Ladies and gentlemen, good day and welcome to the Laurus Labs Q1 FY 2027 Earnings Conference Call. 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 and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal. Thank you, and over to you, sir.
Thank you, Abed. Hi, good evening, everyone, and a very warm welcome to Laurus Labs Q1 FY 2027 Earnings Call hosted by DAM Capital Advisors Limited. 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. Then we'll open the floor for questions. Please go ahead, sir.
Thanks for the introduction. Good afternoon to all our stakeholders. We continue to make steady progress in a strong demand environment for multiple complex technology platforms and integrated manufacturing capabilities. We reported significant acceleration in our CDMO business, maintained sustained momentum in affordable medicine portfolio, and continue to show tangible advancement in our mid- and late-stage commercial projects with global innovators. We are executing well on our transformation strategy with a clear focus and determination to realize the near-term opportunities. At the same time, we continue investing in capacity readiness to best meet our client needs. New technologies, emerging and complex modalities like peptides, ADCs, gene therapy, et cetera, to seize the next wave of business opportunities that will positively drive future value creation for all stakeholders. Moving on to financial results. Laurus maintained its strong growth momentum, delivering highest quarterly revenue, EBITDA, and profits during the first quarter.
The company's revenues were INR 2,026 crores, showing a 29% growth. This was mainly driven by growing contribution of commercial supplies in CDMO segment and continued strength in affordable medicine portfolio. Gross margins were also very healthy and maintained around 62.7%, and EBITDA margins further expanded over the previous quarter by 7 percentage points to 31.8%. Our product mix within the business divisions and operating leverage have continued to do well, supporting healthy margins overall. We also achieved several milestones in our operations. The first one is we signed a development and commercial agreement with Aarvik Therapeutics for 2 ADC molecules for India markets. Those are in the clinical stage. We have onboarded a Big Pharma client with significant opportunity set up for us.
The third one, the final handover of 400 plus acres of land parcel from our AP government is in the final stages now. I would like to thank our dedicated team for their relentless effort and strong progress we are achieving now. I would request Mr. Krishna Chava to share key updates on our CDMO segment.
Thank you, sir. Within the CDMO side, the division has continued to deliver strong operation execution in Q1, reporting a growth of 69% with the sales of INR 835 crores on the small molecule side. This is mainly driven by acceleration in the late-stage clinical and commercial deliveries of the programs for multiple global partners. We continue to see good and encouraging progress across both human health and animal health businesses, both on volume ramp-ups with existing portfolios and also new potential customer engagements. As we continue to strengthen capabilities of our CDMO platform, we are constantly enhancing the service efficiency and also conversion of the opportunities at various different clinical stages, reflecting client trust in our technical and commercial capabilities. Continued investment into capacity creation at our Vizag site and also advancing quite well on the commercial-scale peptide capacities based on customer demand.
I would say with customers' ongoing demand for enabling services, our strong CDMO business model and the management execution in line with which the company is confident to sustain a very healthy business growth. Moving on to the Laurus Bio side of things. Bio division reported a Q1 sales of about INR 35 crores, which is about 21% growth year-over-year, which is broadly in line with our expectation. The growth is supported by customer revenue diversification and also continued pipeline progress on some of the larger global accounts, both in the animal origin free space and also in the CDMO side. We have continued to demonstrate significant value-add through the expanded application and capabilities, especially in the enzymatic and biocatalysis platform
Across various different clinical phases, further deepening long-term customer partnerships. Construction work for the commercial scale fermentation facility and strengthening of our downstream processing infrastructure is progressing in line with the plan, and we expect phase I of this capacity, which is a little over 400 kL, is expected to be operational towards the end of this year. Thank you.
Thank you, Krishna. I would like to request Ms. Soumya Chava to share the key updates on our Affordable Medicines business.
Thank you. Our Affordable Medicines division delivered a strong quarter one performance, with revenue reaching to INR 1,156 crore, which is an increase of 10% year-over-year. Our growth was driven by higher volumes across our established portfolio, including ARVs and Onco, where we continue to maintain our market leadership. Our recently launched products in the developed markets also sustained their strong momentum. Operational execution remains robust, supported by consistent supply reliability, improving efficiencies, and greater resilience across manufacturing and the supply chain. Despite a dynamic and external environment, our teams continue to proactively manage production, shipping, and inventory to ensure uninterrupted customer deliveries and execution excellence. We are also accelerating product registrations across three emerging markets, building a stronger and more diversified growth pipeline. The establishment of a new office in South Africa further strengthens our commercial presence and positions us to capture the growing opportunities in this region.
