Ladies and gentlemen, good day, and welcome to the Laurus Labs Q4 FY 2026 earnings conference call hosted by DAM Capital Advisors. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Payal Shah from DAM Capital Advisors. Thank you, and over to you, ma'am.
Thank you. Good afternoon, everyone, and a very warm welcome to Laurus Labs Q4 FY 2026 earnings call hosted by DAM Capital Advisors. On the call today, we have representing Laurus Labs management Dr. Satyanarayana Chava, Founder and CEO, Mr. V.V. Ravi Kumar, Executive Director and CFO, Mr. Krishna Chaitanya Chava, ED Head CDMO, Mrs. Soumya Chava, ED Generics and Commercial, and Mr. Vivek Kumar, AVP Investor Relations. Before we proceed, I would like to remind you that some of the statements made during the call today could be forward-looking in nature and a safe harbor statement to this effect has been included in the press release that has been shared on the company's website. I hand over the call to Dr. Chava to make the opening comments, and then we'll open the floor for questions. Please go ahead, sir.
Good afternoon to all our stakeholders. Our company's purpose of chemistry for better living guides us everything what we do. In 2026, we significantly accelerated our performance reflecting sustained demand in technology-driven commercial offerings. The transformation of our portfolio is well underway. The momentum is building as we continue to execute on our strategy with a clear focus. In 2026, our business benefited from successful clinical and commercial supplies for complex NCE compounds, ramp-up of supplies of the few new launches and sustained global leadership in antiretroviral therapy, where we continue to service one-third of the global HIV population. We continue to advance our well-recognized development and manufacturing platform capabilities with global customers. I'm confident in our ability that this will further expand business opportunities in coming years.
The company has exceeded 8,200 cu m of reactor volume for small molecule API and intermediate manufacturing in FY 2026. As we progress, we are making significant investment behind important technologies, high growth modalities, large scale manufacturing infrastructure to support our clients' needs. Currently, we are managing several CapEx growth projects which will be executed in the next two years. 90% of project spend is towards mid and large scale manufacturing units. I will just make a few areas where we are investing. We're creating a large manufacturing greenfield project in unit 7, the first production block will be ready for commercial validation by March 2027. Four additional manufacturing during the next financial year, FY 2028, with a combined reactor volume of over 2,000 cu m .
Commercial scale captured manufacturing block will be ready for commercial scale validation during Q2 of this financial year, FY 2027. Animal Health additional capacities at unit 10, which is addition to LSPL unit 2. A fermentation greenfield site for our Laurus Bio. Phase I will start by end of 2026. We are also spending on formulation facility under our KRKA joint venture in Aldermaston, and we expect phase I will be completed by mid-2027. Moving on to our financial results. Laurus maintained its robust business momentum and delivered robust operational and financial performance for the financial year 2026. The company's revenues were INR 6,813 crore with a growth of 23% over previous year. This was mainly driven by significant growth in CDMO business, supported by affordable medicine portfolio, which is generics.
Gross margins were healthy and maintained around 50%-60% range. EBITDA margins expanded by 6.7 percentage points to 26.8%. Our product mix within business division and operating leverage have continued to do well, supporting our healthy margins overall. When we look back at our last six years, Laurus has delivered on successful transformation across both business and product portfolio. Today, our share of CDMO business has increased from 13% 6 years back to over 30% right now. The contribution from ARV revenues come down from 67% to 41% in the current financial year, while sustaining absolute sales and global leadership in HIV therapy. We're deepening our CMO partnership based on consistent supply track record of large volume API and FDF. I would request Mr. Chaitanya to share key updates on our CDMO business.
Thank you. The CDMO business delivered robust operational execution for the full year, clocking at a little over INR 2,000 crores at INR 2,080 crores. For the small molecule CDMO, we have clocked a growth of about 38%, with the sales for the full year at INR 1,896 crores. The growth essentially came from late-stage pipeline programs, commercial NCE API supplies to several global partners and also ramp-up of the growth projects. For the small molecule side at Q4, our sales stood at about INR 524 crores. Majority of the business has come from the commercial revenues, which are programs that are very early in their commercial journey.
The underlying demand momentum for complex APIs remains strong, driving increase of outsourcing activities with trusted partners like Laurus, which operates in advanced technology platforms, offering leading solutions in both chemistry and biology with large manufacturing capacities. Our small molecules pipeline continues to expand with focus on high-value programs and projects, and fully integrated programs across technologies such as biocatalysis, flow chemistry, hydrogenations, continuous manufacturing of drug products, high-potency APIs, amongst others. There is continued investment into capacity creation at Vizag, and also we are advancing quite well, as Dr. Chava mentioned, on commercial peptide manufacturing capabilities based on customer demand. Coming to Laurus Bio. The bio division reported a Q4 sales of about INR 65 crore. On a year-on-year basis, that's about 124%, partly due to the lower base that was there last year.
