyone. Thank you for joining this call today. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are projections or estimates about our future events. These estimates reflect the management's current expectation of the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Indoco does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new confirmation, future events, or otherwise. Thank you. I'll hand over the mic to our Managing Director, Ms. Aditi Panandikar, for her opening comments. Thank you.
Good afternoon and thank you very much for logging into this call for a discussion on the results of Q1 2026. As you will all recall, our company, Indoco, went through several challenges last year, and consequently, results of the second half, and in particular of Q4 2025, were severely impacted. Coming out of such a period is not easy, but I'm happy to share that while it is a steep road to recovery, there has been marginal improvement on many fronts. This is reflected in the results of first quarter 2026, wherein, despite a negative impact of mark-to-market on the numbers, we have yet shown improvement in EBITDA, both for standalone as well as consolidated for the company. I'm happy to share that the OTC business has shown great improvement, and we have seen a growth of more than 46% over the immediate preceding quarter this year.
In addition to that, our master manufacturing program, which was almost near completion, has seen a Phase 1 rollout in the first quarter this year, and this is seen in the increase of more than 26% in international business, solid oral exports, which we have seen in this quarter. On point number three, which is the warning letter by U.S. FDA on Goa Plant II, efforts to complete remediation and get the FDA to inspect Goa Plant II continue. Meanwhile, U.S. FDA has allowed manufacturing to start from two out of four lines in the plant. Also, as of last evening, we heard the happy news that European authorities have approved the plant for sterile product supply to Europe. This speaks well of all the efforts we have taken at the plant for remediation and to meet with the global standards of manufacturing. I will now hand the call over to Mr. Sundeep to take you through the financials of the first quarter.
Thank you, Aditi. Good afternoon, everyone. Let me first begin with the business highlights. Standalone net revenues of the company for the first quarter FY 2026 are at INR 3,838 million compared to INR 3,942 million for the same quarter last year and INR 3,411 million for the immediately preceding quarter, showing a 12.5% growth on Q4 FY 2025. Consolidated net revenues of the company for the first quarter FY 2026 are at INR 4,291 million compared to INR 4,243 million for the same quarter last year and INR 3,839 million for the immediately preceding quarter. Standalone EBITDA to net sales for the quarter is 3.9% compared to 13.1% for the same quarter last year, and for the immediately preceding quarter, we were at 1%. Consolidated EBITDA to net sales for the quarter is 4.1% compared to 11.3% last year, and for the preceding quarter, we were negative.
Domestic formulation business revenues from domestic formulation business for the quarter are at INR 2,028 million compared to INR 2,002 million for the same quarter last year. Major therapeutic segments like Gastrointestinal, Anti-Infectives, Stomatology, and Respiratory performed well during the quarter as compared to last year. On the international business front, revenues from international formulation business are at INR 1,393 compared to INR 1,571 for the same quarter last year. Revenues from reg markets for the quarter are at INR 950 million against INR 1,273 million. Revenues from U.S. business are at INR 283 million against INR 487 million. For Europe, for the quarter, we are at INR 635 million against INR 754 million, and for South Africa, Australia, and New Zealand at INR 32 million compared to the same figure last year. Revenues from emerging markets are at INR 443 million against INR 298 million, and for the API business, we are at INR 366 million against INR 312 million.
Revenues from AnaCipher CRO and Indoco Analytical Solutions are at INR 50 million against INR 57 million. That's all about the business highlights for the quarter, and I now request the participants to put forth their questions. Thank you.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Nirmam from Unique PMS. Please proceed.
Yeah, hi. Thank you for the opportunity, and congratulations for the GMP certificate from the European authorities. So my question is, so for the plant and the warning letter, is the remediation complete with, I mean, what the U.S. FDA expects? And if so, when can we invite the FDA to come and audit the plant?
So I said this in the earlier call also. Our remediation efforts are on. They're almost near completion. We expect to finish most of it by August this year, which is coming month. Some of the updates will continue to go to FDA until December this year. But they keep getting updates from us, and when are we ready to? I think we will be from September, anytime we should be able to reach out to FDA to ask them to come and audit us.
Okay, and ma'am, so given this approval from the European authorities, do we have approvals in Europe to sell our sterile products in Europe?
