Thank you. Hi, good afternoon, everyone, and a very warm welcome to Ipca Labs Q1 FY27 earnings call hosted by DAM Capital Advisors Limited.

On the call today, we have representing Ipca Labs management, Mr. A.K.

Jain, Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary.

I will hand over the call to Mr. Jain to make opening comments, and then we will open the floor for questions.

Please go ahead, sir.

Thank you, Nitin, and DAM Capital for organizing this call. Today's hearing call and discussion and answer given may include some forward-looking statement based on our current business expectations.

This must be viewed in conjunction with risks that pharmaceutical business faces. Our actual future financial performance may differ from what is projected and perceived.

You may use your own judgment on information given during the call. Our domestic formulation business for Q1 FY27 has delivered growth of 13% to one and to around ₹1,082 crore as against ₹961 crore in FY Q1 FY26.

MAT June '26, Ipca's rank remained continuously around 16 as per IQVIA. Market share has marginally improved to around 2.08% as against 2.07% in MAT March '26.

Top six brands of Ipca continue to feature in the top 300 brands of the country. Both on chronic and acute segments, Ipca has outperformed the IPM.

Our chronic segment growth is around 17.2% and acute growth is around 8.9%, and overall IQVIA has tracked our growth as around 11.7%. Overall export business has delivered growth of around 34% for Q1 FY27 to around ₹603 crore from ₹450 crore in Q1 FY26.

Promotional branded markets of ROW markets has delivered growth of around 16% to ₹143 crore from ₹124 crore in first quarter last financial year. Generic business excluding tender business has delivered growth of around 27% for Q1 '27 to around ₹340 crore as against ₹268 crore in Q1 '26.

Institutional generic business has delivered growth of around 107% to around ₹111.75 crore from ₹58 crore in Q1 FY26. Approximately ₹40 crore worth of shipment which was to go in March was shipped in April, and therefore, institutional business is shown exceptional growth in this particular quarter.

API business of Q1 FY26 has delivered growth of almost around 30% to around ₹424 crore as against ₹362 crore in FY26. Almost all businesses has delivered good growth for the company for the first quarter of the current financial year.

On consolidation basis, if we see, the overall business has grown to around 21% to ₹2,788 crore from ₹2,309 crore in FY26. For FY of Q1 FY27, we have seen a lot of uncertainties, significant fluctuations in material prices, shipment delays, non-availability of containers, and significant increase in logistic costs, which is further going up in the month of from July to August, and some of the destinations like South America and all, very difficult to get the containers and ship.

Overall, despite all these factors, we could deliver the better profitability. Overall consolidated EBITDA margins has improved to 22.88% for Q1 FY27 from 18.39% for Q1 FY26.

That's an improvement of almost around 4.49%, and from absolute amount is around ₹638 crore as against ₹425 crore in last financial year, an increase of almost around 50%. Standalone EBITDA margins for Ipca has improved to 26% in Q1 FY27 to around 23.82% from and to rupees around ₹557 crore from ₹416 crore in last financial year, an improvement of almost around 34%.

Having given the broad numbers, now I'll request participants to ask questions.

Thanks for the opportunity. Just on the India part, in the acute segment, we have underperformed the market.

What are the reasons for it? How we are doing overall in the India business, both in the chronic as well as in the acute segment?

What is the outlook for India business for FY27?

Both on chronic and acute, we have outperformed the market. It's not that we have underperformed on acute.

The market IPM growth was around 7.5% and IQVIA has tracked our growth as at 8.9%. By and large, in this market, I think, our anti-malarial segment has declined by almost around 24% this quarter, and that's one of the reasons that outperformance is not that great compared to the overall scheme, because there was hardly malaria in this particular period.

As far as the chronic is concerned, our tracked by IQVIA was around 17.2%, and the market growth was around 15.2%. As far as the overall business growths are concerned, let's say, our internal growth, our pain management business, which includes rheumatoid arthritis and osteoarthritis, both put together has grown by around 13% for the quarter.

Cardiovascular and anti-diabetic segment has grown by around 17%. As I talked earlier, malaria has declined by almost around 24% in this quarter.

Now malaria business is becoming almost insignificant. It is just hardly 1% of our overall business.