If you look at our full year numbers, sales has increased by about 15%, which is largely along the expectations of the year. The good part is that this growth is supported by customer revenue diversification and also continued pipeline progress on global accounts, both in AOF animal origin-free portfolio and the CDMO. Construction work for the commercial scale fermentation facility in Vizag is progressing well and is along the plan, and we expect the phase one capacity to be operational by the end of 2026. Now I'd like to request, Miss Soumya Chava to share key updates on our affordable medicines portfolio.
Thank you. Revenue from the Affordable Medicines division, formerly Generics, stood at INR 1,223 crores in Q4, with the momentum sustained on an absolute basis, though the growth has been slightly moderated. For the full year, the division delivered INR 4,733 crores in revenue, reflecting a strong 18% growth. FY 2026 growth was driven by higher volumes across ARV and oncology portfolios, along with strong traction from recent launches in developed markets. We maintained a consistent supply track record despite global supply chain challenges. However, increasing geopolitical disruptions may impact raw material availability and logistics, potentially creating a near-term pressure on OTIF performance across the industry. The business outlook remains steady.
We continue to focus on optimized capacity allocation, improved supply efficiency, ramp-up of new product launches, integrated CMO opportunities, and expanding our footprint across developed and emerging markets, particularly in the non-ARV segments. The oral solid facility expansion is progressing well, with formulation capacity increased by 20% in FY 2026 to 12 billion units. On the regulatory front, we have filed a cumulative 92 DMFs to date. In developed markets, we filed seven dossiers and received six approvals in FY 2026, taking the total to 94 product filings cumulative. Thank you.
Thanks, Krishna and Soumya, for the overview of Generics and CDMO business segments. On R&D front, overall R&D spending to sales for FY 2026 was at 4.1%, increased by 10% year-on-year, including our expenditure on cell and gene therapy space. The spend is in line, we expect a similar percentage going into the next year as well. We'll continue to invest in portfolio, focusing on product complexity, scale, and sustainable technology platforms. Let me share a brief on our quality and ESG side as well. In 2026, the company underwent close to 132 quality audits by multiple drug regulatory agencies and several customers. Company has successfully passed audit inspections without any critical findings. We remain committed to advancing quality systems, meeting highest compliance standards from clients and global regulators as well.
Besides, we continue to advance on our EHS ESG initiatives, which is getting sustained recognition from global rating agencies. You may refer to our IR presentations for more details. To conclude, our business model has proven as resilient, and we remain well-positioned to execute on our growth strategy ahead. We continue to focus on deepening strategic partnerships on integrated capabilities, strengthening technology platforms and ecosystems, advancing pipeline, as well as focused investment into capacity creation that will sustain our success in the long term. I would like to again recognize the commitment and efforts of our dedicated teams towards strong R&D and operational execution, enabling continuous transformation of our company. Now I request Mr. Ravi Kumar, ED and CFO, to share overall financial highlights.
Thank you, Dr. Satya. A very warm welcome to everyone on quarter four and full year FY 2026 earning call. Let me quickly take over through the highlights. Total income from operations is INR 6,813 crores with a growth of 23%. For the quarter four, we are at INR 1,812 crores with a 5% growth. Despite the ongoing macroeconomic challenges, we have continued to see the high level of demand in our integrated offerings. Gross margin maintained at healthy level of 60.4%, and for quarter four, it is at 61.4%. Mainly due to better product mix and some of the improved process improvement efforts. EBITDA for the year stands at INR 1,826 crores with a 26.8% margin, which is well in line with our broader outlook.
For the Q4, EBITDA reported INR 523 crores with a margin of 28.9% due to strong operating leverage. Profit after tax for the year, INR 1,809 crores with a growth of 148% and Q4 is at INR 279 crores. ROCE is around 17.7%, improved from 9.7% for the previous year. On the CapEx front, Which is a key enabler for Laurus for future growth and also a key focus for the organization now and going forward, we invested close to INR 333 crores for the quarter and INR 1,070 crores for the full year. More than 75% investment, expansion of CDMO and CMO capability, rest in common infrastructure like ETP and maintenance.
Our net debt stood at INR 2,285 crores, due to an EBITDA, debt by EBITDA is 1.25 versus 2.3 last year on the back of strong internal cash flows. Of course, though there is a net increase in the quarter four, still we are at a 1.25 debt to EBITDA level. On the capital allocation front, our strategy remains unchanged, and we will continue to prioritize investment into high-value business segments to drive near and long-term growth and returns for our shareholders. You can refer our IR presentations for more details.
Last, actually, because of this crisis today, we are able to manage our supply chain. We don't have any supply disruptions for this quarter, and we are expecting not to have any disruptions even till the end of June. With this, I would request the moderator to open the lines for Q&A.
Thank you. We will now begin the question- and- answer session. The first question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.
