Ladies and gentlemen, good day and welcome to Ipca Labs Q2 FY 2027 earnings conference call hosted by DAM Capital Advisors 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and a very warm welcome to Ipca Labs Q2 FY 2027 earnings call hosted by DAM Capital Advisors Limited. On the call today, we have representing Ipca Labs management, Mr. A.K. Jain, Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I will hand over the call to Mr. Jain to make the opening comments, and we will open the floor for questions. Please go ahead, sir.
Thanks, Nitin and DAM Capital for organizing this call. Today's earnings call and discussions and answer given may include some forward-looking statement based on our current business expectation. This must be viewed in conjunction with the risk that pharmaceutical business face. Our actual future financial performance may differ from what is projected and perceived. You may take your own judgment based on information given during the call. Our domestic formulation business for Q2 FY 2027 has delivered growth of around 14%, and it has reached to around INR 1,157 crore as against INR 1,019 crore in Q2 FY 2026. MAT September 2026, Ipca's rank remained 16 as per IQVIA. Our market share has improved to around 2.11% as against 2.09% in September '25. Top six brand of Ipca featuring among the top 300 brand of the industry.
Out of the top six brands, Zerodol SP is the top brand of the company, and it has improved it's rank to eighth rank as against 11th in the Q2 FY 2026. Zerodol as a umbrella brand has crossed INR 1,500 crore sales as per IQVIA in September 2026. It has become the fourth-largest brand in IPM. As per IQVIA, on chronic segment, MAT September 2026, Ipca has achieved a growth of around 20% as against IPM growth of around 17%. As per IQVIA, the acute segment, Ipca has achieved a growth of around 11%. We are at par with the overall market growth in the acute segment, largely because our some of the portfolio like antimalarials and antibacterials are Antimalarials are declining, antibacterials is having very marginal growth, and even cough and cold is having very low growth.
On export formulation business, on standalone basis, Ipca has grown by 32% in Q2 FY 2027 to around INR 653 crore as against INR 493 crore in Q2 FY 2026. Our promotional branded business in ROW markets has delivered growth of 19% for Q2 FY 2027 to around INR 172 crore against INR 145 crore in Q2 FY 2026. Generic market excluding tender has delivered around 36% growth in Q2 FY 2027 to around INR 364 crore as against INR 268 crore in Q2 FY 2026. Institutional generic business has delivered growth of around 45% for the quarter, and API has delivered a growth of around 6% for the quarter. Our consolidated Q2 FY 2026 business has grown by around 14% to around INR 2,910 crore as against INR 2,557 crore. For Q2 FY 2027, we continue to see significant price increase on inputs, logistic cost, shipping cost, and even fuel and your energy cost.
In spite of all these factors, overall consolidated EBITDA margins has improved to around 22.97% in Q2 FY 2027 as against 21.68% in Q2 FY 2026. Standalone EBITDA margin of Ipca has improved to 26.61% in Q2 FY 2027 as against 25.46% in Q2 FY 2026. Having given the broad numbers, now I will request participants to ask questions if any.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may please 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. The first question is from the line of Saion Mukherjee from Nomura. Please proceed with your question.
Yeah, hi, good evening. Mr. Jain, wanted to check on Zerodol franchise. What's the kind of growth you are seeing, and if you can split between volume and price increase in this? And what's the headroom to grow this franchise? What would be the key drivers and any competitive pressures that you might be seeing in the market?
Overall, for let's say April to September, if you look at our pain segment has grown by around 14% from 1,000 internal numbers, from INR 1,065 crore to around INR 1,216 crore. So we have this continuously growing at 14% for the first half of the current year. In fact, in the second quarter of this quarter of the current financial year, on pain segment, we have grown by around 16%. The overall pain segment has delivered a number of around INR 628 crore from INR 543 crore. So we have recorded almost around 16% growth. O n continuous basis, both our portfolio of rheumatoid arthritis and osteoarthritis, which includes Zerodol and all rheumatoid arthritis products, they are continuously performing and continuously growing in the range of around 14%-15% kind of range. We have absolutely no concern on that.
