Thank you, [Iqra?] .

Hi, good afternoon everyone and a very warm welcome to Ipca Lab's Q3 FY '26 post-earnings call hosted by DAM Capital Advisors Limited. On the call today we have representing Ipca Labs management Mr.

A.K. Jain, Managing Director, and Mr.

Harish Kamath, Corporate Counsel and Company Secretary. I will hand over the call to Mr.

Jain to make the opening comments, and then we will open the floor for questions. Please go ahead, sir.

Good afternoon. Thanks, Nitin, and DAM Capital for organizing this call.

Today's hearing call and discussions and answer given may include some forward-looking statement based on our current business expectation that must be viewed in conjunction with the risk 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 business for Q3 FY '26 has delivered a growth of around 12% for the quarter.

MAT December '26, our rank continue to remain at 16th as per IQVIA. On both chronic and acute segment, we have outpaced IPM.

On overall, let's say, IPM has grown by around 8.9%, Ipca has grown by around 10.6%. On acute segment, IPM growth was around 6.9%, our growth is around 8.4%.

On chronic segment, IPM growth was around 12%, and we have grown this business by around 15% as per IQVIA. Ipca's market share for the quarter continue to be remaining at around 2.08%, MAT December 2025.

Our export formulation business in Q3 has delivered a growth of around 17%, and for 9 months period, export formulations has delivered growth around 6% from 1,395 crore to around 1,477 crore. API business during the quarter was flat at around 317 crore.

For nine months of the current financial year, that business has grown by around 14% to around 1,051 crore from 924 crore. Q3 consolidated business has delivered growth of around 6.5% to around 2,245 crore from 2,393 crore, and for nine months of the current financial year, consolidated business has grown by around 8.44% to around 6,993 crore from 6,993 crore to 7,258 crore.

Our standalone EBITDA margins for the quarter has improved to 26.09% from Q3 FY '26 margin of around 24.25%, an overall improvement of around 1.81%. Consolidated EBITDA margin for Q3 FY '26 is at around 22.15% as against 19.87% in Q3 '25, an improvement of around 2.28%.

For first nine-month of current financial year, EBITDA margins is at around 20.79% as against 19.18% for first nine-month of last financial year, an improvement of almost around 1.61%. Having given the broad numbers, now I request participant to ask questions.

Sir, around Unichem, our current cost of goods sold is 45%, and assuming it to stay the same in upcoming quarters, suppose the company aims to reach 18% to 20% EBITDA margins in, say, around 18 to 24 months with operating leverage and some further cost cutting, can you provide a roadmap around the same?

Unichem business in current financial year has faced some problem because they're lost certain businesses in US and gained certain businesses. Overall, Unichem's, I think, basic business what they were doing other than Ipca portfolio has just grown by around 2% in current financial year.

The business where it is lost is mainly which is a high-volume businesses where the plants was also recovering good amount of overhead. That business loss has impacted little of Unichem's overall margins, and their EBITDA margins in this quarter is close to around 8% in the current financial year.

Their European business is improving now, and now more and more filings are also happening. In time to come, we hope to do better there.

As far as US business also their overall business growth is good because of, let's say, the portfolio which they have got from Ipca. Overall, I think first nine months of the current year, US business has grown by almost around 15% -- 15%.

For the quarter, US business has grown by around 17%, yeah.

Sir, for EBITDA improvement, can we have any roadmap around the same? Do you have any plans for improvement in EBITDA margins?

Improvement in EBITDA margins will come from, let's say, higher utilizations of capacity, better US business, and which we hope to do in time to come. Also improvement in business which is currently happening in Europe, yeah.

Sir. Regarding the proceeds that the company has of around ₹275 crore from the land sale, can you provide some color around that?

Are there any plans around it?

Let's say that their cash flow was also impacted because of payment of European Union that fine, which was to be paid on past issue of [perindopril?] some issue.

Almost around ₹181 crore has gone there. They have healthy cash flow right now.