Yeah. Hi, good evening, team, and thanks for taking my questions. Dr. Satya, as we commission and scale the upcoming Vizag 400 KL fermentation, what could be the single biggest source of yield variability from things such as contamination, oxygen transfer, strain stability to even downstream recovery, and how tight do we expect the batch to batch variance when we actually commercialize that 400 KL capacity?
I think the initial batches, what we're going to take up in our expanded fermentation capacity is non-pharmaceutical, non food also. It is mostly industrial chemicals, surfactants, and then polymers. Where the titer is very, very high, and we don't see the biggest challenge in any fermentation, you know, contamination, and we don't have a very long tedious downstream processing for the products what we intend to manufacture in that facility. We don't expect any challenges in downstream manufacturing, Sajal.
Right. Okay. Just a quick follow-up on that one. Clearly we are moving into the world of material sciences and biomaterials. I mean, what does it mean for the steady state economic model for Laurus? I mean, in terms of utilization, yields, pricing structure, and customer concentration. Which of these kind of variables are more sensitive in achieving the aspirational return thresholds?
The products what are moving to Vizag are from our Bengaluru facility. The commercials are achieved, and we made those products in our 45,000 L fermentation fermenters. Then those are moving to 110,000 L fermenters here. We believe that is the optimum size for these products what we are making. This unit will see the early commercial stage production for those products. We have crossed multiple lines of multiple gates, I would say, in the commercialization of those products. The uncertainty of the commercial success for those products is very, very less. We have very good visibility. Once those products are commercialized, we have to move to much bigger facility, and that is not the commercial size for the products what we intend to initially manufacture.
Sure. That's helpful, Dr. Satya. My second question is, beyond the R2 at Bengaluru and this 400 KL at Vizag, looking at the horizon beyond 2030, if I may, is biotech getting the attention it truly deserves? Because that's the sort of coming wave, we may or may not accept it publicly along with the AI, of course. Just to understand the CapEx better, I mean, how much of what we are planning over the next few years, say three to five years is already backed by committed or highly visible demand versus any speculative capacity we may be building ahead of demand.
Our biotech initiatives spread across many things. Biocatalysis, enzyme manufacturing, animal origin-free cell culture ingredients, precision fermentation, cell therapy, gene therapy, fermentation of pharmaceutical intermediates. What we are talking right now in our unit 4 bio expansion at Vizag is only for the non-pharmaceutical one. Where, as you are aware, we are also investing in our gene therapy and ADC manufacturing facility in Hyderabad, and our subsidiary in Bombay, they are also investing further in our cell therapy CAR-T manufacturing. There are multiple fronts going on, Sajal Kapoor.
Sure, sure. Just a quick follow up on that one, Dr. Satya. For the capacities, we commissioned about, let's say, two, three years back, where is the utilization level at the moment on those capacities versus, you know, what you or the team initially expected? Are we broadly in line with the utilization for the capacities that went live about two years, three years back? Or are we below that aspirational threshold or above that threshold?
In R2, our unit 4 into 45,000 L fermenters are fully occupied. That is the reason we quickly expanded capacity in Vizag. We expect this capacity, current capacity, we expect to manufacture 2 products. Once the commercialization happens and the first two commercial production is delivered, we expect to expand there itself to 1,000,000 L. There we have the space. One product is downstream without any chemical operations. The one product we have to do some chemical operations, that also will be done by us. We don't see any capacity unutilization challenges for the plant which will go online by end of this year.
Super, super. Thank you so much. I'll rejoin the queue, Dr. Satya. Thank you.
Thanks.
Thank you. The next question comes from the line of Bharat Siripurapu from Quest for Value Capital. Please go ahead.
Hi, sir. If you see our Indian CDMO landscape, some of the CDMOs are getting impacted due to inventory destocking. This is common scenario because CDMOs are dependent on ordering pattern of innovator. More we are concentrated on few products with the more risk of, you know, destocking. Can you say that do we have enough number of CDMO commercial product to say that we do not have product concentration risk and, you know, we are insulated from this inventory destocking risk?
In the last 18 months, we delivered three APIs for commercial. Those have patent life of several years, so they're very early in their commercial phase. Based on indications from our partners, they gave a very clear forecast for next several years, and we don't see any stocking, destocking challenges for these molecules at this point of time.
Good. We don't have any product concentration risk, like on single product or two, three products contributing more in the CDMO. Basically, that's what you're saying?
No. Yeah. That's what I said.
Thank you. Good. My second question is like, if you see our yearly performance of our results, last year our EBITDA margin was 20%, and this year is around 26%. There is an increase of around 600 basis points. Yeah. Majority of this increase is coming from gross margin improvement because our gross margins have improved from 55% last year to 60%. We did not see the operating leverage playing out significantly yet. Yeah. Is it right to assume that the operating leverage is going to play significantly over the next two years?
