Good day, everyone. On behalf of Kirin Advisors, I welcome you all to the Q3 and 9 months FY26 earnings conference call of Fredun Pharmaceuticals Limited.

We have today with us Mr. Fredun Medhora, Managing Director of the company, along with members of the management team, Mr.

Rakesh, Mr. Gajanan, Mr.

Khandu. Before turning over the call to Fredun sir to address your questions, let me briefly walk you through the company's performance for the quarter and 9 months ended FY26.

During the Q3 FY26, total income stood at ₹160.92 crores, registering a strong growth of 57% year-on-year. EBITDA came in at ₹26.34 crores, reflecting a robust growth of 99% year-on-year.

EBITDA margins improved to 16%, expanded by 384 basis points. Net profit for the quarter stood at ₹10.48 crores, nearly doubling with a growth of 96% year-on-year.

Net profit margin improved to 7%, while EPS stood at ₹22.19. For the 9-month period, total income reached ₹426 crores, marking a 48% year-on-year growth.

EBITDA stood at ₹65.66 crores, up by 74% year-on-year, while EBITDA margin improving to 15% and expansion of 237 basis points. Net profit increased to ₹26.98 crores, delivering a strong 96% growth year-on-year.

Net profit margin improved to 6%, and EPS stood at ₹57.13. Overall, the company has demonstrated strong revenue growth along with meaningful margin expansion and improved profitability during both the quarter and 9 months period.

With that brief overview, I would now like to hand over to Fredun sir for taking your questions. We can now open the floor for Q&A.

Hi. Good afternoon.

Am I audible?

Yes.

Yes, sir, you're audible. All

right. Perfect.

Good afternoon to the team. Good afternoon, Mr.

Fredun. I had a two-part question.

The first part of that question was that given the growth that you are seeing, and obviously it is higher than what you had anticipated, do you see any immediate requirement of funds? Obviously, you have done a QIP and raised some funds, and you said that the working capital cycle improvement will take some time.

I am sure that cash generation might be chock-a-block for the short term. In the next 12 to 18 months, do you think that the funds at hand are sufficient for the kind of growth that Fredun Pharma is seeing, or do you think that there will be another round of fund raise that would be required?

Okay. That's both parts of your questions?

Yeah. Sorry.

The second part is that given the growth that you're seeing, and obviously the newer parts of the business, the Freeneu and the pet care must be contributing handsomely to the growth. I think that the next 2 to 3 years, obviously, the kind of guidance that you have given seems to be a bit conservative.

Can you just throw some light on that also? That's it.

Thank you.

Sure. Addressing your first question, we are expanding quite rapidly, and we are right now also increasing our production capacities at our current plants, and we have also added new partner facilities where we ourselves manufacture across various locations.

We have around 37 of those. Currently, the way we are anticipating that the new brands which we have launched in the last 2, 3 years are suddenly taking a lot of traction.

The growth that you've seen is because many of our products across various brands that we've launched and various segments that we've launched have picked up quite well and are doing very well in the pockets that we have launched them. Yes, we do not envision any sudden need of funds in the next 12 to 18 months.

Business is dynamic. We are growing.

If there are a need of funds maybe after 18 months or 24 months or 30 months, we might look into it if we have to raise funds for a different division or something, we might. There is nothing on the table right now, and there is no immediate need for any funds for that.

The second part of your question was if you can

Yeah. Just wanted to understand that given the growth that we're seeing in the company and all

Ha. Because of guidance numbers.

If you have seen my BSE guidances from 2016 onwards, every single guidance has been conservative. Because I do not believe in just giving a number and then if I overachieve that number, I'm comfortable.

I don't want to be ever in a position where I'm underachieving a number. We have to take into factor market situations.

We have to take into factor so many of the situations that arise on a day-to-day basis. It's better to be conservative.

Our conservative numbers are also robust growth. Our investors, our partners, the people who believe in us need to be in sync with the journey, and that is what I want.

If we overachieve, yes, we might have a better guidance maybe next year or the year later. We are on track to achieving our guidances.