They are sitting with almost around more than ₹250 crore of cash in the bank. Currently, there are hardly any expansion plan except someone solar project which is currently going on to use the more green energy, and that will have a capital outlay of almost around ₹50 crore.

Other than that, they don't have any kind of major capital expenditure plan, yeah.

Sir. Thank you.

Thank you for the opportunity, sir. Sir, my first question is on the promotional brands growth what we have seen.

I think this is such a strong growth after many quarter that we are witnessing. Anything that can be attributed to this growth or is it to some extent led by the rupee depreciation factor?

I think West Africa has done very good business in this quarter, and overall, I think for whole of the year West which is more of a French-speaking African market and all, that business has grown by almost around 41% for the first nine months. In Q3, that has gone up by almost around 69%.

That's one business. Latin America has grown by 20%, Middle East Africa by around 27%, East Asia is almost around 36%.

CIS business during the quarter has remained by and large flat. Overall business growth is good.

For first nine months, it has grown by almost around 14%. For whole of the year, we don't expect business growth to remain at even 14%.

It's likely to be around 11% or so for the first nine months of the current year.

Okay. Sir, relating to the domestic formulation business, we have been outpacing the industry growth, and we have been one of the top five or top 10 player in terms of the growth.

It looks like that from the PharmaTrac, the growth would have to some extent moderated for us also. Going ahead, if we see the GLP as a kind of key growth driver for the industry as a whole, but we are not there on the first wave of the commercialization of the GLP.

Given that, is it likely we would underperform to the kind of our larger peer in terms of growth in the domestic market?

We are also working for in-licensing, yeah we we we can come with the GLP. It's not that in-house will not be manufacturing, but yes, we are looking for those kind of opportunity.

Overall, let's say, for us, this growth is going to remain better because the trend what we are seeing that be better, let's say, our pain segment, which is over 50% now, is continuously driving the business. In this quarter also, pain has grown by around 13%.

Our cardiovascular business, because last year we have in the beginning of current year we have done the reorganization, first few months that growth was little lower because of restructuring. Now that business is also started delivering good growth, and I think for current quarter, cardiovascular domestic business has grown by around 16%, anti-diabetes business has grown by 14%.

Overall, that business is also good. In spite of anti-malarial declining by almost around 21% in this quarter, other business has done really very well like CNS business has grown by around 19%, derma business has grown by around 22%, urology has grown by around 17%, and other businesses, small small businesses, which has also grown by 13%.

Overall, let's say, business is good, and we expect to continue to beat the market, yes.

Okay. In terms of the gross margin, sir, there is a kind of a meaningful positive surprise that we have seen in this quarter.

Any specific quarter-specific factor that is there or it is the rupee depreciation factor or it is the product mix factor? What would have played this and how sustainable that you think this gross margin that we can see going ahead?

Let's say overall gross margin is the function of overall top-line growth. When domestic grows, when branded business grows, where we have good margins.

Even in generic businesses, we have very good margins, and that business growth was also very good. Institutional business in this quarter has declined, but other businesses has grown very well, and we have very good margins there.

Overall, for standalone, if you look at material cost to sales ratio has come down to around 24%. Material prices are, by and large, stable, slightly upward movement, but not very significant.

It's all the product mix change and higher-margin businesses growing higher in this quarter. That has also resulted in higher margins.

For first nine months of the current year also, if you look at, we have improved by almost around standalone, I'm talking, by around 3.36 basis points from 28.73% material cost in last year in first nine months. Material cost ratio is around 25.37%.

Almost around 3.36% percentage point improvement, and then this quarter, improvement is little more. It is around 3.64%.

Overall, I think it will remain for whole of the year maybe 3.3% or 3.4% kind of overall improvement in the material cost to sales ratio standalone for Ipca, yeah.

Okay. Just last one point, sir, from my side.

