Good afternoon everyone, and welcome to Q1 FY27 earnings conference call of Emcure Pharmaceuticals. We will begin today's session with opening remarks from the management, followed by a Q&A session.

Joining me today on this call are Mr. Satish Mehta, Managing Director and CEO; Mr.

Taj Shaikh, Chief Financial Officer; Mr. Samit Mehta, Whole-Time Director and COO; Mr.

Vik Thapar, President, Corporate Development, Strategy and Finance; and Mr. Piyush Nahar, Executive Vice President, Corporate Development and Strategy.

We hope you had an opportunity to review the financial results, the results presentation, and the press release, which was released earlier this afternoon. Before we start, please note that this call is being recorded.

I also need to remind everyone about the safe harbor related to today's call. Certain statements made during this call may be forward-looking in nature.

These statements are based on our current expectations, assumptions, and management's views as of today. Actual results may differ materially due to a range of factors, including market conditions, regulatory developments, competitive dynamics, operational factors, and other risks and uncertainties.

The detailed disclaimer accompanying the results presentation and the press release applies to this earnings call. I will now hand over the call to Mr.

Mehta to begin with his opening remarks. Over to you, sir.

Thank you, Saurabh. Good afternoon to all of you.

This is Satish Mehta, CEO of Emcure, and I am absolutely pleased to speak to you post publication of our Q1 results, which I believe you must have seen by this time. Before I start talking about the performance for the quarter which has ended, I would like to share some important board and organizational updates, some important details, I would like to share with all of you.

Number one, our chairman, Mr. Berjis Desai, and as far as Berjis is concerned, he is associated with me for more than three decades, has been appointed as member of National Commission for Minorities, member of National Commission for Minorities he has been appointed.

It's a full-time employment of Government of India, and as a result of this particular appointment, Berjis is going to step down, Berjis Desai is going to step down from the boards of all listed companies. Obviously, as far as Berjis Desai is concerned, he will retire from the board of directors of Emcure at the conclusion of our AGM, annual general meeting.

As I told some time back, Berjis and myself, we have been working together for more than 35 years, and he has been very much responsible in shaping the value system of the value system and culture of the organization, and immense guidance and contribution he has given to Emcure. Obviously, being a stalwart and a very eminent lawyer in his own right, he has helped in terms of improving the governance standards and institutional processes of the company, and we will obviously continue whatever he has we have jointly built over a period of last 35 years and take it to the next level.

Anyway, the entire management of Emcure and each and every Emcurian is absolutely grateful to Berjis for the contribution that he has given to company in last 35 years, and things wouldn't have happened but for his active participation. With the recommendation of the board, I will now take on the role of Chairman in addition, Satish Mehta will take on the role of Chairman in addition to my existing role as Managing Director and CEO of the company post the conclusion of the coming annual general meeting, post the conclusion of coming annual general meeting.

In a weird way, I feel happy about the development because I jokingly keep on saying, that I started my journey in early '80s, and I still vividly remember the first year turnover of the company was less than 10 lakhs. At that time also I was Managing Director and CEO, and now, I've got promotion after 40 years, more than four decades of services to the organization.

Now, I will be Chairman and CEO of the company because of support that I have received, from you all. I assure all of you that company's strategy, operations, execution, everything remains absolutely unchanged.

In terms, of this new position that has been entrusted to me, I feel humbled, and I am committed to give more than what I have done so far, and I will work very closely with the board, senior management team, and each and every Emcurian to take the company to the next level. The first thing I told you about Berjis, stepping down from the board of the company for after having been appointed as member of the Minority Commission.

The second important announcement I would like to make is that Samit Mehta now takes over as Chief Operating Officer of Emcure, as CEO of M-- COO, COO of Emcure. As far as Samit is concerned, as you all know, as I told you in the beginning, is extremely passionate about science and technology.

He has done his MBA from Wharton, and he has spent, more than two decades with the organization. He has also been involved in giving a lot of innovative products, and has worked very closely, with the R&D and manufacturing.

Now, going forward, he will have a broader oversight of group R&D, operations, licensing activities. I have every reason to believe that Samit will play a bigger role, not necessarily in the areas, where he is directly involved, but overall strategic inputs, we'll we will get from Samit as he's getting, getting committed and to to the next generational leadership change, that will happen in the organization.