We continue to make a steady progress on regulatory filings. Our cumulative DMF filings now stand at 92%. In developed market formulation dossiers, we filed two dossiers during Q1, taking our cumulative product filings to 96. Thank you.
Thank you, Krishna and Soumya for the overview of Affordable Medicines and CDMO business segments. On R&D front, we spent 5.8% of our revenue on R&D, which is significantly higher, 70% more than the previous year. This was on account of capability development and efforts for our gene therapy ADC technology infrastructure. There are some complex pipeline building activity on Affordable Medicines side as well. Having said that, the recurring spends are in line with full-year target. We maintain our commitment to invest in portfolio focusing on product complexity, scale, and sustainable technology platforms. Let me share brief on quality and ESG side as well. In quarter one, the company underwent 24 quality audits by multiple regulatory and customers. Company has successfully passed these audit inspections without any critical findings. On ESG side, we continue to take steps towards meeting our ESG commitments with a focus on clean energy.
In Q1, the Science Based Targets initiative was validated our targets to reduce our near-term emissions. You can refer our IR for more details on this. We continue to see robust demand for our specialized technology offerings and the integrated manufacturing capabilities. This is significantly accelerating our global position and expanding various market opportunities. We therefore remain confident in our ongoing transformation strategy and in our ability to deliver sustained growth and value creation for all our stakeholders. Now I request Mr. Ravi Kumar to share overall financial highlights.
Thank you, Dr. Satya, very warm welcome to everyone on our quarter one FY 2026 earning call. Total income from operations is around INR 2,026 crores, this resembling our current calendar year, registering a growth of 29%. The main driver is CDMO and of course, Affordable also has been contributed. Gross margin maintained at 62.7%, about 3.3% higher than before. This is due to the division mix and the process improvement efforts. EBITDA for the quarter one stands at INR 644 crores with EBITDA margin of 31.8%, which is about 7% higher than before, which is consistently improving since last several quarters. This is largely on account of improvement in capacity efficiency, driven by the growth of late-stage clinical and commercial projects. Our profit after tax is around INR 368 crore, and ROCE is around 19%, against 17.7% of the previous year.
On the CapEx front, we invested about INR 394 crores for the quarter. Our net debt stood at INR 2,656 crores and debt by EBITDA is around 1.28, against 1.25 of the last quarter, on the back of strong internal cash flows. A slight increase in the debt is due to the CapEx plans. On the capital allocation part, 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 presentation for more details. With this, I would request the moderator to open the lines for Q&A. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone 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'll wait for a moment while the question queue assembles. First question is from the line of Vandit Dharamshi from Antara Growth Capital. Please go ahead.
Hello.
Yes.
Hello, am I audible?
Yeah. You are audible.
Yeah. Congratulations team, and it's very heartening to see these kind of numbers. Just two questions. First question is regarding the CapEx that you've guided. We started with INR 1,000 crore, then up the guidance to INR 1,500 crore, and in our AGM, we spoke about INR 2,000 crore CapEx for FY 2027. I mean, could you please explain what would have changed in the last six, eight months that you've chose to double your guidance on CapEx?
The increase in numbers for the CapEx spend is broadly based on our requirement for capacity to meet our customer demands. The current year investments into capacity expansion is based on what our customer demands are and creating capacity to meet that demand. Yeah.
Got it, sir. The second year, which is FY 2028, would you continue to maintain the older guidance or any revision there?
See, we changed our guidance. Last quarter, we said INR 3,000 crore for FY 2027 and 2028. We may do more than that, but we don't have a correct number to give you in this call. Yeah.
Got it, sir. Last question from my end, just a bookkeeping question. What will be your operating cash flow for this quarter?
Operating cash flow, we have not disclosed. We'll get back to you.
Okay, sir. Thank you so much. Wishing you all the very best. Thank you.
Thank you.
Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Thanks for the opportunity and congratulations on good set of numbers. Sir, if you could firstly highlight what was the constant currency growth for the quarter.
Constant currency growth, revenue is around INR 36 crores.