See, going ahead in terms of our focus, what would be the key areas like see whether it is the integrated manufacturing or optimizing the US or Unichem integration, or it is like capability buildup in terms of the biosimilar injectables, hormones? What would be the kind of a couple of key focus area which should drive growth for, let's say, over next two years?

All these are our focus areas because, let's say, there are different teams, and this is the focus area for them. Domestic continue to remain focus area, branded business is also focus area, and also your generic businesses because there are different teams who looks after that business and our overall filing is also building up in all these markets.

R&D output has now increased, in future that will also have better impact on overall generic businesses and also ROW filings are moving up. We hope to do on all these businesses good in the time to come.

As far as your biosimilar business is concerned, we have now five candidates, and now we have already started process of technology transfer for two products, and hopefully, that manufacturing will start shortly, yeah.

That is even targeting advanced market, sir?

That will target all global market. I think we have already taken opinion on our regulatory framework from UK MHRA, we have taken from European authorities and also from US FDA.

All the three agencies, we have taken that opinion on protocols and everything, everything is going on that line, yeah.

Sure, yeah. Thank you, sir.

Wish you all the best.

Thank you.

Hi, sir. Thanks for taking my question.

My first one was on the domestic API business. I think in our export API, broadly realizations have started stabilizing, but in the domestic API, just wanted to get some sense if the Y-o-Y decline is still largely a function of realizations remaining under pressure or have volumes also sort of come down?

Just wanted to get some sense around that.

I think overall domestic business we also do a lot of anti-malarial business. That business has little come down, and that impact is there.

Also some businesses on [chiro-peptides?] which were getting it manufactured from Crax facility and all, so that has declined.

Other than that, there is no meaningful difference overall.

Got it. Secondly, just on the margin expansion that we've seen this quarter on a Y-o-Y basis, I think the console margin expansion is a bit higher versus what you've seen on a standalone basis, though Unichem margins I think have come down.

Wanted to get some color around what is driving that, and is it also sort of linked to the fact that the ex of Unichem revenue, if I look at it for other sub, that is a bit lower this quarter? Is that linked to that or wanted to get some color around that?

Basically, it's Ipca's standalone business that is driving, and also for the nutraceutical business which we have in Trophic Wellness, that is also doing very well. Both these businesses has done well, and that is what is driving the margins, yeah.

Got it, sir. Thank you, and all the best.

Hi, thank you for taking my questions. My questions were more specific on Unichem.

In the quarter, revenues have declined by 2%, and you have already mentioned that it's largely on account of market share loss in the key products. That was already a part of H1 trends.

Is there any incremental market share loss in 3Q that we have seen?

No, actually that decline started from Q2. It will perhaps continue for one or two more quarters.

Okay. Understood.

How do you plan to regain the market share? Is it like a yearly thing that you get the business back or?

We are also

launching four, five more molecules in the US market, and we are also taking necessary steps to regain the market share where the market is lost for two, three major molecules. Suddenly because of increase in the competition and price reduction, they lost some business.

We will recover that business. It may take another one or two more quarters.

These contracts usually are for 1 year or how frequent?

Not necessarily. 3 months, 6 months.

It's not a hard-and-fast rule everything is for one 1 12-month contract and all.

Understood. What gives you confidence?

Is it gaining market share in the same molecules or is it the new product launches that you are planning for?

No, in the existing molecule also, we will recover our market share whatever we have lost, albeit at a lower price, plus new products also they are continue to launch in the marketplace.

Understood. Should we assume that gross margins and overall EBITDA margins should be under pressure although we might gain?

Definitely in one or two more quarters, it will be definitely under pressure. From there on, it should improve.

Understood. Post that as well, if we are bidding at lower prices, then gross margin should be under pressure, right?

No, but they will be also doing some Ipca business, which is shaping up and growing well. Unichem is our marketing partner in US, and we have already launched five molecules in which over a period of, say, 1, 1.5 year, we now have lot of market share.