We expect so, Bharat. Your point is very valid. Yeah. Operational leverage will come in. We keep on expanding capacities, so we are on the, at the border of leverage or de-leverage. But next year we expect some operational leverage will come. See, as you observed that EBITDA margins are going up. If you even look at the four quarters of the FY 2026, EBITDA margin continuously kept improving. If you look at the Q4, it is almost at the 29% EBITDA margin.
Yeah. Good. Thank you. That's it from my side. Thank you very much. Bye.
Thank you.
Thank you. The next question comes from the line of Chirag Shah from White Pine Investment Management. Please go ahead.
Yeah. Thank you for the opportunity, and congratulations for good results. Sir, I have three questions. Question one on continuing the CDMO side. If you can indicate that when your CDMO transitions to CMO, how does the gross margin and EBITDA margin interplay happen? Because that's question one. Question two, on the ARV business, anything on the pricing that you would like to comment that is which has helped you on margin side or realization side? I'll come to the third question based on your response.
See, I would like to clarify on the two terminology, what we use CDMO and CMO. A CDMO is proprietary brands. One customer, one product, and some development is also included. When we say CMO is a generic fully integrated projects where we make API and formulations to a generic customer. When we are seeing our CDMO revenues, we are not including any CMO revenues coming from generic products.
I was more referring to phase-.
I'm sorry to interrupt. Chirag, you're not audible. Please use your handset on the handset mode.
Hello.
Yes.
Yeah.
Now go ahead, please.
Hello.
Yeah.
Hello.
Now it is visible. Audible.
Yeah. Sir, I was more referring to the development phase. How does the margin trajectory between gross and EBITDA margin play out? If you can educate us on that.
We are not publishing our EBITDA and gross margins segment-wise.
Yeah.
That we don't want to do that. Second maybe on your ARV pricing. ARV pricing, broadly were constant during the financial year. We improved our sales. We used to say 2,500 ±200, but we did 2,800. That was because of a full utilization of our ARV assets. Yeah.
Yeah. Gross margin improvement is on account of raw material price softening and process improvements.
Yeah.
Okay. Sir, would it be fair to make an assumption that when you move from development to commercials, while your gross margin would be lower in commercials, operating leverage will ensure their EBITDA margins are similar to the development phase. Is it a right statement?
I would say whether it is development or commercial, in our opinion, gross margins will remain similar. We make more profit in commercial rather than development because development we employ more people during R&D, tech transfer and all. I would say whether development or commercial, NC programs will have similar gross margins.
Will have similar gross margin. Commercials would have a higher EBITDA margin because of more volumes and operating leverage.
Yes, you are right.
Fair point.
Yeah.
Just to follow up on this, you indicated three projects have moved from development to commercials. How should we look at next two years of CDMO space given the stupendous growth that we have seen? Can we maintain that kind of journey given the pipeline that you have and what are the key monetizable that you would like to highlight from your perspective?
Krishna would like to answer this question.
Yeah. I think while we are not giving any indicative numbers.
Yeah.
We expect post positive growth in the CDMO in the coming years as well.
Mm-hmm. Okay. What I was referring to is it hinging on one or three large projects or it is more even spread, so that concentration risk doesn't play out that significantly? I was more referring to that.
At this point in time, given the visibility that we have, we are not expecting a concentration risk or heavy reliance on one single program. From current standpoint, I think we are fairly well de-risked from a concentration perspective.
Okay. Thank you very much. All the best.
Thank you. The next question comes from the line of Mehul Panjwani from 40 Cents. Please go ahead.
Hello, sir. Thank you so much for the opportunity. Am I audible?
Yes, you're audible.
Yeah.
Okay. Sir, my first question is about CDMO pipeline. Out of the expanding CDMO pipeline, how much is expected to convert into commercial revenues in FY 2027? What is the revenue visibility from late-stage molecules?
That's probably. Yeah, but we're unfortunately not in a position to give you like very specifics in terms of what programs are we working on. With that being said, there's multiple late-stage programs that we are currently involved in. As you're aware, given the clinical nature of the compounds, we can't necessarily accurately put in and say that FY 2027 will be the commercialization of that molecule or not. Yeah, the pipeline is quite, you know, robust and we're confident in continuing to post growing numbers in the CDMO side.
Right. Sir, my second question is about the margins. How sustainable are the current 29% EBITDA margins, and how much is driven by mix versus temporary operating leverage?
We are very confident on maintaining or improving this EBITDA margin in FY 2027. We are comfortable in maintaining that. Yeah.
Sir, my last question, you know, this is just not a very framed question, but kind of, it is going to give us some visibility on the growth trajectory of Laurus in CDMO business. When would be Laurus identified as a CDMO company and not as a, you know, all categories company kind of?