Just for a couple of products, but important products, which is why it was triggered. But that now opens up other opportunities.
We will be filing more products for the European markets as well?
Yeah, wherever the opportunity looks good.
Okay. And on the master manufacturing plan, ma'am, so you said we've rolled out Phase 1. So is there anything more that is left? And secondly, in the rollout that has happened, so how has been the efficiency versus our expectations?
Yeah, so when I said Phase 1, that's why I called it Phase 1, not that the plants have not completely started, but out of the four plants we had talked about last time, three are now completely on, but as part of Phase 1, the manufacturing has begun. For us to get complete efficiency, the balancing of products, the availability of the right number of orders, because with the kind of disturbance we had last year, it's going to take us some time to put that in place. Efficiencies will be seen when the plant capacity is really occupied fully, which is why I said in Phase 2, we should be able to see the outcomes.
When do we expect?
Yeah, sorry?
No, no. When do we expect this whole rollout to get over?
So by end of Q2 now, so come Q3, from day one, we should have all plants up and going.
Okay. That's helpful. And last, on the domestic market, so the growth has not been, I mean, formulation side INR 200 crores, I think we did that last year. We did that this year. So how do you see this market panning out for this year?
Yeah. So again, if you look at domestic IRL alone, yes, it is flat. But with the Warren OTC in toto, the company has shown a growth on YoY basis about 5% and on QoQ basis around 13%, 14%. But first quarter for most companies is challenging because it comes after the March, which is typically a big billing month for most people who have to finish their targets. So the way to look at India business performance would be to look at our performance possibly as shown in IQVIA, which is absolute third party. So if you look at the IQVIA analysis of first quarter performance, then for the industry, Q1, there has been for the covered market, there has been a growth of 8%, and for Indoco Remedies, the growth is 10%.
So when it comes to absolute secondaries, as we call them, that is the primary impact sometimes sways between Q4 and Q1. But at secondary level, there is a good 10% growth in the performance of products. And almost all top four segments, Anti-infectives, Respiratory, GI, as well as Stomatological, are in very heavy double-digit growth.
Okay, ma'am. And lastly, on the interest cost, so we saw a substantial increase in the interest cost. So if you could give the net debt number right now, and how do you see the debt reducing over the next, say, one to two years?
Yes. So just in a note, our debt level at this point of time, that is on 30th June, is overall at consolidation level. Short term and long term put together is INR 951 crore, which is reduced by about INR 21 crore as compared to March 2025. So we have repaid certain loan as per the repayment schedule. As regards to finance cost, it includes certain FX loss on account of mark to market. That includes close to about INR 5 crore and up to INR 6 crore. If I remove that, then you can see the comparison of finance cost. But definitely, it is increased slightly on account of overall exposure to the long term and the short-term borrowings, what we have at this point of time.
Okay. Yeah. Okay.
The second part of the question, we expect another loan repayment in the coming period, in nine months, about INR 68 crore repayment, which is planned for remaining nine months.
Okay. Yeah. Okay. Yeah. Thank you. That's it from my side.
Thank you. The next question is from the line of Kenil Mehta from Boring AMC. Please proceed.
Yes. I would like to know, are we going to further increase capital in Warren Remedies because it has a INR 52 crore negative net worth? So try and run the balance sheet.
What is your question? Can you repeat?
Are we going to increase capital in Warren Remedies as it has a negative net worth of INR 52 crores to strengthen its balance sheet in coming?
Yes. Yes. Yes.
three quarters?
Yes. Yes.
Also in our U.S. subsidiaries, which has a negative net worth, FPP Holdings?
No. In FPP, that's not required.
Okay, so you are expecting it will become profitable?
Yes. Yes. Yes. Yes. FPP's performance is in a manner linked to our U.S. performance. So when we improve here, they will also.
Understood. Understood. And I would like to know, what is the OTC revenue for this quarter?
I think close to.
For the quarter, it's INR 31.6 crore, overall.
Yeah. OTC revenue first quarter was INR 31.6 crores. Yeah.
Understood. Thanks a lot. No questions.
Thank you. Before we proceed with the next question, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Sudarshan Padmanabhan from ASK Wealth ND PMS. Please proceed.