That's a very important development that has taken place that Samit is going to become the COO. He will get more and more involved in the management of the company and clear signal to everyone about the way forward.

The third important thing that has happened that we have just recently acquired 12% minority stake in Gennova, and now, Gennova happens to be completely, completely owned, 100% owned subsidiary of Emcure. With this strategic platform, the strategic control of our biological platform will obviously ensure that we have a very sharpened focus on biosimilars and obviously adjacent therapeutic platform.

The another thing, that we have done, and biosimilars, is very close to my heart. In fact, we began the journey 15, 16 years back.

There, as far as Samit is concerned, because of his passion for science and technology, apart from being, Chief Operating Officer of Emcure, he also becomes Chief Executive Officer of Gennova, our biotech arm, fully owned 100% subsidiary. He will obviously be focusing on taking Gennova, biosimilars, and other, technologies to the next level because I personally believe the way the things are happening at the global level, a lot of things are happening in the field of biologics, and obviously Samit's leadership to Gennova will ensure, that we will have a robust product pipeline going forward because biosimilars and biologics are going to play a very important role.

The Gennova consolidation now allows us full control of our India and foreign subsidiaries because all subsidiaries, Gennova, Zuventus, now everything is 100% owned by the parent company, giving us a very simplified and aligned group structure that ensures, strategic coordination across all businesses. I talked to you about three three major events: Berjis, stepping down, I assuming the role of Chairman of the company; the second thing I talked about, Samit becoming COO of Emcure, very clear signal about way forward; the third thing I talked, is obviously about Gennova, minority stake being acquired, 12.06%, and now, each and every company under the Emcure umbrella is 100% owned by parent company.

Having discussed about these three major events, now let me focus on our quarterly performance, which I believe most of you have seen. As far as our FY27 first quarter is concerned, it's the second year of our five-year plan, and I'm very pleased to say that we have started on a very strong footing, and Q1 gives a very, very encouraging early signal.

The Q1 FY27 reflected strong all-round performance with broad-based growth across revenue across revenue, profitability, and earnings. Let me tell you what has happened.

As far as revenue for the quarter is concerned, it grew by 22.8% year-on-year, 22.8% year-on-year to 2,580 crores, 2,580 crores, I repeat, supported by momentum across geographies. As far as EBITDA is concerned, it has grown by 25.8%, 25.8% to 508 crores, 508 crores, and margin has improved margin has improved to 19.7 percentile points, 50 basis points more, and reflecting the productivity gains and operating leverage that has happened in this particular quarter.

As far as PAT is concerned, profit after tax has grown faster at 36.2% to 292 cr, 292 crores, underlining the strength of quarter's operating performance. Inormous amount of extra control has been exercised in operating parameters and operating performance.

Again, outstanding performance as far as the second year of the five-year strategic plan, about which I talked last time. We have obviously begun on very, very sound footing.

With that, let me turn to the performance of what has happened in India. As far as India business is concerned, on year-on-year basis, it has grown by 10 to 10.2%.

We have done 1,094 95 cr, 1,095 cr, returning to double-digit growth, double-digit growth over the quarter previous year, Q1 of previous year. If you compare with Q4 of '26, if you compare with Q4 of '26, I repeat, we are grown by 12%.

As far as the performance is concerned, it is in line with our plan and line with our expectations. I must say that all our leading brands, all our leading brands in CNS, cardiology, and gynecology have shown very good traction, very good growth.

We have also seen we have also seen improvement in Zuventus, following the changes which have taken in the previous quarter. In the previous quarter, as I told you last time, there was a bit of problem in Zuventus, but now, we are moving towards stability because what really happens, there are three areas on which, we have been working: stability, consolidation, acceleration.

Stability we have achieved, we are almost in the process of completing consolidation, and now, we are obviously moving towards acceleration going forward, having achieved the first two objectives, that we have set for ourselves. Then again, as far as the in-licensed products, from Sanofi, Roche, along with Povistra from Novo Nordisk, the semaglutide from Novo Nordisk, the performance complemented, complemented the performance of our own brands and broadened our presence in relevant therapy areas.

It's a matter of happiness that through Povistra we have a very solid presence in obesity market, which I believe is going to grow going forward. I'm also happy to inform that we have entered into consumer business through our wholly owned subsidiary Emcure Wellness, and that is also getting traction.

In fact, one of the product Bitter Drops that we have is showing early signs of scalable growth going forward. It has been very well received, by the consumer.