I think you have to say what is the revenue coming from CDMO segment determines how much your exposure is to CDMO business rather than. We are at 1/3 of revenue comes to CDMO business. It is sizable, INR 2,000 crore. There are not many companies with INR 2,000 crore CDMO revenues, which they are well-recognized CDMO partner companies. It is up to see how much reactor capacity, how much R&D capacity, how many programs, what is the size of the program. Earlier people used to ask us how many clinical programs we have. Say, clinical programs may confuse everyone. One program may give $500,000, one program may give $50 million. Giving a number of programs may not give you any perspective.
The question is, is Laurus a strategic partner or tactical partner to customers? We are a strategic partner for many big pharma right now. We have a pro-flow of RFPs, commercial, early stage, mid stage, late stage commercial. We have a robust pipeline, that much we can tell you. It is up to the market to gauge how much revenue and who is doing well in CDMO.
No, right, sir. I obviously am with you in sense that we are bigger than quite a few companies in the CDMO space. When we compare ourselves with ourselves, what would be that year inflection point?
One good thing, we are happy we are doing most of our clinical programs are APIs.
Okay.
Not doing, we're not doing RSMs or early-stage inter. Either we do advanced intermediates or APIs. That way the sustainability of our customers and our offerings is much more longer than offering very early-stage intermediates or KSMs. Yeah.
This was very helpful, sir. Thank you so much, and all the best.
Thank you. Thank you.
The next question comes from the line of Abhijit, an individual investor. Please go ahead.
Hi, am I audible?
Yeah.
Yes.
Abhijit, yeah. You are, yeah.
Yeah. My first question is, what is the asset turnover currently?
Ravi.
Sorry.
Asset turnover ratio.
INR 0.89.
0.9. Yeah.
Point. Yeah.
Point nine.
Considering this, growth for the year, I think overall, CDMO business has grown 20% and it's reached a good base at the moment. What is the trajectory going forward? Can we expect this growth momentum to maintain? Or do you see some sort of lumpiness or not? As another analyst mentioned, there are other CDMO companies which are talking about destocking and couple of variations in funding for alternative medicines from the small, you know. With keeping that in mind, do you see any lumpiness in the earnings?
If you compare year to year, we expect a good growth in CDMO segment. There could be lumpiness quarter on quarter, but we don't expect any challenges for us to record growth in FY 2027.
Okay. I think Mr. Ravi Kumar mentioned that your EBITDA margins have gone up because of operational changes in the input costs and other stuff, softening, right? I have two questions on this regard. Because of the geopolitical situation, et cetera, do you see any challenges in the next few months going forward in the operating, you know, costs to go up because of the raw material prices, et cetera?
In Q4 of FY 2026, some impact was there because of the solvent price increase. We'll see some. I can tell you, our production hasn't been impacted so far. We have enough visibility that in the next three months we don't have any challenges of curtailing our production because of higher prices of solvents or the availability of solvents. There will be some pressure, but as our mix is going, operational mix is going up, more capacity creation, we will able to weather that challenge well. Yeah. Abhijeet.
Okay. With regards to this gross margins going up, your gross margins right now are 61.4%. As and when the CDMO contribution of the business goes up, can we expect this to go substantially higher? I think this is the highest gross margin since the one-off CDMO contract that happened in 2021. Am I correct?
See, we are very comfortable to say we'll maintain gross margin for sure.
Yeah.
Despite of challenges on the solvent price and all, we are confident. Yeah.
Okay, that's good to know. One last question with regards to the peptides opportunity that is available. Are you guys looking at the weight loss sector, or are you looking at overall peptide revolution that is going around? Is it like the breakthrough is near term, or is it like still substantially time away or et cetera? Just an insight, please.
Krishna, you want to answer?
We have a, diving into too much details, we are currently working in several sectors in peptides, including weight loss and a few other sectors. With that being said, there are some medium-term opportunities that we are already collaborating on. Of course, there's several other opportunities that we are also in active discussions with. But, as soon as we have something meaningful coming out of that investment, we will certainly make our partners aware of.
Okay. Thank you so much. Congratulations on the great set of numbers. Thank you.
Thank you. The next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Thanks for the opportunity. Am I audible?
Yes, sir.
Just on firstly this, if you could give the breakup of ARV business into API and formulations, please.
It is two-third, one-third. Two-thirds API, one-third is roughly formulations. We are not giving exact split, but it is broadly that, two-third, one-third. Yeah.
Okay. Effectively, just trying to understand the non-ARV formulation business, has that grown or declined for the quarter?
Actually, non-ARV formulations, is going up. Is going up. Yes. Yes.
The growth number is... Correct me if I'm wrong. INR 683 crores of ARV business for fourth quarter, 2026 effectively. You're saying two-third is formulation, which means INR 450 crores of formulation business. Is that the way to understand?
No, no. Two-thirds is API, one-third is formulations.
Okay.
My answer was for the overall year I mentioned.
Yeah.
It is around that number. It may change one month, one quarter, but broadly, two-thirds of ARV revenue come from API sale and one-third comes from our own formulation sales.