We have taken buffers for any unforeseen circumstances that may arise. Currently, the trajectory on which multiple of our divisions are going, I think we are quite comfortable in overachieving those.

Perfect. Thank you, sir.

Thank you for your time.

Thanks.

Yeah. Hello, sir.

Just one question. In the 9 months, what is the growth in the legacy business and the size of the legacy business?

What is the size of the new age business? If you could just give that split for the 9 months.

Yeah. I have explained this in previous things.

I'll again say the legacy business is pegged to grow at somewhere around 12% to 18% year-on-year Hello.

Sir, I was asking your performance in the 9 months, what it has done.

Yes. Yes.

I I I will I will address that.

It is

pegged to grow at around 12% to 18% year-on-year for the next 5 to 6 years based on our registrations.

Last

year, last last year, last year, our exports our direct exports were about 100 18 to 120 crores. Our institutional sales was around 40 crores.

Our third-party business and our tolling business accounted for about 100 crores. On that basis, this year, we will, on the 9-month basis, proactively, we have grown at around 15% to 20% on that.

Okay. Can you then tell us what is the size of the Yeah, ma'am.

Why? Hello?

Hello.

I'll answer that question.

Hello.

Yeah. Yeah.

I just told you. The institutional sales, the export business, and the third-party business, on last year, on that, about 110 crores, 45 crores, and 90 crores will grow at around 15% to 18%, which it has grown.

That number will be somewhere around close to that same number as well, plus or minus a crore or two.

No problem. How much is the size of the new business in the 9 months?

How much proportion of your revenue is now new business? The remaining

the remaining remaining portion of that business is the new age business. This year, we are pegged this year at at year-end closing, we are pegged to do somewhere around 50 crores of our generic business, around 42 crores of our pet care business, around 26 crores of our nutritional business.

That gives us a run rate to reach around 600 crores. We are comfortable and around 550, 570 to 580 crores, and we will easily achieve those numbers.

The remaining part is the new age business, which includes mobilitics, which includes dermaceuticals, which includes cosmetics.

Can you update us on the pet biscuits line, has it started, and what revenue run rate it is?

The pet biscuits line is doing phenomenally well. The revenues and numbers right now, we are adding more and more divisions right now with and products.

We started production in the second quarter of actually third quarter of this year, this quarter. The numbers will start showing in from this quarter and the next quarter onwards.

Okay. It will start showing from the next quarter.

No. Numbers will start showing from this this Yeah.

This this quarter. The numbers will start showing from this quarter.

Okay. Thank you, sir.

Bye. Thank you very much.

Hello. Am I audible?

Yeah. Hi.

Hi. Am I audible?

Yes, audible.

Sir, just first of all, thank you for giving this opportunity and congratulations for a good set of numbers. I just have a simple bookkeeping question.

We have seen a steep jump in finance costs as well as other expenses. Can you throw some light on that?

Any growing company and rapidly expanding company has always requires working capital. Certain things plus we had changed our banks also.

We have taken new machinery loans also. Those all add up to the finance cost part of it.

This will decline over the next 2 to 3 quarters because our fund raise money has come in this quarter actually, on the third quarter. We are going to sizably use it for working capital as planned.

Also, we will have our own internal cash flows, which are improving, as you can see. It's part of growing a company.

Okay. Sir, I just want to know about margins.

We have seen improvement in gross margin over the last 2, 3 years. I just want to know, does this margin level sustainable for next 2 to 3 years?

What is your outlook on raw material cost over the next few quarters? See,

as any number grows you guys are in the number business, the bigger it gets, you cannot sustain the same percentage growth. On a smaller number, you can sustain a percentage growth.

On a larger number, it's not technically possible. Because our numbers are small right now, in the foreseeable future, we are okay to see it.

There will be a sudden growth in the profits even further in the next 2 to 3 years because of the operational efficiencies coming into our high-margin business, especially dermaceuticals, especially our pet care, especially our new line of businesses. You might, in fact, see a further jump in the profits coming in the next 6 to 7 quarters.

Then it might have a gradual growth phase from there. That's about it.

Okay. Thank you, sir.

Hello? Hello.

Yes, sure.