It is showing, good traction, going forward. I'll keep on telling you quarter-on-quarter, about the performance of Bitter Drops as we go forward.

We remain confident of continued growth in India as we strengthened sales teams and portfolio gained traction. I feel, going forward, whether it is Q2, Q3, Q4, we will see the northward movements as far as the Indian business is concerned.

As I told you last time, as far as Indian business is concerned, there is a lot of, what I would say, overseeing of the performance, from senior management, I included, and obviously this particular part of the business is very close to our heart, and you will see positive movement quarter after quarter as far as India business is concerned, because, as I told you some time back, I think the process of consolidation is behind us, and now, we will obviously move towards acceleration. Having said that, now let me turn my attention to international market.

As far as the international business is concerned, it delivered a very, very strong and robust growth as far as the quarter is concerned, with revenue of 1,485 crore, 1,400 485 crore, recording a growth of 34.2%. Growth was supported by base business ramp-up, new launches, and obviously, we had tailwinds because of currency.

All regions contributed to this strong performance. All regions contributed to this strong performance.

Just to recap, as far as Europe is concerned, Europe grew by 32.8% to 537 crore, with growth growth led by a strong base business performance and obviously, enhanced contribution from liposomal amphotericin, enhanced contribution from amphotericin B. As far as Canada is concerned, Canada grew in the first quarter by 24.6% to 427 cr, with continued growth in the base business, while rest of the world, while rest of the world grew by 44.8% to 522 crore, led by very strong performance in ARV, HIV business.

Now, having spoken about stellar performance of international market and also, getting back on growth track, as far as the domestic business is concerned, let me spend a few moments, on R&D and the pipeline that we have. During the quarter which ended, we received 15-plus product approvals across developed and emerging markets, across developed and emerging markets we remove we received 15 product approvals.

This approvals provide visibility for continued business growth for Emcure across markets because as far as the international markets are concerned, the growth is driven by the quality of filing, that we have, what type of products that we filed and how many approvals we get. That plays a very important role, and it's a matter of happiness to inform my investors that we got 15 approvals in the quarter, that has just ended.

As we discussed previously, we continue to build differentiated capabilities across biologics, complex injectables, novel delivery systems, especially focus on liposomal platform, where we have a reasonably good understanding. I think, we are going to focus on technology-driven differentiated products.

That is going to be the core strategy that we will be pursuing as far as the emerging markets and Europe and Canada is concerned. Again, something interesting has happened, as in the month of July, as part of government technology transfer, as part of government technology transfer, government-led technology transfer, ICMR licensed, ICMR licensed a novel anti-HPV candidate, a novel HPV candidate for cervical neoplasia to Emcure.

This particular product, will will have to go through various phases, and we are very excited because this is NCE, and the development is also the development is also part of our women healthcare portfolio. As you know that is woman healthcare portfolio, gynecology is one segment, where we are doing doing well, and this is part of that particular segment.

Now again, as far as July is concerned, we signed a royalty-free, non-exclusive voluntary licensing agreement with Merck Sharp & Dohme to make and sell a generic version of experimental once-a-monthly oral HIV pill in 129 low and lower middle-income countries. The drug, islatravir, a pre-exposure prophylaxis, or PrEP, candidate, is currently in late-stage development.

As I told you, we do exceedingly well as far as the ARV segment is concerned. Last time, we spoke about lenacapavir, the molecule, which has been licensed by Gilead, and this is one more feather in our cap getting a MSD product, which is also a path-breaking molecule, a oral pill once a month.

Obviously, as we go along, as far as ARV portfolio is concerned, that also we are consolidating. That's what is going on.

Now, in conclusion, I would like to tell that as far as FY27 is concerned, strong start to the second year of our five-year journey. We delivered broad-based growth, saw improvement in India over Q4 of FY26, consolidation as far as Zuventus is concerned.

We have continued with our strong international momentum, acquired full ownership of Gennova, and deepened deepened our leadership bench. Now, as far as we are concerned, our priorities are absolutely well-defined.

The emphasis going forward will be on execution, execution, execution, that is key to success. I believe very strongly on that.

Second thing, acceleration and improvement as far as the Indian domestic market is concerned. We'll keep on doubling down on the international business where scale is also going to play an important role, where getting, technology-driven differentiated products is going to play an important role.

