Thank you so much. Good afternoon everyone and a very warm welcome to Laurus Labs Q3 FY26 earnings call hosted by DAM Capital Advisors Limited.

On the call today, we have representing Laurus Labs management Dr. Satyanarayana Chava, Founder and CEO; Mr.

V. V.

Ravi Kumar, Executive Director; Mr. Krishna Chaitanya Chava, ED, Head CDMO; Mrs.

Soumya Chava, ED, Generics and Commercial; and Mr. Vivek Kumar, AVP Investor Relations.

Before we proceed, I would like to remind you that some of the statements made during the call today could be forward-looking in nature and a safe harbor statement to this effect has been included in the press release that has been shared on the company's website. I hand over the call now to Dr.

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

Thank you, Nitin. Good afternoon, everyone.

We continue to execute our strategy the advancement of important clinical and commercial programs with global partners, successful ramp-up of new launches, and strengthening our leadership in ARV segment. Our large-scale development and manufacturing capabilities across small molecule as well as large molecule offerings continue to gain traction with multiple partners.

We are seeing healthy level of interest across technologies and scale from our long-term existing partnerships. We are confident that we are investing in interesting technology platforms, many of those already underway.

Successful execution of these projects will continue to transform our business portfolio and drive future growth. Some of the notable progress I wish to highlight, we made significant investments in capex so far in peptide development and manufacturing infrastructure to meet our current and future capacity requirements.

In addition, we operationalized our antibody-drug conjugate and gene therapy process development labs in Hyderabad this quarter, and the construction of GMP manufacturing facility is well on track. Last month, we also announced increase in giant investments in Krka Pharma, which is in line with our plan to support ongoing FDF facility construction in Hyderabad.

Phase 1 is expected to be completed by mid-2027. Moving on to financial results, we delivered another quarter of strong operational and financial performance.

Revenues for the third quarter stood at ₹1,778 crore. Gross margins have expanded further from the previous quarters and maintained around 60%, and EBITDA margins expanded to a little over 27%.

We achieved these numbers through strong performance across our generic business and also clinical and commercial supplies of CDMO programs to our partners. Our product mix, generic business, the operating leverage have continued to do well in supporting our healthy margins overall.

As we look forward, we remain well on track to deliver healthy operational growth for the entire financial year 2026. Now I would like to request Mr.

Chaitanya to share key updates on our CDMO business.

Thank you. Yeah.

On the CDMO side, we continue to see strong interest in our integrated service offerings across various complex technology platforms. Our cumulative 9-month performance has been very healthy, clocking more than 50% growth.

This has been supported by strong recurring business from our existing long-term customer relationships across various different scales. Now in the small molecule space, our Q3 sales have been at ₹408 crore.

I would say this performance is in line with our expectation due to phasing of deliveries in the coming quarters involving very long and complex synthetic processes. Pipeline momentum has remained very healthy with well-balanced mix of big pharma clientele and also mid and small-sized biotechs.

Majority of the pipeline programs under execution utilize several advanced technology platforms, and in line with that, we continue investment for large-scale capacity expansion in our Vizag sites and expanding our capabilities, including peptides, flow, high energy chemistries, purifications, etc. Now on the Bio division side of things, Q3 sales have been reported at ₹43 crore.

The performance has been a bit muted, but we are seeing better and longer visibility on demand projections and executing longer campaigns on the CDMO side. Additionally, our AOF business is clocking healthy operational progress with continuing customer interest for dedicated lines.

Construction work for the commercial-scale fermentation facility at Vizag is progressing in line with the plan, and we expect a phase 1 capacity of a little over 400 kL to be operational towards the end of 2026. Thank you, Krishna.

I now request Soumya Chava to share key updates on our generic business.

Thank you. The revenues from the Generic division have continued to perform well, reporting growth of 37% to ₹1,327 crore for quarter three.

For the 9-month period, we achieved sales of ₹3,510 crore, reflecting growth of 26%. The growth has been supported by higher ARV volumes, and more specifically, by strong offtake in recently launched products in the developed markets.

We continue to see stability from the established product portfolio and expect the benefits to continue at least in the near term. The broad API market portfolio and production capacity in the ARV business continue to be fully optimized, ensuring that we are well-positioned to support additional orders as and when they arise.

This positions us well to meet customer requirements. The oral solid facility expansion is progressing well.

A significant part of the planned capacity became operational during the quarter and is currently undergoing ramp-up activities in line with the plan. Cumulatively, 92 DMFs have been filed to date.