Anti-bacterials has delivered growth of 1%. CNS delivered a growth of almost around 19%.

Our cough and cold segment has delivered growth of around 9%. Derma business has delivered growth of almost around 17%.

Urology business has delivered growth of almost around 25%. Ophthalmology around 17%.

Overall growth of business is almost around 13% overall, yeah. Overall outlook is also looking better because market growth itself has started moving up.

What we are seeing the trend that the chronic business growth in the market is very good, and we are also delivering line growth in line with markets now.

The guidance which you have given earlier of 12% to 13% will remain for this year, right?

Yeah.

Okay. Sir, in terms of institutional business, what kind of normalized growth should we see in the subsequent quarters?

Or it's best if you can give for the entire year only, and where the pick up is happening, basically?

Let's say, as I said, in this quarter, the growth has been significant is mainly because of ₹40 crore worth of shipment which was to go in March, they were shipped in April because of shipping delays and all those. They are all nominated shipments and it is not in our hand to we just deliver the goods to notify that goods are available to the nominee of the buyer, and they pick up the goods depending on the availability of shipment.

What happens sometime is by the time they book the ship and they take the permission to ship, the freight rate and all that, the ship has gone or the rate has gone up, again he has to do start and then delivery become later. Because of that reason, the shipments were delayed, and therefore, there is exceptional growth.

Institutional business, we don't look for a very high growth. It will be remain in single digit kind of growth and the overall business may be around clear around the ₹260 crore to ₹300 crore, that's the range it will be.

We are not looking for a very high growth from institutional in the entire year.

Just one last question, if I may. On the generic segment, we have seen a pretty good growth.

Earlier we were facing some supply issues in the UK business. Whether all those things have been resolved now, and therefore, we are seeing a good growth pick up?

Are we seeing any traction in other geographies? If you can elaborate on that.

What will be the outlook for the whole year for this piece, as well as for the branded generic business?

Overall, if you look at generic business, broad-based it has all the market has given good growth. Let's see, if you look at UK European business overall, that has delivered almost around 70%, which is EU is the main growth driver almost.

Almost business has become from ₹83 crore to ₹137 crore. That's a significant growth has come from EU.

US has given around our shipment to US is around 8% up. Canada, there is some minor decline is there.

Overall let's say, the generic business is almost around from two excluding institution is around ₹268 crore to it became around ₹370 crore for Ipca as a whole. Overall growth because of institutions and other European high growth in Europe, overall business growth was very high, yeah.

Are we going to upgrade our guidance for generic business for FY27?

Overall, let's say, at the beginning of the year, we have given the business growth guideline that we should overall business will grow around 12% to 13%, but now looking at the upside what we are getting from overall generic business, India business performing very well, even is the API business was giving good growth. Overall growth percentage from 12% to 13% may become almost around 14% to 16% overall for the whole of the current financial year, yeah.

Okay. This 14% to 16% will be mainly driven from your upgrading in some part of the guidance in branded market, generic market?

Any update on your Unichem? That is also performing very well in terms of the margin also, and in terms of a strong growth on revenue front.

Where do we stand there, and what kind of growth and margin guidance do we give now? See,

overall for Unichem, I think, if you look at for first quarter, US business has given growth of almost around 27%. That is largely, I think, Unichem portfolio per se has grown by around 9%.

It is Ipca portfolio which they are selling for us in US, that portfolio has grown very well and that's the reason delivered almost around 27%. Per se, their Unichem's own portfolio has delivered a growth of almost around 9%.

Then

their Europe portfolio has delivered growth of almost around 3%. Brazil has given good growth and Brazilian traction is also improving.

They have grown by almost around 52% in this quarter, and they will expect continue to do well in Brazil. Acacia business which is there or ROW market business, that has also become almost around double in the quarter from ₹8 crore to 17 ₹17 crore.

Overall, and API business of Unichem has also started now moving up from ₹33 crore, ₹34 crore to almost around ₹58 crore. Almost around 73% kind of overall improvement in that business.

Overall, Unichem has also done well in terms of overall growth, yeah.

The guidance of 10% growth in the Unichem portfolio and 13% EBITDA margin, which you had given last quarter, that remain intact, right?