Yeah. Thank you for taking my question. And congrats on getting the GMP for European markets. Yeah. My question is on the European markets. Now that the positive development that's happened here, and if you look at our changes about INR 65 crores , where is this kind of open opportunity for you to scale up in the coming three quarters? And do you have any such numbers that you can share?
I can't hear you very clearly, but I think I got the gist of your question. You want to know about the prospects for Europe going forward, right? So.
Yes. Yes.
Yeah. So Europe this quarter, we have done INR 63.5 crore. And this is despite some challenges continuing in this quarter also of supply to Europe, which is the factor I said by end of Q2 we will be able to overcome. So by Q3, you will see Europe bounce back to its regular levels of supply. If your question is regarding the sterile approval for Europe out of plant two, as you know, Europe is a continent of many countries. And although Ophthalmics and Injectables have got good prospects in Europe, they kind of are divided into several countries. We are looking at those products which have substantial potential and volume, and we look to start supply to Europe from this unit. And at this point, I would reserve giving any numbers.
Sure. And I mean, with respect to the semi-regulated market, we've seen a good growth this time. I mean, what was driving the kind of growth this quarter? And should we expect similar kind of run rate to continue?
Yeah, so as you know, our model in the semi-reg market is very much like the India model where we build brands, and there has been good growth in demand for our products on the ground. Therefore, we are seeing this kind of growth in semi-reg markets. The growth is uniformly seen in various territories across French West Africa, rest of Africa, LATAM, and other Asia as well. Since there is good concentration now on brand building, as well as there has been a good amount of revamp with the sales structure and the people who are responsible on the ground in French West Africa, both of these combined with a good strategic impetus from corporate office has resulted in this kind of growth. Going forward, we are pretty confident that we should be able to sustain this.
And on the West market, I mean, any view on brinzolamide and Combigan launch? How do we see this business moving up? And also in terms of remediation cost, how much was there in this quarter? And how do we see the cost coming down?
So when it comes to Plant 2, if you heard my earlier response, we hope the authorities come down before December and help us lift the Warning Letter. Some of these products, especially brinzolamide etc., they are very complex suspension products. And as of now, it will be some time before we'll be able to supply those from the unit. Quite honestly, it's better to look at probably Q4 this year as a time for when we can start evaluating the Ophthal business to the U.S. and its performance.
On the remediation cost?
Remediation continues. We continue to spend close to around INR 4 crores per quarter.
Yeah. Sure. And if we've seen an improvement in the cost QoQ basis , and if I'm probably fast-forwarding it, say, for the next four quarters or even further than that, our business is clearly an operating leverage business where we have a high gross margin, but it is basically the higher cost that is impacting us. So from what you've done in this quarter, can you give us some fair color on where we see by the end of the fourth quarter when things kind of get back to normal and probably more towards FY 2027 exit? I mean, is it something that we should be at least hitting double digit by the end of the year in terms of run rate and probably get back to somewhere closer to what we were in FY 2026?
Actually, it would be very tough at this stage to give any numbers, to be honest. But as you have seen, there is good cost containment or at least the beginning of cost containment. We have a lot of efforts going on across the organization, across all manufacturing sites, as well as sales functions to control any unnecessary other expenses. Good control is beginning to come in on CapEx and other spend while we work on the efficiency at the plants. So our EBITDA was very severely impacted. And as you know, previous year, we were running at around 11%-13% EBITDA. So I think our first intent would be to get back to those levels. And I would wait for another quarter to give you some kind of a future path. But that said, I can give you one commitment.
You will see quarter-on-quarter improvement from here on.
Sure. One final question before I run back to you. It's on the domestic side. I believe probably Warren we have done about 5%. Can you give some color? Because if I look at the growth optically, it looks lower than the overall IPM, while I think the products that you are into might be different, so in terms of more from market share, in terms of more from prescription, I mean, how are we trending? Are we taking the market share? Are we kind of maintaining it, and how do we see the efforts panning out in terms of bringing growth back into control?