But growth-
Tushar, you're asking this only, right?
Only INR 36 crore?
Revenue.
I meant constant currency growth in revenue.
INR 36 crore only.
Growth percentage.
Percentage, you are asking?
Yes, sir.
Percentage is about 2%.
Year-over-year? Hello?
Yeah. Correct boss, 2%.
Okay. Secondly, with respect to the delivery of late-stage molecules, this is with respect to supplying to the customer in terms of anticipation of product approval, or these are with respect to products which are approved and we have initiated the supplies for these projects?
It's a mix of both in towards preparation of launch and also for products that have already garnered the approval.
Can you share the sort of mix so that which can be a sustainable number and which could sort of have a temporary pause once the inventory buildup completes?
In the small molecule CDMO business, about 55% of revenue came from commercial supplies.
Understood. Sir, if you could just lastly let know what was the, let's say, customer advance in this quarter or let's say compared to what it was in FY 2026.
No, we didn't have any customer advances during this quarter. Increase.
Got it, sir. Thank you.
Thank you. The next question is from the line of Krish Mehta from Enam Holdings. Please go ahead.
Thank you for taking my question and congratulations on these numbers. I just wanted to get the split between your FDF and API within the ARV revenue, if you could just disclose that. The second question I had is that, now this quarter, we're seeing that mix of ARV versus non-ARV coming back down to the 1/3, 2/3 split, which we have spoken about for a while. How do you think about this going forward for the next three, four years? Are we going to be at this mix now? Have we reached that stable level of 1/3, 2/3?
I'll answer the last question.
Sure.
See, currently two-thirds is non-ARV and one-third is ARV. This will be the highest. I expect it'll go down further, but I don't think it'll go up beyond this number.
To answer your first question, for ARV APIs, we did about INR 415 crores and ARV FDF is INR 254 crores. Together, its total ARV revenue is INR 669 crores.
Okay. Thank you very much.
Thank you.
Thank you. The next question is from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.
Yeah. Hi. Good evening team. Congratulations on a strong quarter. I have two questions First is, Dr. Satya, take us back to 2023, please. The numbers were weak, the stock was under pressure, yet you kept investing. What was going through your mind during that period, and what gave you the conviction to stay the course? I would also like to hear Ravi ji's comments on this question, please. Thank you.
See, in the CDMO business, what we have realized, customer would like to see the capacity before giving products. Second, the trend what we also seen, when they put a very important program of theirs, they don't want to see batch size increases. They don't want to see change of manufacturing lines, change of manufacturing sites, to minimize the regulatory complexity. Since we realized this very early in the CDMO growth, we did invest aggressively. We realized we are taking risk, but we are not taking the risk of putting the company at a bankruptcy. We decided to invest aggressively, created capacity, and that attracted customers, that attracted complex project, that also attracted projects at scale.
That's helpful. Ravi ji, being the CFO, it's your job to not approve any project, right? I'm sure you must be having a very close scrutiny at that point in time, because the environment was foggy. At least to us as investors, it was very less visible. Looking at the numbers, the ROCE was collapsing, the margins, the sales. I mean, the CDMO segment itself saw a big collapse because of disappearing of that purchase order. What gave you the conviction to sign on the capital allocation decisions that the team was making?
Sajal ji, your question has an answer. FY 2023 is the best year because of that execution of large purchase order. Maybe the execution itself is a classic example or a precedent to approve a CapEx. Had we not had capacity before accepting that order, actually, we should have been missing the entire CDMO opportunity maybe in the next future years. That created a milestone. Fortunately, I'm there in this business and with Dr. Satya for a long time, we may have some differ sometimes, but we go together. That's how we have done. Only seven quarters we had a not-so-great results. Those seven quarters, we read Bhagavad Gita well, we were having a balance of mind, we were using our judgment to invest continuously.
That is really paying well for last five quarters, and then it will repeat in the next years. I hope I answered your question, Sajal ji.
Yeah, definitely. Ravi ji, you read the most important book at the point in time which you created the maximum return on that investment of your time on that one. Thank you for answering that. Second question is, Laurus now seems to be at a stage where some investments are being harvested, others are scaling, while a third set is still being seeded. How do you think about balancing these three horizons when allocating capital? Lot of what you are seeding today will not be visible to us as outsiders or investors, maybe next five years, maybe four years, who knows.