In developed markets, 4 formulation dossiers have been filed and 5 approvals received during the 9-month period. Overall, 91 products have been filed cumulatively to date.

Thank you.

Thanks, Krishna, Soumya, for the overview of Generics and CDMO business. On the R&D front, overall R&D spending was at 4.1% of our sales for the 9 months FY26, increased by 8% year-on-year, including our spend on cell and gene therapy stage.

This R&D spend is in line with our full-year target, and we continue to invest in portfolio focusing on product complexity, scale, and sustainable and new technology platforms. Let me share a brief on the quality side.

The 9 months, the company underwent close to 110 quality audits by multiple drug regulatory agencies and several customers. Company has successfully passed audit inspections without any critical findings.

On ESG front, one of the leading agency S&P Global has published its 2025 ESG score, in which Laurus reported an impressive 10% 10 percentage points increase in the score, achieving 81 out of 100 points. This reflects our continued commitment to sustainable development and exceptional performance ESG practices as we move along.

Now I request Mr. Ravi Kumar to share overall financial highlights.

Thank you, Dr. Satya.

Very warm welcome to everyone for this quarter three and 9 months FY26 earning call. Total income from operations for the 9 months came at around ₹5,001 crore.

We just crossed ₹5,000 in 9 months' time. Registered a growth of 30%.

We have continued to deliver strong growth mainly due to sustained ARV business momentum, strong CDMO, and growth in other generic business. For the quarter three, total income from operations was at ₹1,778 crore with a 26% growth.

Gross margin maintained healthy way for 9 months at 60.1% and for quarter three, it is at 60.9%, mainly due to better product and division mix and continued process improvement efforts. EBITDA for 9 months stand at ₹1,303 crore with a margin of 26.1%.

It is well within our earlier guided range. For quarter three, EBITDA reported at ₹485 crore with a margin of 27% due to strong operational leverage.

Profit after tax at 9 months, ₹610 crores. It's a growth of 388%.

For quarter three, ₹252 crore. ROCE has improved to 18.5%.

If you look at last three quarters, it is progressively improving. On the capex front, we invested about ₹246 crores for the quarter, and cumulatively for 9 months, it is ₹735 crores.

Our net debt stood at ₹2,092 crore, which is similar range of quarter ended September, and debt to EBITDA has further decreased to around 1.2. On the capital allocation front, our strategy remains unchanged, and we will continue to prioritize investments into high-value business segments to drive near and long-term growth and return for our shareholder over a period of time.

To conclude, as we will finish the year, we are confident in delivering growth and ongoing focus on execution. We remain well-positioned to drive long-term growth.

You can refer our IR presentation for more details. With this, I would request the moderator to open the lines for Q&A.

Thank you.

Thanks for the opportunity and congrats on a good set of numbers. Just first to start from keeping question in terms of, if you could break down ARV sales into formulations and API?

In the 9 months,

Hello? I'm just answering.

In the 9 months, APIs is 86 The formulation is ₹865 crore, ARVs. In the APIs is ₹1,259 crore.

Sorry, how much? How much is the ARV API?

Tushar, it is there in the IR, or Vivek can give it to you, Tushar. You can ask any qualitative question.

Yes. Total ARV revenues were ₹744 crore for the quarter three.

Got it. Secondly on the capex side, this 9 months capex is largely more than what you would have done in FY25, and when we have certain contracts maybe on peptide side or now in ADC, firstly, how much one can think about investment into peptides as an asset over let's say next 12 to 24 months, and ADCs as well, and then thirdly on the overall capex for '27?

The ADCs still at the nascent stage right now. We have allocated $25 million to the GMP facility which is under construction right now.

We don't expect any meaningful revenues coming from ADCs in the next 2 years. When it comes to CDMO investment in peptide commercial manufacturing facilities, we expect qualification during this calendar year, and we will give you more details as and when we're in position to give feedback to you.

Sir, overall capex?

Overall capex this year will be about ₹1,000 crore in FY26. FY26, based on the current estimate, we do feel it will be over ₹1,000 crore next year also.

This would be largely done with keeping net debt at similar number?

Maybe debt may be increase slightly if it's needed, but your debt by EBITDA will be in a better way. Yeah.

Got it, sir. Just one last from my side if you could at least just share in terms of pecking order, the gross margin for different segments like API, Synthesis, FDF?

We are not giving that segment-wise gross margin details, but it is everybody's guess. Yeah.

No, no, sir.