Unichem guidance, I'm not revising right now. Let's see for some more quarters how it performs, and we are working hard to deliver more growth, but let us see on ground, and thereafter, we'll revise the guidance.

Okay. Thank you so much, sir, from my side.

That's it.

Hi, good afternoon. Thanks for the opportunity.

Sir, firstly, on the US business, if you mind giving us some color on what we can expect for the next one to two years? Maybe some sense of the number of launches, both from Ipca's stable as well as from Unichem.

Also, you had talked of in the past that some of Unichem's products, you're going to change the API source to Ipca. Some more color on the US business would be very helpful, sir.

I'd say normal Ipca launches will be almost around three to four products, and Unichem will also launch similar kind of products. Almost in a year, there I think there will be around seven to eight kind of launches, both Ipca and Unichem put together will be there.

Some of the product approvals are already received for source changes, some products are in still in pipeline. That journey is going on.

They're also working very hard on, let's say, cost reductions on API, and those are also filed with FDA and somewhere it's on CB30 and somewhere is the past basis, it may take some more time to get those kind of approval, but that journey is going on, yeah.

Sir, on your base, then can we expect a 20%, 30% kind of a consistent growth for the next few years?

It's maybe around 15%, 16%, 17% kind of growth is possible, but currently looking at portfolio and other things.

Sure, sir. Sure.

Sir, one more question. Sir, you mentioned about material cost going up significantly.

Maybe if you can just quantify a bit on the kind of gross margin impact that one can expect in the coming quarters? Is this fluctuating or is it going up unidirectionally?

Some more color, sir, would be helpful.

Gone up, then came little down, then again little because petroleum prices going up, somewhere supply chain disturbances, some product going down, somewhere going up. Overall, if you look at last financial year, let's say, we have grown on terms of turnover, but Ipca's overall, let's say, material cost to sales was down by around 2%.

This quarter, even you look at we have grown by around 21% and my material cost has also moved up by 21%. Overall, let's say, we have improved the EBITDA margin by almost around 2.4%, but largely it has not come from overall let's say material cost savings on material cost.

It is just savings on material cost is just 0.14%. Largely, the EBITDA improvement has come because turnover has moved up, personnel cost to sales has gone down by almost around 1.41% and overall manufacturing cost to sales overall to the revenue has gone down by almost around 0.91%.

On consolidated basis, if you look at, material cost is down by almost around 1.35%, personnel cost is down by almost around 1.95%, and manufacturing and other cost is down by around 1.19%. Overall, let's say, EBITDA has improved on consolidated basis almost around 4.49% for the quarter,

yeah. Sir, my question is more like going forward, because you said in July, August, prices are going up again.

Do you foresee some margin pressures in the rest of the quarters?

No, no. No margin pressure.

I would see that your sales compared to sales growth, material cost will little come down.

Okay. That is good to know.

Sir, you also mentioned shipping and container and logistics cost. All that is baked in your guidance, sir, right?

We have taken that into account, but you say freight rate somewhere has gone up by three times. Like say South American markets, from I think the container's freight was almost around $3,000, it is almost around $9,000 to $10,000, and that too availability is difficult.

As far as US reefer containers were available at around $7,000 to $7,500, now it is almost $12,500 to $13,000. Even European containers which was $3,000 now is almost around $5,500.

Everywhere rates are moving up.

We have

spend and we have taken that into account, yeah.

Got it, sir. Just one more question, if I can.

Sir, on the India business, can you share the sales force strength, and what are the expansion plans?

We are almost around 7,000 people, medical reps around, and expansion plan is already completed, so that 7,000 includes that. I think in the middle of the year, we may include another almost around 200 people more on some of the new divisions which we'll be launching in the current year.

That will not increase significantly the number, just by around 200.

Got it, sir. Got it.

Very helpful, sir. Thank you and all the best.

Hello?

Yeah. Sir, my question is regarding your associate company Lyka Labs.

We invested in this company in FY 2022 and then invested through primary route also till FY25. Now this company's revenue has not grown and even the EBITDA has become negative.

Any plans to revive this company? What is happening there in the lyophilized injection?

What are we doing there?

Let's say, they're building up three different kind of businesses. One is for animal health business.