See, one segment our investments are not going to give returns is our advanced biologics, our investments into gene therapy, ADCs, and all. That investment we are doing consciously because those modalities are the one which are growing faster than others. Except that our investment into small molecule, API, small molecule drug product, I think we know, as you always say, the CDMO, CMO business is lumpy but predictable. Now our investment is, CapEx investment is very heavy because we were able to predict better than earlier.
I just want to add one more point to Sajal ji.
Yeah, sure, Ravi ji. Please.
You see, few years back, we have taken a call when we started generating a more cash. We took a call that up to 10% of our investment or our profits into a disruptive technologies, either in-house or external. That also is paying well. For example, some of the initiatives what we have taken, they are not even generating any revenue, or maybe not meager revenue. Not yet generating a meager revenue. I think the combination of all these strategies or three points what you have said, which can create a sustainable organization.
The other point.
Just one. Yeah, please, Dr. Satya.
The other point I want to add here is, see, any major investment, new areas. It will take four to five years. Unless we invest right now for our growth in FY 2030 onwards, we don't see regular growth coming after four to five years.
Yes, absolutely. Unlike generics, as you said, Dr. Satya, ours is a lumpy business, but it also is predictable. How predictable you think is the fermentation and the precision fermentation, the Laurus Bio, including the Vizag 400 plus scale that will go commercial starting early next year. How predictable is that side of the business?
That business currently giving, give or take, INR 200 crores right now. That INR 200 crores, we are very confident that will generate. Next ramp-up, we are banking on multiple products. I hope all will not succeed, at the same all will not fail also. We are hopeful some products will succeed, and that will give a massive upside. Our next 12 to 18 months will be very crucial, which molecule, which program in our precision fermentation will take off, which will not take off. That is the reason this is a gestation period. We expect 18 months for our Bio business to see significant ramp-up. Yeah.
Yes. The capacity there is fungible, right? Even if some molecules fail, the lesson and the learning will be deployed to the next set of opportunity, and we could use the same infrastructure to manufacture something completely different there.
The capacity what we have created upstream, downstream are fungible. We can use the same capacity for multiple programs.
Oh, thank you. Thank you. That answers all my questions. Best wishes. Thank you.
Thank you.
Thank you. The next question is from the line of Bharat from Quest for Value Capitals. Please go ahead.
Yeah. Congrats for good set of numbers. Regarding this FY 2027 CapEx guidance, as one of the participant already read, you have effectively doubled CapEx from INR 1,000 crore to INR 2,000 crore in just six months, yeah. Could you help us understand what has changed during the six-month period? What new opportunities have emerged that made you to do two successive upward revision of CapEx? Is it due to increased inquiries from Big Pharma due to supply chain diversification?
It is from the capacity needed for our existing customers. Some programs we are doing advanced intermediates, maybe we have to do API. We were expanding our offerings in the programs. We are investing in new modalities within the small molecules also. This CapEx, unlike earlier CapEx, what we have done, this we are doing for a purpose, for a product, and capacity what is needed in the near term for our partners' needs.
Okay. Thank you. Thank you very much on that account.
Thank you. The next question is from the line of Ghanshyam Meena from Moonshot Capital. Please go ahead.
Hello.
Sorry to interrupt, Mr. Ghanshyam. May I request you use a microphone for asking a question?
Okay, sir. Is it audible now?
Please go ahead with your question.
Sir, I have one question regarding the way we can witness the impact of CDMO ramp-up in our margins or in our profits, whether we can see them in gross profit or operating profit. As we compare with respect to the last quarter, our CDMO business has improved a lot. However, our gross margins have not improved and operating profits have improved. Further, raw material cost, if we consider that there may be some higher cost due to the Middle East or West Asia crisis. But in case of API, I think the prices reflect around one quarter after the raw material we procure. Can you please explain to understand the business in this regard?
As you mentioned, our CDMO business increased significantly. Our gross margin also improved from 61%-63%. That's from quarter-on-quarter. When compared to year-on-year, it is almost a little over 3% increase was there. We have seen some pressure on margins because of the global conflicts, but that margin pressure is not that significant to take a shelter that because of that margins were gone down. We expect the similar margins will maintain for the coming quarters as well. Yeah.
Okay, sir. Thank you. Sir, second question is regarding the asset turns. Would we expect the growth asset turns around 1.5x as we ramp up our CDMO business?