We keep on focusing on that. We also will work to advance the differentiated pipeline and convert growth into operating leverage.

If you recollect, last time, I had very specifically mentioned that we as a company, as far as the strategy is concerned, will double down on whatever we are doing, make the big brands bigger, that's one thing. The second thing, we will also be ensure, I'm very proud of the R&D that we have built up, we keep on getting, products from our R&D.

Even today when I am speaking to you, all the products, which have come from our R&D, like Ferrous Ascorbate, Orofer-XT, Orofer FCM, or Pause, or for that matter, all chirally pure compounds, they are doing exceedingly well. Do expect, R&D to contribute to the growth of the company, make big brands bigger.

The third obviously important vertical that we'll have as part of the strategy is to work on in-licensing from multinationals, also look out for products, from ICMR, and look out for products, which are in early stage of development. That's the strategy we'll follow.

I am very happy to say that Emcurians have shown a lot of resilience. That is something, which has happened.

If you look at the global environment, you know what's happening in West Asia, Middle East, or even for that matter, what's happening with Russia and Ukraine. With so much of uncertainty, Emcurians, have shown a lot of resilience, and everyone is absolutely committed to the growth of the company.

That is something, which makes me as I also take the role of Chairman with the support of each and every Emcurian backing me, and obviously support of all the investors, which means a lot to me, and that's what we are doing. I think, with the very diversified and geographic presence, in various geographies with four verticals that I talked to you, I think, going forward the performance is going to be northwards, is going to improve quarter-over-quarter, and all of us at Emcure, we are very positive about the direction, that company is taking.

Obviously, we'll be counting on your support as we go forward. With that, I will complete my this one, opening remarks.

Just one second. Just, I would like to reiterate my confidence in Emcure to deliver low- to mid-teen revenue growth in FY27.

As told you, quarter-after-quarter, there will be northward movements, positive movement. As we discussed in the past, we are committed to give 70 to 100 basic point basis point of EBITDA margin expansion.

Very bullish about the business. With that, I will request my CFO, Taj, to give little more color on and run through the financials before we open the floor.

Good afternoon everyone. I will now walk you through our financial performance for Q1 FY27.

Unless stated otherwise, all growth numbers in my remarks are on a year-on-year basis. Revenue from operations grew 22.8% to INR 2,580 crores, reflecting strong execution across both domestic and international businesses.

Growth was broad-based, with international markets continuing to be the bigger growth driver, while the domestic business delivered a resilient performance. Domestic revenue grew 10.2% to 1,095 crores, led by strong performance across key therapies, including CNS, cardiology, and women's health franchise.

International business grew 34.2% to 1,485 crores, continuing to be a key growth engine for the company. Europe grew 32.8%, supported by amphotericin scale-up and steady execution in the base business.

Canada grew 24.6%, led by new launches and market share gains. Emerging markets, rest of the world delivered strong growth of 44.8%, supported by robust growth in the ARV segment and continued momentum in the non-ARV segment.

Gross profit stood at 1,507 crores, up 16.1%. Gross margin was 58.4%.

Margins declined year-over-year, led by increased exports and also a function of product and business mix. R&D investments were INR 90 crores, representing 3.5% of revenue.

R&D investments are expected to pick up in the remainder of the fiscal year to support our full-year plans. EBITDA grew 25.8% to 508 crores, reflecting the benefits of scale, operating leverage, and continued productivity initiatives.

EBITDA margins improved to 19.7%, up 50 bps, supported by operating efficiencies and disciplined cost management. Depreciation and amortization grew to 110 crores from 99 crores in Q1 of FY26.

Interest cost was 32 crores. Effective tax rate for the quarter stood at 25.6%.

Profit after tax grew 35.4% to INR 292 crores, with PAT margin improving 110 bps. This reflects strong operating performance and improved profitability.

Gross debt as on 30th June stood at 1,291 crores, with cash and cash equivalents at 189 crores. Net debt stood at 1,103 crores.

Net debt is expected to increase in the next quarter, reflecting the Mantra and Gennova payouts completed in July. Looking ahead, we remain focused on sustaining growth across our domestic and international businesses, improving operating efficiencies, and driving steady margin expansion over the medium period.

With that, I will now open the floor for questions.

Hi, Kunal Randeria here from Axis Capital. Good afternoon, sir.