Got it. On the balance sheet side, how much would be the customer advances at the end of FY 2026?
we not disclose specifically, Tushar.
Has that increased compared to last year directionally if you could? The annual report will disclose that number.
On a full year basis, there is an increase.
Okay. Yeah, that's it from my side, sir. Thanks.
Thank you. Thank you.
Thank you. The next question comes from the line of Jeevan Patwa from Sahasrar Capital. Please go ahead.
Thank you, sir. Congratulations first. One question on the CDMO side. Was there any revenue from the Crop Science business in FY 2026?
Krishna?
There has been some, but very marginal, I would say. There has been some.
Yeah.
Okay. Animal Health is still, I would say in a not too meaningful yet in the CDMO side, or is it meaningful now? Basically the context is FY 2027, can we see meaningful contribution from Crop Science and Animal Health both?
In the Animal Health space, within this year as well, we've had some meaningful API shipments that we had undertaken. In FY 2027 also we'll see a good contribution from that space. In the Crop Science segment, I think we need a couple more financial years to really ramp that up. We have a few ongoing projects that are in the registration phase or in the development phase. Yes. Yeah.
Okay. On the electronic side, one customer that we have, so I think, as I understand it's still in the development stage, but they have got the breakthrough, some months back. Any visibility on, you know, the kind of shipment or the delivery from their side? Any contract, have you signed with them?
We are in active discussion with them, but as you've rightly said, it's still under development phase and application phase. It will take a few more quarters for us to see the actual demand outlook from them.
Perfect. On the formulation side, one question on the formulation side. This, the facility, new facility that's coming up and going to commission in June. That's for the new CMO contract, right? That we have. The 3 billion tablet contract.
Yeah, that's, you know, for an existing partner. Most of that capacity came online, and we are using it commercially, that additional capacity. Yeah.
After we have that tertiary packaging capacity will be coming in June, right?
Yeah. Most of the proposed CapEx has been implemented, and then, we started generating a revenue out of it in the back end of the year.
Okay. Basically the majority of the revenue will start from Q1.
Yes.
Okay. Perfect. Thanks a lot.
Thank you. The next question comes from the line of Venkat Velipalli, an individual investor. Please go ahead.
Okay. Thank you. Good evening, sir. My question is related to fermentation capacity. Given that we have acquired Richcore in 2021, why are we not able to, I mean, scale it up to 2 million? If you are able to scale it up to 2 million, what would be the revenue?
Uh-
Hello?
See, we thought we'll expand to 2 million, but we are doing in a phased manner. We have 250,000 L right now. By end of this year, another 400,000 L will come, and that facility can accommodate another 600,000 L. Overall, we're inching towards that number. See, if you look at when we acquired them in 2021, majority stake, their revenues were about INR 50 crores.
Okay.
Yeah. Now they have gone significantly. We are closer INR 185 crore, INR 180 crore revenue, with INR 35-INR 40 crore EBITDA levels now. There's significant improvement happened. Creating capacity, it takes its own time. The R1 to R2, it took one year. R2 to R4, it took two years for us to create that capacity. We are gauging the market dynamics there, and we have interesting projects. I think we'll update you as and when we have a significant information on that.
Okay, sir. Thank you. One more question. It's related to Amplia Therapeutics. I'm not sure if you are aware that they stopped this AMPLICITY project. Are we, like, supplying any API to that project?
Any customer-related topics, we don't necessarily want to comment from our end. Sorry, unfortunately, because of confidentiality terms, we are not able to comment.
Okay, thank you. Thank you, sir. All the best.
Thank you.
The next question comes from the line of Vihan Bagri from Umaio Advisors. Please go ahead.
Yeah. Thank you for the opportunity.
Vihan, I'm sorry to interrupt. You're not quite audible.
Okay. Am I audible now?
Better.
Yeah. I actually had a few questions. The first one being, what will be the CapEx and gross debt outlook for FY 2027 and 2028, as we had indicated earlier, an INR 1,000 crore CapEx? What can be the effective tax rate considered for the year?
Effective tax rate will be around 25%. 25%-26%, depends on the. The standalone is definitely 25%. CapEx guidance is around INR 3,000 crores in two years' time.
Although we said INR 1,000 crore earlier, now depending on the prospects, what we need, capacity and what projects in front of us, we are increasing our CapEx spend there, and we expect to spend around INR 3,000 crores in the next two years.
Okay. Regarding the gross debt outlook for the next two years.
Gross?
The gross debt outlook.
Gross debt, maybe it may slightly go up, in the current year, FY 2027. The debt by EBITDA should come maybe maintain at the similar levels or maybe softening from the current level.
Okay. Thank you so much, sir.
Thank you.
The next question comes from the line of Vivek Agrawal from Citigroup. Please go ahead.