We have clearly mentioned in our investor presentation, our first target is to asset turnover ratio take little over 1.0x. That's the target. We're almost there right now, but we wanted to take it little more than 1.0x. Yeah.
Okay, sir. Sir, last question from my side. In this quarter, the CDMO business is significantly contributing around, I think, 44% something. I want to know this contribution from the two, three products, or there are multiple products in this regard?
Thanks for asking question. Our CDMO business is well-diversified. No product or no customer are contributing significantly in our business. Well-diversified CDMO segment.
Okay. Thank you, sir.
Thank you. The next question is from the line of Ramesh Chandra Jain from CS. Please go ahead.
Good evening. Thanks for taking my question. First of all, congratulations to the management for great set of numbers. My question to Dr. Chava is, sir, if I remember correctly, you have promised by 2030 our CDMO turnover will be more than 50% of the total turnover. Are we still sticking to that, or are we going to prepone that target to 2028 or '29?
At this point of time, we are very comfortable to say that by FY 2030, we will definitely reach our target of at least 50% of revenue come from CDMO segment.
Secondly, sir, just I wanted to know what is the amount of exchange gain we have made during this quarter?
In Forex gain?
Sorry, Forex.
Forex gain on the balance sheet is about INR 5 crores.
Is INR 5 crores?
Yeah. Forex gain as a separate head is INR 5 crore.
INR 5 crores. Thirdly, sir, if I see your presentation, you are mentioning some in-licensing of two antibody this thing. Can you throw some light on this, sir, exactly when we will be able to generate revenue out of it?
These programs are at the preclinical stage. We have to continue process optimize in Hyderabad, do GLP toxicity, file IND. Data are good, then we have to do phase I, II trials in India. It will take three to four years in India at least.
Okay, sir. That's all from my side, sir. Again, congratulations, sir, for the great data.
Thank you. The next question is from the line of Rehan from Trinetra AMC. Please go ahead.
Good evening, sir. I have just one question on your CapEx side. You have guided, sir. You have guided long-term target of 1.1x asset turnover and 25% ROCE. Sir, given the cumulative CapEx has now crossed INR 3,700 crore, what is the expected trajectory for these ratios over the next four quarters or the fiscal year?
I think asset turnover ratios will be over 1.0 for sure. The ROCE, because of heavy CapEx this year, maybe going to 23% will take some time. We expect ROCE will continue to grow from last year to 17.7%, this year is 19 point something%. We continue to grow our ROCE returns as well.
Okay. Just last one more question, if I can ask. Sir, we have previously observed pilot scale shipments for GLP-1 peptides, like semaglutide. Sir, has the company now qualified commercial scale synthesizers, and when do we expect meaningful revenue contribution from this category?
Within GLP-1 space, while there are a few different opportunities that we are working on, unfortunately, we're not able to discuss any project-specific details. We expect peptides to be a meaningful area for Laurus as a company.
Okay, sir. Fine. Thank you. I'll get back in touch with you.
Thank you. The next question is from the line of Manoj Bahety from Carnelian Asset Management. Please go ahead.
Hello. Am I audible?
Yeah, Manoj. You're audible.
First of all, congratulations, Dr. Chava and entire Laurus team for a very strong quarter. I have three questions. First question is, as you mentioned that in CDMO, 55% of the revenue is on the commercial side and 45% is on the startup, where the filling of inventory may be there. Just wanted to understand whether this 45% portion of the revenue is going to sustain. How do you see the sustainability of this portion? That is my first question.
The majority of the revenue which is not commercial is for phase III supplies. We expect they will become commercial soon. For one of the program where we supplied phase III supplies, the approval also obtained. We expect it will become commercial soon.
Okay. Second part is if you can give us some update on KRKA JV, how much more CapEx will be required in that, and when do we expect the revenues and what will be our guidance, if any, on this part?
In KRKA JV, we are doing two things. One is small volume oncology formulations and large volume normal solid orals. The oncology facility will be ready early next year, solid oral facility will be second half of 2027 calendar year. Currently, we have invested so far INR 400 crores, that facility needs another INR 400 crores, part of that investment will come from loan from our partner.