In fact, from current 1,500 growth of umbrella brand, we are looking similar kind of growth to continue for next three, four years. Yeah.
And sir, how much of the growth of say 14%-15% would be volume-led?
Volume-led growth may be almost around 8%-9%, and price growth may be around 4%-4.5%. Yeah.
Do you expect the volume growth momentum to sustain?
Yeah.
Okay. Sir, one other question was on growth and margin guidance, if you can reiterate the numbers, any fresh look you have for FY 2027? How should we think about-
Whatever guidelines we have given earlier, that will stand. In earlier quarters, we have given guidance that overall growth guidelines was almost around 12%-13%, which was revised to 14%-16%, so that would remain. Consolidated EBITDA margin guidance was from 22%-23%, that will also stand.
Sir, what is your expectation—
We are not revising the guidance.
Sir, can you—
We are not revising the guidelines.
Okay. Yeah, and also, what is the medium-term EBITDA expectation, let's say over the next two, three years? Where do you see EBITDA margin consolidated setting?
Every year we should be improving by almost around 1%-1.25% of EBITDA on consolidated basis. Ipca EBITDA will go by almost around 1.5% standalone EBITDA.
Understood. Okay, thank you.
Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions, may please press star and one at this time. The next question is from the line of Shashank Krishnakumar from Emkay Global. Please proceed with your question.
Hi, thanks for taking my question. This quarter for Unichem QOQ, we saw sharp gross margin uptick. If you could just share what drove that and whether this is a figure that we can work with going forward as well. Also for Unichem, are we sticking with their earlier guidance of 10% top-line growth and around 13% margins?
Unichem has delivered almost around 11.3% kind of EBITDA margin in current quarter. I think overall, because of freight increase, the freight was significantly increased in this particular quarter. Freight numbers has almost around INR 30 crore extra has gone in this quarter. If you look at the other expenditure of Unichem, that has moved from INR 142 crore to INR 189 crore. So there is an increase of almost around INR 47 crore in other expenses. Out of which almost INR 31.2 crore is only increase in the freight expenses. It is all because of significant increase in overall freight cost and also overall little increase, your air shipment has also gone up because of overall the time the shipping lines are taking to deliver the goods and all that. So some of the consignments was to be sent by air and all.
Air percentage of overall has gone up almost in this quarter to around from 5%, 6% to around 25%. So that has taken almost around INR 30 crore out of this freight expenses. Out of EBITDA, that has gone, and that has resulted in little lower EBITDA margin. Otherwise, the European business has done well. The Brazil, till now, they were incurring losses for first two quarter of the current financial year. That has started delivering now the profits. So in time to come, Brazil business will also move up. So, if situation normalizes, the margins can move up. But if your freight and all these costs, energy costs, and remain high, maybe it may remain between 11%-13% kind of thing, EBITDA margin.
Got it. The GM that we saw this quarter is sustainable, right? Close to 48%.
It may be 1% or 2% here and there vary because input costs are fluctuating too much. Yeah.
Got it. Sir, if you could also call out the U.S. portfolio growth, both for Ipca, which is getting booked in Unichem, and the Unichem portfolio this quarter.
Overall, let's say U.S., in dollar terms, if you look at, overall portfolio growth is almost around 9%, and Ipca's portfolio is, let's say, value growth is almost around 74% in dollar terms. So, I think Ipca portfolio is, I think for the quarter, has given almost around $5.8 million of sale. And Unichem's portfolio is almost around, has become $38.5 million for the quarter.
Got it, sir. Thank you. That's helpful. All the best.
Yes.
Thank you, sir. The next question is from the line of Rashmmi Shetty from Dolat Capital. Please proceed with your question.
Yeah, thanks for the opportunity. Sir, on the institutional business, you earlier guided INR 300 crore for this year, and we have already done INR 236 crore in first year. You feel that it will be lumpy and in second half sales will be pretty low, or you are upgrading the guidance for that?
Institutional business, normally we don't give any kind of, let's say, very aggressive guidelines because of, by nature of this business itself, we wish to be very conservative. This year, because of, let's say, when guidelines was given, I think overall, I think in first quarter, significant amount of shipment which was to go in last financial year, because of non-availability of ships and other things, those businesses got shifted in the first quarter of the current year. That shipment was almost around INR 25 crore. But in second quarter also, we have grown good in this financial year. And trend would continue, but we don't expect this kind of growth.