Thanks, sir, for the opportunity. One question on affordable medicines. It's a generic businesses, all put together. This year you have done well with around 18% kind of growth. Just want to understand, what's your outlook, let's say, for FY 2027 and FY 2028? What kind of the growth that you are looking up in this particular segment? Thank you.
For the next year also, we have our order book pretty much in place. We will continue to reflect a strong growth in the next year as well.
Growth in terms of is it possible to say that it can grow in the double-digit as well in the next year or what is like a single-digit growth?
Vivek, you know we don't want to give any quantitative guidance.
Yeah. No problem.
There's definitely growth, but we will not be able to comment on the percentage over here.
Perfect. No problem at all. In CDMO, like, so the pipeline looks, it's shaping up well. Is it possible for you to just help us understand how the pipeline of products which are in the advanced stage and which is in the phase III, et cetera? That is looking like at this point of time. Secondly, in FY 2027, are you expecting any new products that are getting commercialized by your partners? Thank you.
While we are not giving concrete numbers on different phase-wise, split, we have several exciting programs that are late-phase programs. As I mentioned, given the clinical nature of these programs, it's difficult to predict when and how it will be, you know, commercialized. Within the visibility that we have, we expect some of the programs that we're working on to get commercialized and some of the projections that we've had for volumes from our partners have been along those lines. Yeah.
Perfect. Just one last question on the CDMO, right? Out of around INR 1,900 crore kind of revenue. Are you comfortable sharing the share of revenue that is coming from the projects, which are still in the development, or the share of revenue that is coming from the products, which are commercialized by your customers?
We are not disclosing, Vivek, on that.
No problem. Thank you. Thanks so much.
Thanks.
Thank you. The next question comes from the line of Foram Parekh from BOB Capital Markets. Please go ahead.
Thank you for the opportunity. Could you please disclose or highlight on the peptide capacity, the dedicated peptide capacity, and what would be the CapEx allotted for the peptides?
See, we are building a large capacity for peptides, and we have several programs, as Krishna mentioned, but we don't want to comment on how many tons capacity we're creating or how many projects we have right now. We don't want to comment at this juncture.
Okay. Would you be comfortable disclosing the CapEx dedicated towards the peptide program?
I can only say it is large CapEx. I don't want to give a specific number.
Okay. My second question is on the CDMO side. In the previous concalls, you had alluded that you envisage CDMO contribution going towards 50% of the total sales. As per your internal assessment, and now that the CDMO pie is growing well and we have strong order book, how soon do you see as per the internal assessment, 50% number being achievable?
See, we said the two things. One is, we'll go to 50%. We also said by 2030. Yeah.
Oh, okay. Okay. Last question, if I may. Now that we have increased our CapEx from INR 1,000 crores annually to INR 1,500 crores annually, how do you see the return ratios shaping out? Do we still expect operational leverage with increase in CapEx?
Most of the CapEx, what we are doing is growth CapEx. We are not. At least now we have visibility. We are not putting CapEx and hoping customer will come and give projects. We are not doing that. Mostly we have visibility which product, which customer, how much we are going to make in this new capacity which will come online.
Sure. Just last question. Could you please talk on the ARV to non-ARV split for FY 2027? Right now it's 40%. Do you still see non-ARV or ARV pie shrinking from this 40% or it would remain at 40% around?
Quantum-wise, we did INR 2,800 crores ARV. That will remain constant. It will be in that number, around that number. Percentages, it will go down. It'll go down. Yeah.
Sure. Thank you. Thanks a lot. Yeah.
Thank you. Thank you.
The next question comes from the line of Rahul Bhardwaj, an individual investor. Please go ahead.
Thank you so much for the opportunity. Dr. Satya, if we go back about five to six years, you know, the split of the revenue mix was more inclined towards ARV and then, you know, over the last couple of years, we've increased our footprint on the CDMO business. Can you throw some colors on how do you foresee the mix will be if we look out next 5-10 years? That will be my first question. My second question will be: at some point, you know, you may pass on the reins to someone else. Do you have a wish list where you would like to see Laurus, you know, before you decide to hand over the reins to someone else? That will be my two questions. Thank you again.
I will be able to answer your first question easily. The first question is, see our ARV, as you mentioned, our absolute quantum-wise ARV revenues are very, I would say around INR 2,500 ± 2. Now I would say INR 2,500 ± INR 300, because we did INR 2,800 crore this one, FY 2026. By FY 2030, we expect ARV CDMO revenues in general will be around 50% of our overall sales. The ARV percentage will come down significantly. Yeah. While the ARV sales remain constant, percentage contribution will come down significantly. Yeah. The second question is, see, right now, Laurus is engaged in lot of modalities.