They have a lot of injectables which goes in animal health. They have done good work in terms of building that business.

Second, they have started the critical care business in terms of directly selling to the hospitals and all. Earlier, their most of the business was coming from P2P supplies to the other pharma companies.

That business is coming down and their own promoted business is now moving up. That is the second business.

Third, they have a lot of products relating to IVF. That part has also started doing well and they have added almost around significant number of field force in last two years, and that is they are incurring the cost.

Some of these are around break-even and some of these divisions is still below break-even. Therefore, that cost is also So, overall, I think we are hopeful that Lyka will do well in time to come.

They are on a right path.

Okay. Sir, just one suggestion.

At the time of the results, if you guys can give some press release mentioning what is happening there, because it is very difficult to find out what that company is doing because that is also a listed company. If a press release can be given with the updates, what is happening there, that will be very helpful.

Thank you, sir. All the best.

I think this year they have given the press release,

I think. I could not see that.

Okay. We will send it to you, yeah.

Hello?

Hello. My question is in regards with Unichem.

Sir, are gross margin improvements are due to rupee depreciation driving realization or supply of API from Ipca has started?

Ipca supply to Unichem is hardly any because I think one product they have given the order now because that's a source changes approved. One is their overall cost reductions has been good as far as their own captive production of API.

That has also resulted in overall some margin improvement there,

yeah. Also

their European business is doing well. That business improvement overall in the margins and Brazil, which were incurring losses, now is coming positive, and that business is also expected to improve well.

These are the things which are resulting in the better overall margins. As they start, they have whole program of filing the new products in all these markets like Europe, Australia, New Zealand, Canada, Chile, and all those.

I think when these registration start coming in, the business profile of this company will also change. Because currently it's mostly the US and the market where the margins are always under pressure.

These market, once the overall market mix improve, the profitability of Unichem will also improve.

Sir. In this quarter, a rupee depreciation impact is not as much, right?

Rupee depreciation is also there. If you look at overall turnover, let's say, out of, let's say, 21% growth, 5% increase is only on account of rupee rupee rupee depreciation, yeah.

Because dollar has almost gone up by almost around 11% in compared to last year's first quarter. That has also resulted simultaneously that our material cost has also moved up.

That has helped in our all in the overall margin, but material cost has also moved up because, let's say, a lot of your contents are also in dollar terms, and those cost has also moved up. That is only for the that 25%, because material cost to sales is always is almost around 25%.

On 25% of that cost, your depreciation cost has gone, but rest has come in terms of margins,

yeah. Sir.

Thank you.

Thanks for the opportunity. Sir, I missed the EBITDA margin guidance if you have shared for FY27, firstly.

If you can just share again.

At the beginning of the year, we gave the EBITDA margin guidelines of around 22% on consolidated basis. I think because of better performance, overall EBITDA margins may remain around 23%.

I'm improving the guidelines by 1%, yeah.

Okay. Sir, secondly, while the raw material fluctuations are there, but the rupee depreciation should be able to offset any fluctuation in raw material prices.

In fact, is it safe to assume that rupee depreciation benefit is much more than the raw material price fluctuation, and hence, it should result in better gross margin?

Let's say, material cost to sales is 25%. Out of that also, there are a lot of your Indian ingredients and other ingredients which are imported one.

There are a lot of other cost which is also related to your dollar terms. Let's say, freights are in dollar terms, a lot of testing materials and a lot of those things are in dollar terms.

There are a lot of machine parts which are of imported machines and testing equipments and all are also relating to dollar terms, their maintenance contracts and other things are also linked that way. We have huge amount of field force in international markets, their salaries are also going in dollar terms, because those promotional markets and all kind of things.

It's not only the only materials are impacted, it's the other things are also getting impacted. We have for promotional markets, we are running a lot of non-trading offices in various international markets.

Cost of that is also going up because of dollar. It's overall, but yes, in spite of the, let's say, increase in the cost and all, overall because of depreciation, it is to the extent of your margins and some of the Indian cost, that cost is not moving up, and therefore, you see that there is a significant improvements in your overall your manufacturing and other expenses.

To the

sales has moved up, but that cost has come down.

Got it, sir. Sir, what is driving growth in Europe segment as such?