Good afternoon, sir. Am I audible?

Yes. Good afternoon.

Sir, congratulations for good set of numbers. Thank you for giving me chance to ask question.

Sir, one thing I want to ask that deal has happened, India and US, and India and EU. What will be effect of this deal in this our company performance?

There will be no effect. We don't sell any products to US, and neither do we sell any products to Europe.

Neither do we intend to sell any products to US. The companies which are manufacturing in Europe who are planning to sell to India will still be extremely non-competitive into certain of our products that we do.

Overall, the products don't bother us. We are predominantly focused for the next decade to manufacturing in India for India.

It does not affect our plans. It does not affect our numbers.

Doesn't affect our profitability or our sales at all.

Sir. In last concall, sir, it is written that we have outlined you have said that in FY29, our revenue will be fully driven by vintage generics, and FY30 to 51 will become from US business.

That's why I have asked.

It's not US. It's new age business, new age, not US.

51% of our business will come from new age business. Okay.

New age business.

In transcript, US written as US. Okay.

Thank you, sir.

Maybe. It may be a mistake.

I'll get it corrected. It's not US business, new age business.

In last transcript, US written, I have asked. Okay.

Thank you,

sir. Okay.

No. Yeah.

Hi. I wanted to understand about the seasonality in the business.

Generally, March quarter is heavy in terms of revenues, whereas margins are lower versus normal average. What would be the reason for the same?

See, like all sellers, we are selling to importers, distributors, wholesalers. Like how we have a sales target, they have a purchase target.

If you see our numbers, if you see our business from 1995 onwards, our last quarter is always higher. It's a part of the business that we are in.

When you have a higher number, you have to give schemes. You have to give discounts, month-end schemes, year-end closing schemes.

Each distributor, each retail, C&Fs and all, those have targets that itna lakh complete karo, toh aapko yeh yeh products pe itna discount milega. Itna lakh complete karoge, toh yeh products pe yeh discount milega.

Toh, definitely, people would want to buy more. It allows our products to penetrate further into the market, and it allows our visibility of our products further.

The idea of giving our products in bulk and sometimes giving a slight discount also on it allows that shelf pe hamare products rahe. The more our products stay on the shelves, someone else's products is not on that shelf.

That allows us further growth as we go. As we go into a new age business, that seasonality will change because we are doing the pet care ethical marketing and also OTC marketing.

We are doing cosmetics OTC marketing and dermaceuticals ethical marketing. We are also planning specialized dermaceuticals ethical marketing.

We are entering into hormones. Over the next 1 5 to 6 years, the strong change in the last quarter will decline.

I think all quarters will be the same. The way our business goes, the first quarter is always the weakest.

The last quarter is always the strongest.

Got it. Margins in last two, three quarters have been improving.

What would be the sustainable margin that we feel for our current business, say over the next 1, 2 years?

See, anything over 5%, 6% is a great margin at the rate that we are growing. Because our top line is growing, our margins are also growing.

Margin growth, you will see a sudden increase after a few quarters once the cost efficiencies of the new age brands start kicking in because they are intrinsically higher gross margin products, 50%, 60%, 70% gross margin products. Right now, we are in the placement.

In some places, we are in penetration. In some places, we are in repeat sales and diversifying our portfolio.

Cost efficiencies, once they start hitting in, it'll definitely hit our numbers. If you see the margins, I would say what we have right now, we should consider it as I've said earlier in the call, I love being conservative.

So 5%, 6%, you mentioned PAT margin?

Yeah. That's about it.

Okay. How do Please continue, sir.

That will improve over time as I've explained to you why. Yeah.

Sure. Continuing on the answer, how do you see the trajectory of new age business from here onward, say by FY27, '28?

How do you see the growth, and where do you see the mix?

I've said in multiple calls before, by 2029, 2030, 51% of our business should be from the new age business. That's what we are targeting.

We are growing because they are smaller numbers right now, 20%, 25% growth in each of the divisions year-on-year. Some divisions are growing even faster because they have a smaller base.

We are quite comfortable in what we have. When you are launching a product across multiple states, you cannot directly determine 5% growth and 10% growth and 50% growth because there are a lot of challenges that take place in launching the product.