Another four, five more Ipca molecule will also get launched in the US market. Unichem US will also have that benefit going forward.

Understood. These Ipca molecules, how big the business could be in next 1 or 2 years, just to get a rough?

We were doing about 10 molecule business in the US 7, 8 years back. We were doing about ₹300 crore.

Okay.

Out of that, we have currently launched around five molecules, which are all backward integrated. Another four to five molecules will get launched in the next 6 to 12 months period.

Understood. Got it.

Just in broad terms, how do you see Unichem's growth for next 2 years, FY '27 and FY '28, now that FY '26 is almost over?

Unichem growth and margin will improve once whatever filing they are doing currently in the Europe and all will get registered, and those products will come in the marketplace. They are also doing many registration in the ROW branded space.

All this will cumulatively help them in growing their business and margin over a period of next 2 to 3 years.

If you were to give the guidance, how much growth do you expect from Unichem's business on the top line or?

See, once this whatever market loss they have in the US gets recovered, then over a period of time, they should grow their top line anywhere between 8% to 10%, and our aim is to reach EBITDA margin to begin with around 15% maybe in 2, 3 years' time. Gradually improve it to about 20% when all their filing and registrations will come in the European market and that business will grow.

They have lot of capacity in their manufacturing plants. Once that starts getting utilized, their margins will automatically improve.

Understood. That European business will take time, right, because you have just filed the application?

Registration takes

anywhere between 1 to 2 years, filings are happening. Few are already filed.

Few more are getting filed. It will take some time.

Understood. Got it.

The 8% to 10%, you meant for US business or the overall revenue growth?

No. Overall, I am talking.

Understood. Yeah.

Thank you so much. This is really, really helpful,

yeah. Thank you.

Hi. Thank you, sir, for this opportunity.

Two, three questions. First, I wanted to ask on the branded formulations in exports.

I'm talking about Ipca ex-Unichem. You have given some sort of guidance for this year at around 11% growth.

Would you mind giving some outlook for FY '27 and '28 as well, and how do we see the business shaping up from a 3, 5-year perspective?

Let's say, our promotional branded business is very stable business except when currencies goes for a toss in the market. It's only around that time this business get impacted.

I think overall, this promotional branded market should continue to have around 10% to 12% kind of growth over a longer period of time. As far as generics are concerned, I think we will now grow faster in Europe, and US also growth will be faster.

Overall, generic businesses we expect similar kind of around 10% to 12% kind of growth. API business will have little lower growth, and domestic business is also around 10% to 12% kind of growth.

Overall, the growth is around 10% to 11%. That is what is overall broadly.

Detailed guidelines, we will provide on the overall business and margins once our current year's budget exercise, and that is complete by March, and thereafter, we will give the detailed guidance.

Sir, promotional branded, I understand. On the generic side, sorry, I didn't understand.

You're saying only a 10% to 12% growth despite the US from Ipca standpoint coming back, right, of that ₹300 crore business that was discontinued 6, 7 years back. Any particular reason why the softness on the generic formulation side despite US coming back?

It's basically uncertainties on institutional business. That is what we are keeping in mind.

Okay. Ex of institutional, what will be the outlook if I keep aside the tender business?

Maybe 1% or 2% more, yeah, growth.

Okay. Got it.

Okay. If I look at the EBITDA margin trajectory now, I think EBITDA margin this year, if I again exclude Unichem, it is kind of trending better than what you have been guiding last couple of quarters.

Any particular reasons why the margins are coming in better, especially on the gross side? Given that there's a big improvement now over the last 2 years on the EBITDA margin side, is there still scope for margin improvement in FY '27 and FY '28?

I'm talking about ex-Unichem.

It's a function of top-line growth. If top-line growth is around 10% to 12%, margin will definitely improve by 1.5% plus.

1.5% per year or over a 2-year period?

Every year.

Every year? Okay.

Yes.

There is a potential of 300 points 300 basis points margin improvement in next 2 years provided the growth remains at 10%, 11%?