Yeah. So as you know, we have a larger share of acute segment in our portfolio. We also have close to 30%-35% coming from seasonal products. And if you actually look at the performance of domestic for this quarter, it was ridden by one singular factor. Probably it's a climate change impact directly seen on a seasonal product portfolio. But our main division, pharma, and I used to say this that it has a hero for each season. And this is the first time we saw both Cital and Cyclopam impacted together in one quarter at a primary level. But I must hastily tell you that if you look at our performance as per IQVIA, which is more indication of secondary, then Cyclopam in the quarter has grown by 11.4%. Cital is flat. It's flat. The category for Cital is also flat.
The category for Cyclopam is that market is growing at lower than 6%. We are growing at 11%. So we have done, yeah, and as you rightly said, some of our products are in categories which show this kind of a seasonal thing. But this year, summer was very muted because of the early onset of rain. In addition to that, a heavier push by some of the divisions in March probably must have impacted primary performance. But at secondary level, we are fine. Prescriptions also for eight of the nine top brands of the company are in double-digit growth. So I'm not really concerned about the hygiene of the branded business. Also, new products continue to do well, and they are at close to 4.5% of top line. This quarter also, we have launched several new products. I think we have given you some indication in the MDA. Yeah.
Thanks a lot, ma'am.
Thank you. A reminder to the participants, please press star and one in order to ask a question. The next question is from the line of Rehan Saiyyed from Trinetra Asset Management. Please proceed.
Good afternoon, team, and thank you for giving me the opportunity. Ma'am, my first question is toward the MR productivity in India, so what is the current figure for MR productivity? Am I audible? Hello. Hello. Hello.
Yeah. Yeah. Yeah. Yeah. Now it's better. Yes.
Can I continue with my question?
Yeah.
Yeah. Okay. So what is the current field force for MR productivity in Indian business? Have you taken any strategic decision to rationalize division or therapy focus in light of profitability pressures? Just throw some light on this right now.
Okay, so our average per man return is in the range of 3 +. Our larger acute divisions average out at 3.5- 4, but we have several small divisions where the therapy is also niche, like Ophthal, which is sub 2, and some of the newer, some of the ethical dental divisions because of the portfolio, which has shifted to OTC, and while they build again a new portfolio, so this is an impact of that, but I'm confident by end of this year, we should be able to add at least INR 25,000 per man by way of incremental PHY, and regarding resizing and restructuring, we are always looking out for that. Currently, the effort is to move the very low PHY headcount to a reasonable level of at least 2, which should help us take the average much higher.
Okay. Okay. And my next question is around the R&D expense. R&D expense came in at INR 21.6 crores this quarter. Can you provide more insights on pipeline progress, number of filing expected in FY 2026, or any differentiated or complex generic things worked on in the company for going forward?
We expect to file four to five products this year. Regarding the increased R&D expenditures, this is typically because in the first quarter of the year, you see a lot of expense on R&Ds, purchasing innovator samples, etc. A lot of extra expenditure happens. That is why it is reflected like that. By and large, we keep it at 5%. I think we should be able to maintain that 5%-5.5%.
And last one, the CapEx. Can you please provide a CapEx in Q1 of FY 2026 and guidance for the full year? Will this primarily be for maintenance or any expansion of formulation with API and effective capacity? Are we going forward?
So as we have said earlier also, we are now very much controlling the CapEx going forward. Currently, there are some projects which are underway at Goa Plant II , as well as at the API site for Warren Remedies. Those are the only ones which will be gradually completed. That too not entirely this year. So I'm not expecting anything more than around INR 50 Cr incrementally to be put in CapEx this year.
Okay. Okay. Okay, ma'am. Thank you. Thank you so much. Thank you.
Yeah.
Thank you. The next question is from the line of V.P. Rajesh from Banyan Capital Advisors. Please proceed.
Hi. Thanks for the opportunity. Just my first question was if you can comment on the debt we had outstanding at the end of the quarter?
Yeah. So the total debt outstanding is around INR 950 crores.
So as you mentioned earlier, overall debt level and consolidation level, short term is INR 350 crore and long term is INR 600 crore. Both put together INR 950 crore as of 30th June 2025.
Okay. How much do you think you will pay down this year?
In remaining nine months, we have already paid about INR 21 crore in first quarter. In remaining nine months, we'll be repaying about INR 68 crore as per our current plan.