However, we have surmounted those challenges, and we have still achieved a 20%, 25% growth year-on-year on the new brands since we've launched it, since 2020. We are comfortable on that growth path.

The vintage business will grow at between 12% to 18%.

Right. Okay.

Got it. Thank you so much, sir.

Yeah. Thanks for the opportunity.

My first question is if you can give as of December, how much is our inventory, trade receivable, and loan?

Yeah. Those those numbers are already in in our balance sheet and our things which are declared.

Inventories are on the same level as the quarter before, absolutely same level. Trade receivables have drastically reduced, but they are again dynamic as we are into local sales.

Once it goes to the distributor level, the orders are cyclic. You don't You don't send We are not D2C company.

When when in certain months, you will have higher sales. Certain months, you will have lower sales.

In in December in on 31st March, if we have to consider in Indian market and at least a 90-day credit period, in in on 31st March, you will see a slightly higher debtor sales. If you see on in the first quarter, you will see lower debtor sales.

Same thing happened last calendar year also, this financial year also. Last year, our inventory our receivables were 177 crores.

We received almost 380 crores of receivables till September 2025. Again, our receivables went down to around 80 80, 85 crores even after the turnover increasing by 50% to 60%.

This is not a pharma sales is where you have bulk sales, and you don't have a daily sales in the sense you don't sell everything daily on per day averaged. It is for for 10 days, you will have a lot of sales.

Then for 2, 3 days because of the production cycles, because the nature of business has this cyclic nature. Quarter sometimes production times are 2 months.

Sometimes they are 2.5 months. Sometimes they are 1.5 months.

Quarters are sharp 3 months, numbers will change quarter-on-quarter. If a sharp financial analyst will understand the nature of business and seeing the kind of receivables averaged over the last 2, 3 quarters, they will understand that yes, the receivables are quite robust, and the creditor levels are remaining the same, and the debtor levels are remaining the same, plus the inventory is identical to what it was last quarter.

Okay. More or less

No, no, I am not

the new question. Just reconfirming.

What you are saying that the trade receivables and inventory are more or less at similar level of what it was reported in September?

Yes.

Okay. I'll join back in the queue.

Thank you.

Yeah. Hi, Fredun.

Can you hear me?

Yeah. Hi.

How are you?

Very well. Thank you.

I just have one question and one suggestion. My suggestion is that please, as part of your quarterly earnings release, please provide us the break up of the legacy business and the new age business.

That's the metric that most investors are actively trying to figure out. The question that I have is the legacy business, with your current sort of establishment and cost, what kind of growth can you get in the new age business?

When do you think, sir, the operating leverage will start to play out?

Yeah. As I've said earlier, the vintage business, that's what I want to call it, the legacy business called the vintage business,

and

that will be growing at around 12% to 18% year-on-year for the next 5 to 7 years. The reason why it will grow at this percent is because we have about 1,300 to 1,400 registrations in the pipeline.

Those registrations are going to keep on kicking in, and they are going to come. In the new age business, the growth is about 20%

to

25%. We cannot launch all states at the same time.

We have launched Maharashtra. Then after, say, 3 months, 6 months, we launched, say, Karnataka.

Then we launch Kerala. We can't launch the whole India at the same time.

Now Maharashtra will start getting operationally leveraged, say within 9 months. Now we have started Karnataka, you are again going to be putting in funds and energy into that state.

Considering that we are doing this off and on for the last 4.5 years for multiple brands, in the next 5 to 6 quarters, you will see a good set of numbers. That is what I told the other participants as well and the same questions that were asked earlier that, yes, between 5 to 7 quarters, you will see some kind of leverage coming in some kind of brands.

Sure. The only request I have is, going forward, your quarterly earnings release, please try and give the revenue breakup between sort of vintage and the new age business.

That's the only suggestion.

Sure. We'll do that.

No,

it's a good suggestion. We'll keep that in mind.

Thanks. Appreciate it.

Thank you.

Yeah. Hi.