Yeah.

Got it. Thank you, sir.

This is helpful.

Sir. Thank you for the opportunity.

Sir, where are we on the US business if you can talk about the third quarter run rate? I understand that this is subsumed in the Unichem revenue, but you don't give it out.

You don't give us the regional split for Unichem. For our Ipca US business, where is that number?

If you can talk about 9-month and 3-month and what is the outlook there over the next couple of years?

In last quarter Q3, the US business was almost around ₹395 crore, consolidated I'm talking, Ipca and Unichem put together. Q3 '25, that business was around ₹339 crore, there is a growth of around 17%.

All this growth in the US business is largely because of Ipca portfolio and of its own product and Ipca portfolio which was there of Bayshore under which third-party products we were trading around that time. Put together, that business is grown by around 17%.

Overall, if you look at first nine months of the current year, that business is almost around ₹1,140 crore, and last year, that business was around ₹990 crore. There is a growth of almost around 15% in the US business.

Most of this business growth is, by and large, because of either Ipca portfolio and Bayshore portfolio which has gone to Unichem, yes.

Sir, can you talk about the Ipca manufactured product portfolio, please?

That five

products launched, and all,

I think, overall, around $10 million to $11 million kind of business they have already done, yeah.

In 9 months?

In 9 months, yeah.

Correct. What is the exit run rate, sir, in the third quarter?

Business is going to be better.

Understood. How are we thinking about this business in the next couple of years, sir?

Mr. Kamath has already spoken on this matter, yeah.

Chirag, we have about 35 registrations, out of which five we have commercialized. Another five to seven molecule will get commercialized over next 12 to 15 months.

Gradually, every year, we will be adding five or six new products in the US market of Ipca portfolio.

You don't want to give a revenue number?

See, the thing is to get a market share after launch of product, it takes very long time. See, whatever five products I am today marketing, it is almost now 2 years.

Now we have reached a market share most of the molecules 25% plus because they are all our backward-integrated molecules, and there is further scope to improve market share on these molecules itself, the five what we are now marketing. There is a opportunity, and we are working towards that.

Understood. Just one feedback, sir, incrementally.

Sir, if you can also, for Unichem, provide the geographic mix of top line, that will help us evaluate the business better on a quarterly basis if you can do that. That'd be helpful, sir.

See, almost 2/3 of their business is from US. Other than that, they have small ROW branded formulation business, some API business, and generic business especially in UK and one or two countries of Europe, that's all.

Sir. Thank you so much.

Hi. Good afternoon, sir.

Sir, I still don't understand the gross margins. Excluding Unichem, it's already in mid-70s, and I think very few pharma companies report this kind of margins.

Also given the fact that your API business would be facing lower gross margins. Just want to understand because, I think, couple of years back, it would have been high-60s.

What is driving it besides currency? Secondly, what is the ceiling to this number?

It is pure product mix, nothing else. Wherever margins are better, those businesses are growing faster.

For example, in the domestic business, our chronic segment is growing faster than the acute segment where margin is less because most of them are anti-malarial business. Similar thing in the international ROW market also and generic business also.

No, I understand the product mix. Sorry, sir, to push you, but mid-70s margin, this Is it because in [unclear]

Sorry. Is it

Hello?

I will rejoin the queue.

Hi sir. Good evening.

Just one question I had. Have we started making filings for the US market from the Ipca side?

If you can share how many filings have been made and if any opportunity there you see for the next 2, 3 years?

I think current year we have already made four filings, and I think annual basis also around five to six filings would happen every year.

Okay. When do you see these new filings getting commercialized if having timeline in mind?

It will all depend on approval timeline, but let's say we still have, I think, we have over 30 filings, and we still have around 8, 10 approvals still pending, past approvals. Thereafter, new filing approval.

It will all depend on how the approval start coming in. Based on that, it's difficult to give right now the numbers, but yes, it all will depend on that.