Sir, firstly on the India business, good to see that the growth has touched double digits as you guided in the last quarter. Is this a clean growth, is there any element of channel filling over here after Q4, or is this how the growth should be going forward also?

There is no channel filling in this, Kunal. This is just normalized growth that we have, and I think as the CEO mentioned, we expect growth to improve further from these levels that we have seen in the coming quarters.

Right. This improvement in growth would be I know CEO sir said a few things about the existing brands, your therapies doing well, but is how much of your revenue contribution would be coming from some of these in-licensed products?

Are they growing in line with the company average, below that or above that? Some color would be helpful.

I think most of the in-licensed are growing in line with the industry. I think that's what we talked about even when we've taken over the portfolio, they will continue growing in line with the industry growth.

Where we're talking about faster industry growth, that will be driven more by our own brands across women's health, cardio, CNS, oncology, those segments.

Right, got it. Second question is on the ROW business.

See the last you are coming off a very high base of last year where you had a 42% growth. Now you have 45% growth, driven by the ARV business.

What would be the ARV contribution, and would that mean that FY27 base would be high and then '28 could be a bit subdued?

No, I think we are seeing growth in both our ARV and non-ARV segments. I don't think we're looking at that FY27 will be abnormally high and then it flattens out.

ARV is higher in the current quarter. I think about 65 2/3 of the business in ROW will be ARV in this quarter.

For the full year, we do expect about we end up at about that 50-55%.

Got it. Just one more if I can.

I guess the gross margin decline has been due to the geographic mix of the business, but is there any lever for gross margin expansion beyond the geographic mix, you think? No,

I think broadly it is due to the geography mix. We obviously continue to look for ways and means to improve some of the activities around procurement or COGS improvements.

That should continue as an ongoing basis. By and large, I think we had been guiding historically to about a 60% plus gross margin.

Given the strength we're seeing where we're outperforming on the international piece of the business, I think where the gross margin is coming in at or somewhere in that ballpark 59% or 59% to 60% is what one would assume if we continue to see this trend of the international business outperforming.

Perfect. Thanks, Vik.

Thanks, Piyush, and all the best and congratulations to Samit. Thank you.

Hi, good afternoon everyone, and thank you for the opportunity. Satish bhai, Piyush, you spoke about domestic growth picking up year-on.

Just trying to understand where are we in the Zuventus restructuring journey? Maybe in some sense if you can quantify it, maybe we are 60% there, 70% there, some sense on that would be useful.

As you said, I made a very interesting statement which I'm sure, Alankar, you got it. There are three phases, first, as I told you about, stability, consolidation, acceleration.

These are the three very specific terms I used. As I told, in the last quarter, we had a problem, we had exodus as far as Zuventus is concerned, now the stability has come back, normalization has taken place, consolidation has also happened, and now we are moving towards acceleration.

As far as Zuventus is concerned, I think, most of the job has been done, and we are moving in the right direction. Zuventus is no more my worry.

It's only a question of, putting it on high growth. That's the basic objective with which we are working.

We have a very good team in place. All new people, they are also fairly well trained, and going forward, you should see good traction as far as Zuventus is concerned.

Sure, got it. Maybe a follow-up there will be if we look at the IPM growth, it's clearly picked up over the last two, three quarters, and in context of that, Emcure's domestic growth because of the challenges we've seen on the Zuventus front has been lower.

Would you like to call out when exactly would the company be back to growing at par with the market?

Alankar, I think from next quarter onwards you will start seeing that. If you look at even last year, 2H we had seen a bit of impact and slow down out.

That base effect will also start playing out from 2H this year. I think from second quarter onwards you will start seeing us more in line with the industry, and then second half will be more faster than industry growth.

Second half, Alankar, will be much better. As far as this quarter is concerned, we think we should be in line with the industry growth.

Again, as far as Q4 is concerned, if you compare Q1, over Q4, we are grown by 12.2% or 12.3%, it's all moving in the right direction.

Got it. The second question is again on domestic growth.

If we strip off the Sanofi diabetes portfolio, if we strip off Roche Nephro and Povistra, would you like to give some range as to where the domestic growth was in the first quarter?

I think if I strip out the Sanofi OAD and the Roche, we'll probably be about 6 to 6-7% growth in the quarter.

Povistra

effectively is a new brand that we are launching out, so.

Got it. Basically when you talk about growing at par or maybe outperforming the market, you are including You're looking at it at aggregate level, you are not just looking at the organic growth.