Yeah. Great. Sir, my last question is on our animal part of CDMO. I think if I remember, out of 16, 18 molecules, around two or four tech transfer did happen. If you can give us an update there also. The kind of jump we are seeing, have we received more tech transfer? Has number of molecules gone up there?
Well, not in a position to share the specific number of molecules that we are working on. There are a few programs or molecules in that space that are being commercially supplied as we speak.
Okay. Got it, sir. That's it from my side. Thank you so much.
Thanks.
Thank you.
Thank you. The next question is from the line of Sachin from Prahas Capital. Please go ahead.
Hello, Dr. Chava. Am I audible?
Yeah. Audible, Sachin.
Yeah. Many congratulations to entire Laurus team for a wonderful result. Dr. Chava, I'm very impressed the way each success of Laurus is seeding another success. Like for example, API seeded formulation seeded CDMO. What I need to understand, if you see Laurus three to four years from here on, what's your big picture, Dr. Chava?
It will be a fully integrated pharmaceutical company offering end-to-end in pharmaceutical value chain from API to drug product, both in our generic CMO as well as our NCE also. Our desire is to offer fully integrated program, not just starting materials, intermediates, API, but to offer including formulations for our Big Pharma CDMO customers. That's our goal. We are going in that direction right now.
Understood. More particularly, how you see Laurus Bio evolving, say, next three to four years. As of now, comparatively, it's pretty small. In your scheme of things, how you see next three, four years Laurus Bio can shape up.
There are two segments where we have invested a lot of money. One is Bio, and second one is Crop Sciences. We need maybe another 18, 24 months to assess how big the opportunity, what else we need to do. Do we add more customers, more projects, more infrastructure, or more resources in R&D or more resource BD? I think that's at the evaluation stage right now. If you look at in the broad scheme of things, both divisions put together creating INR 250 crore revenue. That's not significant. We are investing significantly in both these. We need 18, 24 months to assess where those divisions will take us from the current stage.
Understood. I think that's from my side, Dr. Chava.
Thank you.
Thank you.
Thank you. The next question is from the line of Mithun Mehta from Lucky Investment Managers. Please go ahead.
Good evening, sir, and congratulations on a great set of numbers. It is very heartening to know that how you have navigated your company in last 10 years from an ARV to a full-fledged integrated CDMO. Hearty congratulations to your entire team, sir.
Thank you.
Sir, my question to you is.
Yeah.
Sir, my question to you is, if you see our quarter one exit rates for CDMO is roughly about INR 800 crore plus. The overall share in the basket is now approximately 42%. Do you firmly believe that we can keep growing our CDMO business at about 30%-40% for the next three, four years based on the CapEx that we are doing for this? This entire CapEx is for the CDMO, or we are also investing in other segment of the businesses? If you could just throw on this particular questions.
The majority of CapEx is for small molecule, either it is API or CDMO. We do expect to grow significantly. I may not be able to give you a number what we will grow, but we have good visibility and lot of confidence and conviction that CDMO will definitely give lot of growth for us.
Yeah. Sir, is it possible for you to give us a total TAM of this CDMO pipeline that we have built over last so many years, so that we get some confidence as to the company is on a very serious growth trajectory for the next three to five years. Is it possible for you to share that number? I am certain that there are a lot of confidential agreements, but just sort of broadly, if you can give us What could be the addressable opportunity in this whole piece?
I think we don't want to confuse all our investors by giving a certain number of projects we're handling at certain percentage and all. It all depends on the value of each program is more important than the number of programs. That's more important. See, addressable market is that CDMO market is growing, a lot of opportunities are there. It is our ability to create capacity, create technology platforms, and absorb customer projects and all. Krishna, you want to add anything here?
No, I echo your thoughts because from a number perspective, in the CDMO space, we have commercial programs, be it intermediate or API, that are maybe less than INR 1 million. There are programs that are in the double digit or even beyond, right? Just giving a number might not give a complete picture, and thereby, that was one of the reasons why we've categorically tried to refrain from giving a breakup, because that might not be an accurate representation of how the business is doing, sir.
Is it possible for you to share how much each product or each program would be contributing to the overall? Is there like a top 3 or a top 5 or it's a basket of products that is sort of contributing to the growth in the overall CDMO business?
Fortunately, within the CDMO space, the revenues are well-diversified. We don't have any particular high concentration of any particular program or customer for that matter. It's a well-diversified set of products that currently we have.