Okay. As of now, we should maintain that INR 300 crore number for the full year?
It will certainly exceed because, say, this INR 25 crore was never taken into account in guideline. So maybe it may become INR 325, INR 330, INR 340. But overall, we don't expect this business to grow significant. It may come down also next year, here and there. Yeah.
Got it. Got it, sir. On the branded business front, we still maintain that 15% growth. In generics and branded business, we should expect a little soft quarter in H2, right? To achieve the guidance?
No, business is going good on generics. We are delivering good growth overall. Branded business, let's say overall in the first half of the current year has given growth of almost around 22%, except one particular geography where West Asia shipment not happening in time has given some kind of decline in that business, a little bit by 3%. But overall, all other market has grown very well, in fact. So, we maintain our guidelines of 15%-16% growth overall in India.
Okay. On the bookkeeping question, on the interest cost part, you all have repaid some debt, right, on the long-term borrowings, and the interest cost was still high in Q2. If you can explain related to that, and how should we see the run rate in Q3 and Q4?
Our interest cost in the Q2 has also come down. It's not gone up. Because last year, we have paid our entire foreign currency debt, which was outstanding in books, because we were carrying the cash in books. So, before this, around the time when the rupee depreciation started, we thought it prudent that let us pay all dollar loans in books. So right now, we have only very small borrowing of around INR 155 crore or so on rupee term loan, which probably at the year end will close by around INR 70 crore-INR 75 crore. I think that's the balance going to remain at this. So, and practically, we are debt-free company because we are carrying almost around INR 700 crore cash in books, and debts are hardly any.
That debt also we are not paying because that debt is contracted at very low rate compared to the current market rate of what we are relying on deploying money in mutual funds and all. We are not prepaying that debt.
Correct. I understood. What I meant was that this INR 12 crore run rate, which we have done in last two quarters, this number should decline in H2, right? Because of the debt.
Yeah, it will decline. Yeah.
Okay. Thank you, sir. That is it from my side.
Thank you, ma'am. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Nitin Agarwal from DAM Capital Advisors. Please proceed with your question.
Thanks, sir. Just a couple of questions from my side. If you can give us a little more color on how the U.K., Europe, and the Australia business have performed this quarter in the first half?
Yeah, I'll give the numbers. Yeah. Overall, generics-wise, if you look at in Q2, European business has grown by around 23%. Australia, New Zealand has grown by around 24%. U.S. has grown by 31%. Canada has grown by 45%. South African business has grown by 46%. Overall, most businesses in generics has done well. Yeah.
And sir, U.K., we had some issues here every now and then. So those businesses now stabilized for the U.K.?
U.K., as my portfolio is growing, last financial year, we were facing a lot of problem because of, let's say, our earlier kind of portfolio was just very old products, maybe genericized 15, 20 years old, and those products were selling below cost in the market. Last year in Europe, in U.K., U.K. portfolio, we have suffered in the overall, I think, in whole of the year, maybe around 2.5 million kind of loss in U.K. But because of that kind of scenario, there are lots of disturbance in U.K. market today. Lot of products are going in short supplies and all. Prices are returning back because situation of selling product at lower price cannot continue for long. That has changed, and the UK subsidiary has also delivered profit in this year. U.K. overall business is moving up now.
Sir, on our subsidiaries, you can give us an update on how the various subsidiaries done?
Let's say, except one subsidiary, which is Pisgah, all subsidiaries have done well. They are all in profit here. Pisgah will still take some little more time because there are good order positions on their API side. Maybe I think by next financial year, the things will start improving there.
Okay. Thank you, sir.
Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. As there are no further questions from the participants, I now hand the conference over to management for closing comments. Thank you, and over to you, sir.
Yeah, thank you, madam. Having answered all the questions, I think we can close this con call. Thank you everyone for participating in this con call. Thank you.
Thank you, sir. On behalf of DAM Capital Advisors Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.