In small molecule, our focus is large volume generic APIs, integrated CMO opportunities, and doing CDMO for clinical programs in Human Health and Animal Health, and also working with discovery-based companies in Crop Sciences, not generic Crop Science molecules. That's the focus. When it comes to biology, as I mentioned to Mr. Sajal Kapoor's question also. We have investments made in cell culture, precision fermentation, enzymes, biocatalysis, cell therapy, gene therapy, ADCs and all. Our investments are in multiple lines, and that's where my focus is currently, and the rest of the businesses are handled by Krishna, Sonia and other team members. My focus is going on new modalities right now.
Thank you so much, and wishing you very good luck for the future. Thank you again. Bye.
Bye.
Thank you. The next question comes from the line of Bharat Siripurapu from Quest for Value Capital. Please go ahead.
Yeah, thanks for the follow-up. Satyanarayana Chava, regarding this new greenfield CapEx of 500 acres in Hastinapuram, may know when can we expect this new greenfield CapEx coming online, the first phase?
We're able to give you more color on that maybe in the next quarter, Bharat. Yeah.
Okay. Yeah. Thank you.
Thank you. The next question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.
Yeah. Hi. Thanks for the follow-up. Dr. Satya, many CDMOs do well at micro or pilot scale, but fail to manufacture a multi-ton batch with consistency. The key word here is consistency. In that context, for the recent CDMO programs that successfully moved from lab or pilot to commercial scale, what percentage met target yield and quality spec in the first three commercial batches? How predictable is the scale-up process, we have today, you know, going from few kilos to 500 kg and more, depending on the molecule, of course.
Why Laurus is investing in large capacities well in advance of commercial launches. Nowadays, big pharma wants the validation, engineering batches at the commercial scale. They don't want to have any uncertainties of scale-up or moving from one plant to another plant for lack of capacities. All the commercializations, what we have done in the last two years were scaled up. Validation is done at the same scale, validation done with the same line of equipment. There are no surprises. When we did validation, we used the same train, equipment train for commercialization, same batch size, same facility and all. We have fortunately, we haven't had any challenges so far.
Perfect. Perfect. Thank you so much for that clarification. Thank you.
Thank you. The next question comes from the line of Yash Lahoti, an individual investor. Please go ahead.
Hello. Good evening, everyone. My question is, the revenues from LORDIN collaboration, when will they start kicking in, sir?
Yeah, this is, again, related to the OLED opportunity that I talked about in the Q&A session. We'll be able to concretely comment on this in a couple of quarters, but at this moment in time, it's difficult to, you know, put a finger on the actual numbers.
Okay. All right. Thank you.
Thank you. The next question comes from the line of Venkat, an individual investor. Please go ahead.
Hi, sir. Thank you for the opportunity. I have one question. I don't have complete understanding on the pharma part of it. My question was AI. With AI, it is disrupting multiple industries. I want to understand in the discovery phase or do you see any challenges in how discovery is getting evolved with, how is discovery phase is getting impacted because of AI? Do you see any challenges in that front?
At a high level, Laurus within the CDMO space, we are not involved in the discovery side of things for any partners. In speaking from a general standpoint, there's certainly a lot of AI being leveraged in the discovery space. The sort of that is, some of the discovery molecules, the pipeline generation is significantly faster. Also, interestingly, given that these molecules are designed by AI, they tend to be also more complex in terms of structures or the synthesis itself, right. Yes, there's certainly AI being leveraged globally, but given that we are not in the discovery space, that's not something that we typically look at.
Thank you. Also, do you see any disruptions in the day-to-day standard operating process in general? Do you see any other companies leveraging it differently or something? I want to understand the application in the industry itself. It may not be limited to Laurus as a general standard process itself.
I mean, there are several, you know, at least what we are aware of, there are several companies that are leveraging it, you know, from especially in the discovery space, in designing molecules and predicting some of their profiles. Yeah, there's certainly quite a lot of interesting publications that are also being put out there. Yeah, this is certainly being leveraged extensively across the industry.
Okay.
Does that answer your question?
Yeah. I think as you are mostly in the manufacturing part of it, we don't see a risk. Can I rephrase it this way or?
Yes. Yes. That's correct to say, our, you know, risk from AI or, you know, impact of it is minimal, if any.
Yeah. Got it. Okay. Thank you.
Thank you. The next question comes from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Yeah, thanks for the opportunity again. On the non-ARB formulation side, there's been decent growth for FY 2026 compared to FY 2025. What kind of outlook can we expect for the coming year with either on the new launches or the scale-up of the existing indications in the non-ARB formulation side?
For the non-ARB formulations, we expect to see growth from existing products. We will be utilizing the capacities to ramp up our formulation units.
There was a sizable jump, say in FY 2026 compared to 2025. That momentum will sustain in 2027 as well?
There is a momentum definitely compared to 2026 to 2027 as well.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing remarks.
Thank you all the stakeholders and for your insightful questions. Good evening, everyone.
Thank you.
Thank you, sir. Ladies and gentlemen, on behalf of Laurus Labs, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.