Qualitatively, while not a specific number, but directionally if you have to think about, is FDF, Synthesis at a similar gross margin, API at a lower gross margin, is that the way to think about?

Tushar, the order remains same: CDMO, Formulation, API. Yeah.

This is in order. Yeah.

API on the lower side, Formulation on the higher side, and the CDMO is on the top.

Because, sir, sequentially if we see, quarter-on-quarter there has been improvement in gross margin while the share of Formulation has increased considerably in this quarter compared to previous quarter, which is why I was trying to understand. In fact, Synthesis share has reduced and even API share has increased.

Which is why I was just trying to understand if there was anything look into as far as gross margin for the quarter is concerned.

I think the order is remains same, Tushar. It's product

I think you see there's a product mix some segments within the same segment, some products where higher margins were there. See, if you look at last quarter also, we have the similar gross margin.

This quarter also gross margin. We expect to maintain gross margins of 60% around 60% for the coming quarter and also next financial year.

Sir. That's it from my side.

Thank you and all the best.

Good evening to the team, and congratulations for a good set of numbers. Thank you for giving me the opportunity.

Sir, I have a couple of questions. First on the CDMO side.

CDMO grew 88% in 88% in H1 FY26 where management has repeatedly warned that this business is lumpy. Your consolidated quarterly revenue grew only 7.5% sequentially over quarter two.

My question here is your CDMO growth is H1 was phenomenal due to late-phase and commercial deliveries. However, looking at the sequential revenue growth in quarter three, it seems the lumpiness might be entering at a plateau.

Is the revenue we see in quarter three the new sustainable quarterly base for CDMO, or did this quarter include a significant portion of registration batches and/or launch quantities that might not repeat in quarter four or quarter one of FY27? This is my first question.

See, CDMO revenues, if you look at the overall year, 9 months, we have grown significantly. We have also confidence that growth will continue like this.

Although the Q3 was a little softer because of timing of deliveries to our partners, but if you look at Q4 FY25 versus Q4 FY26, we expect growth.

Okay.

We request you to take annual revenue than a quarter-on-quarter for the CDMO.

Okay. Fair enough, fair enough.

Sir, my second question is around the opex burn on specialized modality. With the impressive PAT growth this quarter, the burn from specialized modalities like CGT and ADCs less visible.

However, as an analyst, I want to understand the core efficiency. Could you quantify the specific quarterly EBITDA drag from this non-revenue-generating activities?

Furthermore, since you now recruited new leadership for ADCs, is the INR 250 crore budget still sufficient, or should we expect an upward revision in opex as you move towards bioconjugation and fill-finish capabilities?

As a general philosophy, we were informing all our investors earlier,

Sir, you're not clearly audible.

None of the pre-operative expenditure on any of our new initiatives is capitalized. Every new modality expenditure is expensed.

In the ADC space, we're investing significantly both in opex and capex, but that is going through balance sheet. We are not capitalizing it.

Okay.

Coming to your question of the team, actually we have a separate team identified guy who is relocated from US to India to take care of the ADC and then not gene therapy.

Okay. My last question is on the ROCE and ROE guidance that you have given the last quarters.

The management has highlighted that the company's current size can absorb the INR 1,000 crore annual capex better than in the past. However, with the groundbreaking of 5,000 $600 million of Vizag complex and a current fixed asset turnover of 0.9, aren't we risking another multi-year period of operating deleverage specifically if your Bangalore bio capacity is sold out until end 2026 and new Vizag capacities are also a year away?

From which specific division will it be incremental turnover came to bridge the gap to your 1.1 asset turn and 25% ROCE target in next 12 months?

I think in case of Bio, our revenues will stagnate until we operationalize our new capacity, which will be by end of this calendar year. We are not committing that we will achieve a ROCE of 25% in the next 12 months, but we are confident that the ROCE percentage will go up from the current 18%.

Sir, you have said 18%, right?

Right now it's 18.5%.

Right now it is 18.5% ROCE. We expect to go up, but we are not committing it will go to 25 with a time-bound program.

Yeah.

You're not putting any number here.

Yes. Oh

okay, okay. Fair enough.

Thank you, that's it from my side.

Yeah. Hi, thank you for taking my question, and good afternoon, team.

It's heartening to see a very strong jump in the operating cash flow. I'm looking at the 9-month number.