Next quarter onwards if you look at it, OAD will be in the base. Roche is a much smaller business, it doesn't move the needle much.

Got it. The final question before I come back in the queue, maybe Satish bhai to you is if you look at the traction in semaglutide Povistra, not just specifically on Povistra, but in general for the market, we've seen quite interesting trends over the last few months.

Maybe some media articles say that the pickup has been slightly slower, there is inventory in the channel, there are companies who say that more or less the traction has been in sync with expectations. What is your view as far as the pickup is concerned, and how should we expect the market to evolve maybe over the next 3 to 6 months?

I don't have a crystal ball, my dear, because, as far as we are concerned, we are marketing innovation, and what has really happened, that apart from marketing Povistra quite aggressively, one good thing that has happened from our point of view that last absolute 15 days back, Povistra was cleared, or semaglutide of innovator was cleared for MASH. That's one area where we see the growth, and that's one area, where we will possibly have a pole position.

To really opine, what's happening in that particular market, the jury is out. Wait for 3 to 6 months, before we know what's really going on, because I am given to understand almost 40, 50 brands are being launched, how much is channel stuffing and how much is real, what I would say, consumption, I wouldn't be able to hazard a guess.

I can only talk about, what's happening at our level, and I can only say one thing, as far as Povistra is concerned, month over month, we are growing.

If you can comment on the acceptance levels, both amongst physicians as well as patients, in any instances which you can highlight wherein which give you confidence that things will pick up going forward?

No, because what happens, as the innovator is concerned, that is rDNA molecule, number one. Then second thing, that's part of the public domain that two major Indian players, they had a recall.

The third thing, as far as this particular product is concerned, being biologic, I think, what really happens, the absorption or even for that matter the solubility is also a very major challenge. Since, the innovator, Novo Nordisk, and of course Emcure, we took a decision to make the pricing, very, very competitive, I have every reason to believe that eventually, we will emerge winner or we'll do better than most of the brands, because first of all innovation, second thing, massive data that we have, then more and more, publication of clinical trials, which is happening because of the association with the innovator.

Things will work out, very well because the generics, got launched only sometime in the month of March, there is a lot of noise, a lot of brands. Let's see how it plays out, but it's a question of, survival of the fittest, and that's what will happen over a period of time.

Where I feel, we did a very smart thing by getting associated with the innovator.

Good afternoon and thank you for taking my questions. On the export side, what is the constant currency growth for the quarter?

I think for the overall company level, the forex impact was about 6% odd, 6 to 7%. On the international would have been about 12% odd.

Thank you. For growth in Europe and Canada over the coming years, will it be more broad-based growth or will it be driven by one, two big product opportunities like Ampho, for example?

I think there will continue to be big hitters that will contribute and continue to gain momentum, whether it's Ampho or some of the other filings that we are expecting approval for shortly. That said, we have a portfolio approach depending on the market, say, for example, in UK, we also have a retail presence, there's a large number of your plain vanilla generics as well, which contribute meaningfully.

I think that mix will continue to happen. Of course, one or two big products will contribute more than some of the others.

I think it's a little bit different for the two geographies. If you look at Europe, multiple countries, I think it's going to be a little bit more concentrated in terms of some of the high-profile pipeline products that we're working on.

For Canada, however, single market, I think that's a fairly broad-based growth. There's no sort of big hitter product as such driving concentration in that market.

Thank you, Vik. Is Ampho now introduced in all countries of Europe or is it just a few one a few ones today?

It's pretty much in all the countries, and there also, we're ramping up supplies. The order book across the different countries should also go up in line with the supplies.

I think, Alankar, what's happened is we've, Alok, we have introduced the product, but again, most of them are tender-based, and they'll have their procurement cycles.

Right. It should pick up in the coming quarters is what you're trying to suggest.

Yeah. Okay.

Last question is on semaglutide for Canada. I saw in the presentation there's a filing lined up for it.

What could be the timeline that we are looking at?

I think we'll be filing in the current quarter. In

this quarter? Next few months.

Okay. Then Piyush, you will be in the second wave.

Do you still feel there's upside once you are able to get approval and launch the product?

I think it will be a decent product, but as we said, Canada, we're not banking on one product which will be a meaningful growth driver, it will be one of the portfolio products that we'll have.