Thank you for taking my question. I just wanted to know, as the new age business scales and takes a larger share of revenue in the mix over the next 2 to 3 years, how should we think about the manufacturing mix, specifically the CMO versus in-house manufacturing?

Will the new age business be more asset-light, or will it increasingly be manufactured internally?

Yeah. Good question.

Of course, one plant cannot manufacture every single product. We are into mobility products.

We are into pet care. We are into herbal, nutraceutical.

We are ourselves into pharmaceuticals. We have 1,700 products, but at the same time, we have other things.

There is a lot of variants and kinds of product type. Now we, in our plants, in the cluster of three plants that we have, and the fourth one that we've just started, we are making somewhere close to around 2,000 kind of SKUs.

Definitely, say, like in our mobility range, we have walkers, and we have wheelchairs. We're definitely not going to start a wheelchair plant and a walker plant at least anytime soon.

Of course, the new things that we're going to start is going to be asset-light. It suits our thing also.

We don't want to start manufacturing everything we sell. We want to use someone else's cost efficiencies which has been achieved and use those to penetrate further into the markets that we already have.

Say, 4 to 5 years from now, more and more products will be manufactured not directly by us.

Okay. Understood.

Thank you so much.

Hi, Fredun. Congratulations for a great set of numbers again and I wanted to understand more with regard to mobility and beauty Freedo brand, especially with regard to mobility.

You visit any chemist shop, as there is a Pamper section, there is a mobility section too. For a company like us who has always believed into penetration of distribution, at least one product of Fredun should be there in every chemist shop, how is the mobility going for us?

And 3, 4 years down the line, how big you see this mobility brand getting created? Because in mobility, brand is just that product, right?

Yes, yes. I'll just explain on the mobility front.

People right now relate to mobility as knee brace, leg brace, back brace, right? It has more than 800 products.

We have also launched a mobilitics brand, which is our brand, our ortho brand is called Bracon. Our say BP meters, our glucometers is called Digion, and our nebulizers are called Nebon.

We have also launched a physiotherapist product-related brand called Mobilitics, Fredun Mobilitics, which also comes under the Fredun Mobility umbrella. We are not only planning, we want and we will ensure that our products are there in most of the retail outlets.

We are adding almost 30, 40 retail outlets every week in the markets that we are doing right now consistently. The physiotherapy part of it are also being launched in April, where it will go to all the physiotherapists.

Those products will be specifically tailored for the physiotherapist, which the physiotherapist can further sell to their clients and also utilize themselves. That will encompass the entire range of the mobility segment and sector.

We are doing quite well. We are doing quite well.

Step-by-step, we are going to launch these products. It is growing almost at 25% to 30% year-on-year.

This year, we'll anticipate further growth also. I'm talking about the coming year because we are adding another four to five states, and that will kind of complete almost 60% of India.

These are volumetric products. We cannot penetrate like a pharma products, where you can just put in 20 20,000, 20,000 packs.

This, you have to put in 100 chairs, you have to put in 300 chairs, you have to get the market demand for it. They'll see the products, they will feel it, they will have a tactile understanding of the product.

Then they will place further orders, because these are volumetric products. Penetration for any company in mobility segment is slow.

It is for us, we've got such a good response that we are now selling I think one of the highest number of wheelchairs in the state in Maharashtra at least. Most of the places in Mumbai have our products, and that will continue to go across states.

Sure.

Hello. Thank you for giving the opportunity and congrats on good set of numbers.

Sir, I just wanted to ask you, do we see any kind of inventory write-off in near future?

Our write-off of inventory is like ₹1,000, ₹1,400, ₹7,000 like that, sometimes if there is any damage. Big inventory, generally in pharmaceuticals, the inert inventory of the raw material is around for 3 to 5 years.

There is no question of any pertinent write-off at this point and stage or even in the conceivable future.

Okay. Thank you.

That's it from my side, and all the best.

Thank you.

Thank you, everyone, for joining the conference call of Fredun Pharmaceuticals Limited. If you have any queries, you can write to us at [email protected].

Once again, thank you for joining this call. Thank you, Fredun sir.

Good day.

Thank you. God bless.

Thanks.