Is it new product launches? Is it market share gain?

There are

new product launches are also there, but both Europe and UK and European business, both have done very well in the

Has the funnel from Unichem's portfolio started reflecting in the Europe business for Ipca?

No, no.

When do we think that would start happening, sir?

It'll take some time because let's say, they have started filing in those markets. We have yet to get the approvals, and it take almost around 1, 1.5 years after the filing for approvals to come.

Yes, there is a significant amount of programs for filing in the various markets, and so once those approvals start coming in, the margin profile for Unichem will also start changing.

Understood, sir. Lastly, when do we intend to start new filings for US market apart from product transfers?

No, we are already doing that. I think four to five filings will happen every year for Ipca.

Got it, sir. Got it.

Thanks a lot. That's it from my side.

Thank you for the opportunity. With the Indian field force expansion largely complete and the profitability is also improving, would incremental cash flows be deployed towards acquisition or any capacity expansion, or would focus more on filings and launches?

See, capacity expansion will also be needed and that's going on right now, because we will need a lot of capacities for European markets and US market. Right now, we are building up capacities for all these controlled releases and all extended releases kind of formulations at our Pithampur.

Traditional capexes are going on. Biotech is one area where also capexes are going on in terms of further increasing R&D investments, R&D assets, and at plant level also those kind of capexes are there.

On API side also, we are building up new plants because we are running out of capacities at Ratlam, new plants are build up at Dewas site and also at Wardha for intermediates and all. Some of the investments are also going on for converting the existing intermediates into more for continuous process kind of processes, those investments are also there.

Largely, I think, almost around ₹700 crore to ₹800 crore in current year will go in the capex side itself, yeah.

Thank you.

Hi, this is Pooja Sanghi. Thank you for the opportunity.

We understand that the prices were contracted earlier and now the rupee has depreciated, your realizations would have gone up in rupee terms. As per my understanding of the past, whenever this kind of thing happens, the dollar prices again get renegotiated lower.

If that were to happen, sir, how long do you feel that the currency benefit and the higher gross margin will be reflected in our statements? Like another two quarters or another year [unclear]?

I think there are no such renegotiations of the prices where the prices are to be reduced, no. Rather, we are increasing the prices everywhere, because your costs are also moving up.

All other costs are also moving up. There are no reductions and prices are by and large increasing only, not going down.

Okay. Thanks, sir.

Yeah.

Hello. Thank you for the opportunity again.

Could I get a split between the domestic growth as price, volume, and the new product launches?

Overall, I think volume growth is almost around 5%. Price growth is almost around another, I think, 4.5% to 5%, and new product launches may be around 2% 2% or so.

Overall growth is around 13%.

Thank you.

Compared to industry, our volume growth is higher.

Thanks for the opportunity again. Just one bookkeeping question.

This quarter, we have seen a decline in the interest cost quarter on quarter. If you can just give some thoughts on the total gross debt number, and whether we have done any repayments or anything?

Last financial year, we had almost around close to $50 million as a dollar loans which were completely repaid before March itself. In fact, before this dollar depreciation started, we have almost repaid every dollar loan, prepaid every dollar loan.

We don't have those kind of debt in books. Currently, the debt may be around ₹193 crore in books, that's a long-term debt.

We don't have zero working capital debt. I think by this year-end, what we will have is ₹70 crore of your term loan debt outstanding, and that will be repaid completely in the next financial year.

Practically and we have more cash in books compared to the overall loans. Loans are hardly around 1 ₹193 crore currently.

Out of that ₹193 crore, you're saying you will be making a repayment of ₹70 crore also?

No, at the year-end, ₹70 crore will be balance, because that loan is at much cheaper rate than current market rates. I earn more in mutual fund.

Why should I pay? I will pay on due dates, yeah.

Okay. We don't have any short-term borrowings?

Zero, yeah.

Okay. Interest cost is expected to decline in the subsequent quarters also, right?

Interest cost will be hardly any. We will be earning more than decline,

yeah. Okay.

Understood, sir. Thank you, that's it from my side.

Yeah.

Hi. Thank you for the opportunity.

Sir, just one question. Can you give some guidance on FY28 numbers in terms of the top line growth and EBITDA margin?