It's about 600% increase, but there is an interesting trend here, Ravi ji, if you can elaborate and help us better understand this wider picture. If I look at the 10-year data, I'm looking at 2016 to 2025 cumulative, we clocked an EBITDA of ₹8,500 crore, and against that EBITDA of ₹8,500 crore, we generated an operating cash flow of about ₹5,400 crore, so that's about 63% conversion.

Whereas in the 9 months, the conversion is 113%. So 63% going to 70, 75, even 80% is understandable.

There is a definite change in the net working capital strategy as far as I can understand. If you could just help us double-click and understand a more longer-term and more sustainable conversion of EBITDA into operating cash flow.

Thank you.

Sajal ji, thanks for your very interesting question. This kind of a help happened because of some of the customer advances which helped this year.

Of course, if you look at the absolute number of the NWC is close to the similar number for the March and December, but the revenue has increased. That's really help.

You are right, from 63 to 80, 90%, but beyond that actually, it's some part is helped through customer advances. Thank you for your in-detail understanding.

Sure, Ravi ji. Just to harp on that one, given that the business characteristic is definitely changing in the favor of CDMO and this customer advances will be an ongoing thing, we cannot compare quarter-over-quarter for advances because in 1 year the advance may be higher than the other year, but on a broader 5-year basis for the going-forward 5-year, I think the conversion should be a lot better than what we have delivered in the last 10 years.

Is that a fair assumption?

That's a fair assumption.

Okay. Thank you.

Thank you. My second question is for you, Dr.

Satya. Where not to go or what not to do is also equally important because business have got finite cash flows and capabilities.

In that context, what is that one area where Laurus has chosen not to grow despite opportunity looking very interesting in the near term?

Very thought-provoking question you asked, Sajal ji. See, right now we decided not to enter into large-scale mAb manufacturing.

We don't want to do that. That area we decided not to get into.

The other area we decided not to enter right now is also sterile manufacturing. These two areas we decided not to enter.

Although opportunities looks good, but we also need to understand our management bandwidth to handle many things. We know right now we are busy with what we're handling.

We have visibility about our growth plans in the next 2, 3, 4, 5 years. We are cautious in the areas where we wanted to enter and deploy our resources, both man, material, and money.

Yeah.

That's understandable, Dr. Satya, because if you look at India, I've seen many large sterile and mAb, monoclonal antibody players, one of the leaders in that space are struggling when it comes to their balance sheet and the ROCE profile.

Completely understand that strategy, and thank you for clarifying. Thank you.

That's all from my side. Thank you.

Hello, sir. Thank you so much for the opportunity, and congratulations on a great set of numbers.

Sir, that is my first question on the joint venture with Krka Pharma. Can you please elaborate what are we doing, because I'm recently tracking this company.

The joint venture with Krka Pharma is to manufacture formulations for European market where APIs will be supplied by us, and in the phase 1, we are creating 3 billion solid oral capacity and 100 million solid oral capacity for potent molecules. In the phase 2, we will create another 5 billion tablet capacity in the solid oral space.

Phase 1, we expect to complete by mid of 2027. This unit will primarily do formulations packaging for various European markets and also some markets in Asia Pacific as well.

Right, sir. Thank you, sir.

The second question is on cell and gene therapy. If you can highlight or elaborate what kind of revenues will kick in, and what are we trying to achieve for a layman who understand little bit about pharma, it will be helpful.

Thank you.

In the cell therapy, our associate company, ImmunoACT, is already having commercial revenues. When it comes to gene therapy, we are at very initial stage of investments.

In antibody-drug conjugates and gene therapy, our process development labs were operationalized, and the GMP facilities will come in the next 12 months. We don't expect any revenues from ADCs and gene therapy at least in the next 24 months.

Right, sir. What about the joint venture with Krka Pharma?

We will have revenues in the next financial, not in this financial year, 2028. Yeah.

Okay. Thank you so much, sir.

Thank you. All the best.

Hello, am I audible?

Yeah. Sir, first question is both for CDMO as well as for API and FDF business.

Q-on-Q and Y-o-Y, if you can just highlight is there anything with respect to volume and pricing, especially in API and FDF? Have we benefited on pricing in API and FDF?

In the API, FDF, we predominantly benefited from the volume gain.

Okay. Pricing has not really changed much, correct?

Pricing hasn't played a significant role in this. The volume gain was significant.

Was the main reason. Okay.

Sir, second follow-up, just a clarification, also on the CDMO side. If we look at sequentially, CDMO revenue is down by 13%, Y-o-Y up by 1%.