Also within the CDMO, what % would be for the patented molecule and non-patented molecule?
Within the way Laurus Labs as a company represents CDMO, all of these are innovator programs which are on-patent molecules. All the off-patent molecules that we support for various different companies from contract manufacturing point of view are internally referred to as CMO, and the value from this is captured in the Affordable Medicines revenue.
Which means a very significant, I mean 70%-80% or 90% of the business would be from the patented molecules?
In the CDMO space, predominantly yes. Maybe even more than. Yeah.
The therapeutic concentration also is very well-diversified? Or, one or two therapies contribute significant to the overall CDMO business?
Therapeutic area also is well-diversified. There's no specific therapy area that has any high concentration risk.
Right. Sir, you have been primarily into an investment curve, this investment curve also seems to be continuing. The growth, obviously, we can see that your CDMO business is growing at upward of 35%-40%. Just to sort of map Laurus on return metrics, on return on capital employed. If I were to sort of dissect your CDMO and sort of build up P&L for your CDMO business, would your return on capital employed at maturity or maybe at good scale-up would be significantly higher than the total ROCE of the company?
We can't separate the CDMO and the generics part of it, so we can't calculate the separate ROCE for CDMO.
Okay. Thank you. Okay, great, sir. Thank you very much.
Thank you.
Thank you. The next question is from the line of Tawfeeq Kirt from Jefferies. Please go ahead.
Yeah. Hi, sir. Just wanted to get some more comments on your custom synthesis sales run rate, given that we do have high visibility typically at least for next two quarters. Is it fair to say, ballpark, maybe plus or minus INR 100 crore here and there, but we can maintain the current run rate? Is that a fair understanding?
That's a fair statement to make, sir. Yes.
Okay. Also, can you give what was the commercial sales contribution within the custom synthesis for FY 2026? You said it's 55% for 1Q FY 2027.
It's in the same number. We expect in the coming quarters and years that will grow. 50% came from commercial supplies last financials.
Okay. One for Ravi, sir. Sir, if I got it correct, you said it is 2% constant currency growth for the quarter. Can you explain, because against most currencies, especially the USD and EUR, I think INR depreciation is like in 10% rate. How is our constant currency growth so low given that INR growth is 30%?
We have even rupee sales also. The entire sale is not in the USD terms. What I said is for the FY 2026 and the first quarter comparison.
Okay. What would be the total export percentage in terms of total consolidated revenue?
Export, direct export is, I think, about 55%-60%. I have to just check.
Okay. Lastly, one more if I can.
Yes.
Can you throw some more color on the Laurus Bio division in terms of what category of products are currently largest within that division? Is it insulin, food protein, industrial enzymes currently? In terms of new product, what are going to be the largest category of product?
Currently, about 20% revenue comes from animal origin, free cell culture ingredients, and enzymes, the remaining 60% coming from various CDMO molecules at the early stages. It's spread over some alternate food proteins, some colors, some super absorbent polymers. It's spread. It's not one segment which is concentrating more.
Okay. That's it from my side. Thank you.
Thank you. The next question is from the line of Abhijeet, an individual investor. Please go ahead.
Okay. Hi, good evening, everybody. Congratulations on the fantastic set of numbers. I have a question with regards to the Aarvik Therapeutics two ADC contracts that you've signed. I just did a quick Google search, I noticed that they had a different type of ADC. Can you give more disclosure on the product that you're developing? Are you partnering with them to develop it from scratch, or there is already a certain product that is already there, and they're asking you to help them scale it up?
We also made a small investment into Aarvik Therapeutics long back. We have licensed two preclinical assets, which completed in vitro proof of concept. We need to do GLP tasks here in India. That will be mid of next year, we expect to start preclinical tasks. Based on that, we will plan our future course of action. These are part of their MoTA program, these are for 2 therapeutic categories. We will give you more details later, which are both are solid tumor.
Another question is with regards to the organization itself. I think you clearly demonstrated that you're capable of executing small molecule CDMO contracts, and you're positioning yourself as a large molecule player with all your investments in cell and gene therapy, peptides, ADCs. Would you like to give a more visionary disclosure to the investors with regards to the next five years?