Since this is the product it was known that it was going to go off-patent, and company has a relatively stronger positioning in Canada versus others. What could be the reason why you are in the second wave as compared to first wave?

We were looking at semaglutide as a global development. It was tacking along, whether it is Canada or some of the emerging markets, with our domestic development.

Then with whatever discussions were ongoing, there was some delay in terms of looking at expanding that or progressing that. That's why most of these other markets which also had patent expiry, it's going to be more a second wave filing than in March when it expired.

Thank you for taking my questions.

Sure. I am from Jefferies India Private Limited.

Myself Tushar from Motilal Oswal Financial Services. Sir, firstly on gross margin, as while there has been currency benefit as well, what has led to probably lower of the gross margin both year-on-year as well as quarter-on-quarter basis?

Not sure if you have already covered this in your comment.

Tushar, I think it's largely driven by the business and product mix, right? With Europe and ARV being higher, that leads to a slightly lower GC.

Effectively I think how we have always talked about in international markets, there's certain businesses where it's more B2B model. Where probably GC is lower, but at EBITDA level they are more accretive.

Okay. This as this sort of Europe business scales up or even the Canada business scales up with B2B, where do we see this gross margin sort of settling maybe FY27 full year?

I think '27 will probably be around the 59%.

I think if I can just add a little bit of color here. I think at the start of the year our overall guidance was that overall top line would be growing somewhere in the low to mid-teens and we expect a gross margin profile of the entire business to be somewhere in the 60% or 60% to 61% sort of frame.

Given our strength of performance in Q1 and visibility we have particularly on some of the order book on the ARV segment, etc., we think that in terms of the overall top line guidance, we're more comfortable being at the higher end of the guidance that we had given at the start of the year. Having said that, that'll obviously then as a mix of that piece being a bit higher impact the gross margin.

That's where I think Piyush guidance of closer to 59% as an overall mix would be about right on a higher end of the guidance on the top line.

Got it, sir. Very helpful.

Secondly on the India business side, if we break down growth into price, volume, new launches?

Yeah. I think if you look at it, the new launches would have been about 1 to 2%, the rest of it is largely price and volume that you have.

Within that, how much would be volume?

Price is about 5% for us, the 4 to 5%.

Got it, sir. That's it from my side.

Thank you.

Thanks for the opportunity. Sir, my question is related to the Povistra.

How is the response from the market, because it's an innovative product when we compare with generic products? What kind of market share we are building in this product now?

See, as I told some time back, we are getting traction month after month. Early days, as I told some time back, very recently approved, for MASH, we are also approaching hepatologists and gastroenterologists.

Let's see how it plays out, but having said that, I think there is a lot of cacophony and a lot of noise, because so many brands are being marketed. Eventually over a period of time, on the back of innovation, rDNA molecule, then even for that matter, a lot of data, which is coming from the parent company, we should emerge as one of the bigger players, over a period of time, and I see that traction month after month.

Thanks. Sir, my second one is related to the very strong growth in the rest of world business, what are the reasons behind it?

No, as far as rest of the world is concerned, as Vik alluded some time back, as far as emerging markets are concerned, as far as current quarter is concerned, it is driven by ARV, though if you look at the full year, there will be both, ARV and the rest of the business should be 50-50. As far as the European market is concerned, that is also being driven by the differentiated technology-driven product, that we are launching.

Even for that matter, we are also getting traction because of the bolt-on acquisition that we did in UK in the form of Marck, that is also adding to the business because most of the products are now commercialized. Obviously as far as Canada is concerned, we have very strong base, and Canada again what really happens, that we have a very strong product pipeline.

It's a very rounded strategy, that the company is following in terms of, solid growth, then getting a lot of approvals, and that will continue to drive the business in these three geographies.

Thank you, sir. Thanks.

That's from my side.

I am from the Sanctum Wealth.

Thank you for the opportunity. My name is Foram Parekh.

I'm from BOB, Bank of Baroda Capital Markets. My first question is on the net debt.

In our opening remarks, we mentioned about net debt going up in the next quarter, while it has also gone up in this quarter. If you can talk about our strategy of debt repayment or by when can we expect to become net cash?

I'll answer your last question first. Probably by the end of FY28 we should be net cash.

On the question on the debt going up, first you mentioned first I'll answer the one why it's gone up, going to go up in the next quarter. We have made these payments for acquisition of Mantra and also the Gennova minority stake, so that will take up my debt by close to around 450 to 500 crores.