I think for the current financial year, we have already given the guidelines that our revised guidelines is around 14% to 16% kind of growth. We have revised it from 12% to 13% earlier.

EBITDA margin consolidated from 22% to 23%, we have revised upward by 1%, yeah, overall.

Sir, I'm asking for FY28.

So, '28 guidelines we will give at the time of quarter four,

yeah. Fair.

All right. That's it from me, sir.

Thank you.

Good evening. Thanks for taking my question.

Just one question on EBITDA margin for your consolidated business and for Unichem. If you sort of bake in all the impact of Unichem synergies playing out over the next, say, 3 years or so, and business scaling up in US and other markets, and India growing, where do you see EBITDA margin settling from a slightly medium to longer-term perspective for both Unichem and Ipca as a whole?

See, Ipca margin, which is maybe around 26%, could go up to almost around 30% kind of margin is possible. Overall EBITDA margins, maybe 2, 3 years down the line, maybe around 25%, 26% overall for consolidated basis, because by that time, all these other subsidiaries company will also start doing very well,

yeah. Right.

Sir, in terms of key investments, what are those investments on new initiatives, let's say, which Ipca is planning to undertake over the next 2, 3 years, if there are any plans or thought of inorganic, organic moves, some big investment plans?

Right now, our investment is, by and large, more is happening in biotech side. We have almost around now seven candidates in pipeline.

We are working on more number of now, R&D has capacity to work on at least around three to four products now every year. I think two products now we have already taken your engineering batches, and results are absolutely in line with what we were expecting.

I think validations are going on, and a lot of investment will happen in terms of clinical trials of all these biosimilars. We are targeting all global markets, and most of the products are known titer values are practically double or more of the current known in the market side.

We expect to do well, and there will be good amount of investment further will be happening in biotech. Current year also, we will be investing almost around ₹100 crore more on building up the piloting facilities and additional R&D investment in biotech.

A lot of those investments are happening now. Maybe, I think, in 1 or 2 years' time, we may need to further increase our capacities what we have built up on biotech, so that will be another additional investment in time to come will happen.

Sir, the EBITDA guidance or EBITDA expectation that you have, you are factoring in these clinical trials and these investments on

biosimilars? That we are factoring.

Because next 2 years, more revenue will come. Because by the time clinical trial complete, all those we are factoring in.

Right, right. Sir, is it possible to give some color on these products?

It seems that you're mentioning that your yields are much better than what's available in the market today. These seven biosimilars, and two of them which are probably a little advanced, are these old products, or are these products which will go off patent and you will be there in the first wave in the market?

If you can give some idea about what kind of products are you working on?

By and large, these are old products, but there is one product which is maybe that we are targeting around patent expiry itself, and that is very large product. Mostly other products are all are patent-expired products.

Right. Right.

You're saying in 2 years, we'll start to see, that means FY29, FY30 revenues will start to flow in from biosimilars?

Because first we have to produce your API, then formulations, validate formulations, do the stability, then go for clinical trials. That process is all going on simultaneously, yeah.

Okay. These are global trials, you will sort of file in US, Europe, and ROW markets all?

Put together, these are global trials, yeah. We already consulted European authorities, UK, then also US on all the clinical trial protocols and all.

All protocols are in line with all these regulatory agencies, yeah. Sir,

therefore, the filing will happen next year, is it? If you have to launch in fiscal '30, in fiscal '28 you will be making your first filing?

Will that be a right assessment?

I think this year practically your first is the validations of those products will happen, and thereafter, formulations development and stability charging will happen in this year. Somewhere, I think, mid of next year, the initial stability results will come, and thereafter, by the time we have already taken those kind of approval, we'll start the clinical work.

Now clinical work is significantly reduced. We have also the waiver of Phase 3 from European authorities and also from US, it's only the initial work need to be done.

The cost has also come down significantly now, because RLD is not required for Phase 3, because RLD cost becomes very high. Those exemptions have already come looking into biosimilarities and other parameters and results what we have submitted to the various regulatory agency.

Overall, I think, clinical things will start happening from the next financial year.

Right. Right.

Sir. Thank you.

Thank you, yeah.

Thank you. Thank you very much, all the participants.

Thank you. We can close this call, madam.