Okay. Sir, any colors you can give on your European business?

There was some issue in the past. How do you see growth in the unbranded generic outside of US if you can give some color?

Let's say most of our businesses are happening in smaller geographies in Europe, Australia, New Zealand, Canada, and that business is good business. We have very good margins and all.

We have some business in UK. That business was fiercely competitive, and practically in that market, there was a bloodbath on pricing practically.

A lot of products were selling at losses in that market. Last 1 month, we have started seeing a sharp recovery again in prices, and the recoveries are as high as 30%, 40% kind of recoveries are seen.

It's only that kind of sometimes probably in the market when the inventories become large, people just try and dispose of the material, short expiry materials, and all that which kills the pricing. I think last financial year most of our portfolios were facing that kind of problem.

Now we are seeing that much better recovery, and we hope to do better business there. That's the lowest margin business we have in generic market.

By and large, the business which are coming from Scandinavian countries and other smaller European countries, we are not there in currently in Germany, we are not there in France or Italy or those kind of market, but we have good presence in Spain and other market, and overall margin profile is far better.

Okay. Sir, just one last question if I can ask.

You talked about your margins have improved. We have seen improvement.

Also, you mentioned you should see 150 basis point expansion in EBITDA margin. Sir, the steady business that you have in India, I don't know you don't spell out the margin number for India, but if you can give that number, it would be great.

Otherwise, qualitatively if you can talk about how the margin in the domestic business has been faring, has it improved significantly, steady? Or if you can give some color around how the domestic business margin is safe?

If you look at overall, our highest EBITDA margins come from promotional branded business in international market. The second level would be there is a domestic business.

Third will be generic business which we do other than UK. Then comes is the institutional business.

Then last will be UK business and thereafter API business. Margin wise, if you look at, the domestic branded business would be second for us, yeah.

How is it trending, sir? If you can give some color there.

What is your expectation? Because that's a pretty steady business, right?

It would continue to grow at 10%, 12%, you mentioned.

In promotional branded business, our material cost is very, very low. It may be 10%, 12% kind of material cost.

Any improvement in that business, similarly since our domestic business is also now anti-malarials and all these anti-bacterials are very small part of it and we are more going towards the CNS, urology, cardiology, that's the kind of business which is growing faster. Margin profile on that is also improving significantly.

Overall, at 10% to 12% growth, it's very easy to improve overall margin by around EBITDA margin by 1.5%. The quality of business is that way.

Sir. Thank you, sir.

Yeah. Sir, thank you.

Hope I'm audible.

Sir, in terms of the comments for the European market on the pricing part and the recovery, most of the pricing deterioration, there could be multiple reasons, but most of it was led because of tariff-related issues and dumping or was there anything particularly one-off to that angle? If you could spell out some reasons as to why there was significant pricing deterioration in the European market and is it more sustainable in terms of the recovery that we're seeing in the last 1 month?

My comment was only for this UK business, not on European business. European business is very steady and all, absolutely no problem.

My comment was only on the UK business.

Sure. In terms of the clarification for one of the comments you made, this is for the US business.

When you're guiding to the Unichem growth I think 8% to 10% or 9% to 10% for the next 2, 3 years, this is pure Unichem growth, right? Are we blending in or are we assuming Ipca US sales driving the US growth for the Unichem business?

Is that the case or we're just assuming pure Unichem US division to grow by itself?

We have already said current financial year first nine months, Unichem US business, their own portfolio is lower because of loss of market share in one or two molecules, which they hope to gain, regain maybe in another two to three quarters' time. On a standalone basis, once they regain that particular market share lost, they should also grow in their portfolio by 7% to 8% annually going forward with launch of four to five new molecules next 2 to 3 years.

Sir. Thank you.

Over and above that, whatever growth will come in the Ipca US business also will be their growth in the US market.

Sure.

No, madam. We can close the con-call.

We have answered all the questions. There is nothing more to add.

Thank you.