On your question on why the debt went up from Q4 to Q1, yes, my working capital went up a little bit, but that's now stabilized in this month. That will come to normal thing in this quarter.

By the end of next quarter, we should have a net debt of close to around 1,450 crores from what today I see at 1,560 crores.

That's helpful. My second question is on our domestic organic growth, which was mentioned as 6 to 8% growth.

If you can give us some color, why is the organic growth growing at a slower pace, and how do we see organic growth pacing going forward? Will it come at par with the IPM?

I don't know if you were able to catch, I think the CEO had answered that if you look at year-over-year quarter, part of that high or let's say mid to high single-digit growth for organic was impacted by some of the consolidation happening at Zuventus level. I think as we look for the rest of the year, our guidance is that we'll be in line for the Q2 and in fact faster than industry growth as we accelerate, Zuventus back to kind of what we had seen off of a lower base of last year for the second half of this year.

We're confident in terms of the overall guidance that even the organic business should be growing at par or faster than the industry growth when you look at the full year.

Sure, that's helpful. Thirdly, on the R&D side, we mentioned that R&D expense is also likely to go up.

Some guidance if you could share, what is the number that we should be working for FY27, the contribution?

R&D, I think what we talked about for the full year will be between that 4 to 5% range, I think we continue to maintain that out.

Sure. Lastly, is it possible for us to give the segmental constant currency growth for the international markets?

I don't think we break that out, but broadly, as I said, for the overall corporate level, about 6% forex impact, international would have been about 12-13%.

Sure. Thank you, that's all from my side, and all the best.

Hi, thank you for the follow-up. This is Alankar from Kotak Institutional Equities.

Sir, you were earlier planning to launch semaglutide in Quebec via your partnership with Reddy's in the second quarter, the current quarter. Post the issue faced by Dr.

Reddy's, what are the revised timelines?

I think, Alankar, we'll defer to Reddy's on this, what's the timeline. Whenever we have the product with us, we'll be able to launch it out, but I think for timelines and all, probably Reddy's will be the right.

Okay. No, just checking there, they have mentioned about a relaunch possibly in November.

Earlier there was a lag between the launch in Quebec and the rest of Canada, just checking whether that lag will be there at the time of the relaunch as well, or you'll be launching it in Quebec at the same time as Reddy's launches in Canada, rest of Canada?

I think it will depend on how the supplies from Reddy's shape up and how much supplies we can get.

Fair enough, okay. The other question was historically if we look at the domestic market, there are some of these metrics like covered market and number of brands prescribed per doctor, where Emcure has been lower than most of your relevant peers.

As you do more of licensing deals apart from new launches, how should we expect this to move as you progress on your five-year road map?

No, of course, as far as domestic is concerned, very close to our heart, and we should be not only on par with industry, we should do better than them. That is the strategy on which we are working, and that's what I was telling some time back, as far as domestic is concerned, there are three levers, on which we'll be working: we'll try and make big brands bigger, we have some real jewels in the armory; the second thing, we'll obviously be working with multinationals and other in-licensing products, that is number two; and as I told, some time back, more than 30 to 35% of my sales are coming from the products, which are developed by R&D, whether you are talking about Ferrous Ascorbate, Ferric Carboxymaltose, or 11, 12 chirally pure compounds, that my company has given, or tenecteplase, for both stroke and MI.

That journey will continue. Obviously, as I was telling you some time back, the process of consolidation phase is over, we are moving towards acceleration, and you will see a lot of what I would say good news, as far as the domestic market is concerned going forward.

Personally, I am very bullish about it.

Alankar, if I can just add, I think the whole rationale we've been highlighting for some of these in-licensing deals is these are, in some cases, very strong legacy brands that come with strong pen habits of the doctors. We believe that, with the complementarity of Emcure's portfolio, we obviously want to leverage the co-prescriptions along with those writing habits.

That is indeed, the overall strategy to see that the co-prescription should go up as we, handle some of these in-licensing assignments along with our portfolio that we continue to build.

That's quite helpful, Satish bhai and Vik. That's it from my side.

Thank you and all the best.

Thank you, Darwin. Thank you everyone for joining us today.

In case you have any further questions or need any clarifications, please do get in touch with us. With this, we conclude the conference call.

Have a wonderful rest of the day.