See, we already make a few payload linker programs for Big Pharma. See, for us to wet our hands, we need to get technology absorption. Instead of developing, we thought to invest in a small biotech company and get access to their technology. Now with these two ADC programs, we have access to their conjugation, purification, and fill-finish opportunities there. That is one area where we're investing. We also licensed some patents from IIT Kanpur. Those are helping in our gene therapy programs. Our investment into ImmunoAct, helping us to understand the lentiviral and then cell therapy. Based on the programs what we have from partners, we also invested, as Krishna mentioned earlier, into a large peptide manufacturing capacity as well. Eventually, we are investing in the future modalities where the market is moving.
Okay, one last question with regards to the peptides. Everybody in the market is trying to focus on the peptides for the weight loss, the GLPs. I think there is a lot of revolution that's happening in the peptide treatments for other sectors, right? Like gastro, I think I was reading in something. There's a lot of work going on in it. Would you like to disclose more than saying that are you looking at the overall sector, or are you looking at specific sectors where the growth is? I think the market itself is growing around 30%+. If you can give some more details on it.
Krishna, you want to answer?
Yeah, there's a few different class of programs that we expect to support in this space, which we will give additional color in due course. Yeah, it's multiple classes that we expect to support in this space.
Not just GLP. We also have programs other than GLPs, yeah.
Okay. Thank you so much. That's it now.
Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.
Thanks for the opportunity. Sir, just a clarification, the constant currency growth in Q1 FY 2027 over Q1 FY 2026, if you could sort of clarify.
Vivek, we'll come back to you on that. Actually, what I said is on the full year of FY 2026 and quarter one of FY 2027.
No, I meant to ask Q1 FY 2027 over Q1 FY 2026.
That's what. Vivek will offline tell you.
Sure, sir. With respect to this incremental CapEx, while it is for a specific customer, but is it for a specific product?
These are not meant for one customer, multiple customers and multiple products.
The CapEx guidance which you raised from INR 1,500 crore to INR 2,000 crore, incremental INR 500 crore is for multiple products. Is that the way to understand?
Yeah, you're right.
If you could just clarify, again, for animal health, crop science or human health, and for API or intermediates.
It's a mix of both human health and animal health portfolio.
Okay. Again, for API or intermediate?
Both. As you've seen, Laurus is investing more in serving our partners API needs. We do have some business in advanced intermediates in CDMO segment, but mostly it is API for us.
Yeah. That's correct. Very good.
Got it, sir. Just last one, if I may. This regulatory approval for your customer, where the product offtake is sort of expected to scale up, this is for the global market, regulated market, emerging markets, if you could give some color to that.
We expect it is global, regulated and LMIC as well, but it's global portfolio.
Got it. Thanks a lot for addressing my question.
Thank you. The next question is from the line of Kalyan Shammina from Moonshots Capital. Please go ahead.
Thank you, sir, for the opportunity. This is just a follow-up question regarding the CDMO business. As Dr. Chava mentioned that we have very well-diversified CDMO business. Can we know, in terms of percentage, if any molecule in the end product becomes blockbuster, how much we can earn in our business? That is my first question, sir.
I think we can't give you those granular details, product-wise and customer-wise revenue. Because of our confidential issue, we can't give you beyond what we have disclosed.
No, I don't want that regarding any particular molecule. The idea in this regard, that if one molecule becomes a blockbuster in what we make in our CDMO business, how much percentage we can earn in our business in that molecule? Just an example.
That's an interesting question. The answer to that, sir, is it is not very easy to come up with the percentage potential contribution to our top line based on the blockbuster status of the customer. There might be programs that use, let's say, 500 milligram dosage per day, or there might be programs that use, let's say, one or two milligrams a day or even less. Also comes down to what value of that each milligram is. While the program might mean blockbuster for our customer, what it means or what it entails to us as an API supplier could mean completely different based on that particular nature of their product.
Okay. Thank you, sir. Just one more follow-up, if I can get. Do we have molecules in our CDMO business which are generating around INR 200 crore or more?
Yeah. The answer is yes, we do have. Yes, sir.
Okay. Thank you, sir. That's all.
Thank you. Ladies and gentlemen, that is considered as the last question of the day. I now hand the conference over to the management for closing comments.
Thank you everyone for your very insightful questions and your continued support to the organization. Thank you.
Thank you.
Thank you. On behalf of Laurus Labs, that concludes his conference. Thank you for joining us, and you may now disconnect your lines.