Okay. And my other question was on the other income line. So while it has come down quarter over quarter, but if you look at, compared to last year, it is still significantly higher. So obviously, it has one-time cost regarding remediation and perhaps other related expenses. So what is sort of the sustainable business-related other expenses? If you can just give a sense of that, that would be helpful.
Remediation cost is nothing to do with other income as such.
Are you talking about other expenses?
Expenses or income? Other expenses?
So the couple of headers in other expenses we are watching very carefully, which have grown historically for us, are like your advertising sales, promotion, naturally as the business has expanded. Lab, stores and spares, travel, those are the ones we are checking. Power and fuel, of course. Although a lot has been done by the company towards getting solar, etc., which is going to help us going forward. So we are watching these very closely. And many of these other expenses, quite frankly, as the sales increase, you will see that as a percentage of sales, it will come under control. We do not expect with increase in sales, other expenses to increase in the same proportion.
I get that. My simple question was that if you look at Q1 FY 2025 , it was INR 120 crores.
Yeah. Yeah.
Q4, it was INR 161 crores in this quarter to INR 157 crores. What I'm trying to understand is out of INR 157 crores, there will be sort of one-off costs and some costs related to the remediation process. If you take those out, what would be sustainable?
What should be an average level? So we would be comfortable at around INR 120 crore, I feel.
At standalone.
At standalone. Are you asking on consolidated basis?
Yes. I'm looking more at console level. Yes.
Consolidated. Around INR 140 crore should be fine.
Okay. Okay. And my last question is about the marketing expenses incurred on the OTC business. If you can just give some color around that and what are the plans for the rest of the year?
So typically, for the first five years in an OTC business, a good amount of funds had to be deployed towards digital marketing, towards other direct reach to consumers. And the numbers are actually higher. This year also, we have budgeted much higher. Although in the first quarter this year, some of it has not come in, which is why we are seeing slightly better results. We are aware of that. But as I said in the last management call also, we would want to wait for a full couple of years before we see a break-even happen at Warren Remedies. If you want to know exact number, I'm not disclosing that right now.
Okay. But would you say is the business now sort of breaking even, or how far away is it from breaking even at the EBITDA level?
Yeah. So for the first quarter, it has broken even at EBITDA and in fact, done quite well. Yeah. Yeah.
Over 9% of EBITDA.
Yeah. Yeah.
Okay. Wonderful. And lastly, on the U.S. page, given that you have perhaps less visibility of the U.S. FDA section, when do you think it's possible that you will start sort of seeing the light at the end of the tunnel and the revenue start ramping up? Is it Q3 or Q4 or Q1 next year?
In the beginning of the year, we had said Q4, but after, I think May end, when we last spoke with each other after the last management call, that same day, we got a go-ahead from U.S. FDA to restart two lines. So it's been just two months since we got this go-ahead. Activities have ramped up at the site. Sales are yet to happen from the products manufactured. So I would say by Q3, Q3 is a good quarter in which we should be able to see some impact coming in from supply of sterile to U.S.
Right. So that part I understood. My question was, what is the remaining transition we have to come and inspect and then approve it? For that particular line, when is the earliest you see that line coming back into the production?
Like I said, we hope it would happen in this calendar year.
Okay. Okay. That's all I have. Thanks and all the best.
Thank you.
Thank you. The next question is from the line of Keshav Karwa from White Pine Investment Management Private Limited. Please proceed.
Yeah. Hi. So I just had one question. I wanted to know what is the breakup for API revenue, domestic and export API revenue?
Yeah. So although we do record it as domestic and export, largely because of where the product is sold and absorbed, technically, almost all API we sell is used to make formulations which are exported. So there is no real. So when I say domestic, it is to other Indian players who then export the formulations because these are all DMF grades only at the same price as we would give for DMF grade material. But all the same, I can kind of give you a break-up. We have done around INR 16 crore selling API in India and around INR 21 crore selling API outside.
This quarter one. Thank you. Thank you.
Thank you. Ladies and gentlemen, in order to ask a question, please press star and one. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Yeah, so good afternoon, everybody. Thank you for the very interesting questions, and I hope we have tried to resolve your queries to the best of our abilities. Thank you for your confidence in us, and with a promise to deliver better results in the future, I'd like to sign off and wish you all a great week ahead. Thank you.
On behalf of Dolat Capital Markets Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.
Thank you.