Now in the last two calls, we have been indicating supplies to late-stage development as well as commercials. Despite that, we are seeing a flattening out of revenue.

Is there any call-out you would like to make on that side? Where ideally if commercials are playing out, then the ramp-up should be slightly higher before we start flattening out and the new molecule pipeline start replacing or compensating for that.

Even while the late-stage supplies and also commercial supplies are ongoing, even in such situations, some of these supplies are once or twice per year in some cases. There's not necessarily a supply going out every month.

It comes down to their internal manufacturing capacity and demand requirements. Even in the case of it going commercial, we'll continue to expect lumpiness in some of the programs.

I won't say that's the case for all, but some of the programs, you will continue to see that lumpiness on a quarter-to-quarter basis.

On the annual basis On the annual basis, you have to look at on annual basis number one. Number two, on annual basis, we are still committing to our earlier projection for the CDMO for full year.

Correct.

Yeah. I was more keen on '27 because some new molecule supply has to start for us to compensate for this lumpiness, correct?

Or else we will see a kind of a flattening out or maybe 5 to 10% kind of a growth in CDMO business. If you can just talk a bit about that, how to look at '27 CDMO revenue growth?

While we're not giving any concrete numbers for '27, we still expect a healthy growth over whatever we expect to report in '26. If you look at FY26, in the 9 months, our growth is close to 50%.

Yeah. We expect Q4, as I mentioned in just now with another question, our Q4 FY25 was 461.

We indicated that our Q4 FY26 will be better than Q4 FY25. We have visibility now how FY27 look like, but we are not giving any quantitative guidance.

It's

more about qualitative. Are there any large molecules coming up for supplies for you in '27 based on the pipeline that you have created over last 2, 3 years?

Is that the way to think that will drive the growth?

The majority of FY27 revenues in our CDMO division will be commercial supplies. I think that much I can make a statement.

Yeah. Majority will be commercial supplies.

Okay. Sir, this is more with the gross margin improvement that we are seeing.

Has currency played any role in your gross margin improvement, because sequentially we would have benefited reasonably on the USD-INR movement and USD-euro movement also for that matter? Not very

significant. Answer is yes, but not very significant.

Could it contribute 20, 30 bps or even 40, 50 bps of gross margin improvement sequentially? This is in context of adverse mix in the broader segment, like CDMO share is down, API share is significantly up.

That's why I was asking. See, definitely

we will get a benefit because we are a net exporter, but I'm saying that it is not a very significant impact or positive impact.

Okay. Thank you, and all the best.

It's very heartening to hear the guidance of 60% gross margin going forward. I think it's very, very positive.

Coming to the CDMO side, sir, I just want to understand your so FY27 So one is the animal health. I don't think animal health has still scaled up in '25 much.

Animal health, how do you see the scale-up in FY27? Agrochemical also, I don't think FY26, we have done much of a delivery there.

How do you see agrochemical growing in FY27? Apart from that, is there any large contract that we are talking or are in the pipeline with the big pharma if you can speak on that?

Yes, on the animal health, there's ongoing commercial supplies for a few compounds, continue to do validations and filings for our partners in other programs. There is some meaningful revenue for this year as well, and that we expect to continue that or, in fact, grow on that.

In the crop science space, we've commercialized one particular supplies for our partner, and we expect that to continue shipments in the coming years as well. We look forward to adding more partners in the crop science space, but meaningful revenues for the crop science probably will start maybe 2 years or 1 to 2 years down the road.

Okay.

Yeah.

Go ahead,

please. On the second question on the large commercial contracts, unfortunately, I can't necessarily comment on that, but we continue to have good discussions with several partners in several phases of the programs.

Are you basically seeing any cases where the innovator or large pharma is looking to move late-stage molecules from other clients towards?

Opportunities exist, but unfortunately, without divulging confidential information, I can't really fully comment on that. Yes.

No problem. Thanks a lot.

Next question is about ImmunoACT. I think we have done recently tie-up with Cipla for South Africa region.

Any comment on that? How do you see that market or how do you see that opportunity?

That opportunity is to be meaningful only a year from now because of the regulatory approval needed in South Africa. Clinical trials will start soon in South Africa for ImmunoACT product.

It will be FY28, we will see revenue, but there are some milestones ImmunoACT already received from Cipla.

Great, sir. Great.

Thanks a lot.

Thank you.

Yeah. Congrats for good set of numbers.

Dr. Chava, regarding this new greenfield capex of 500 acres in Nakkapalli, may I know when can we expect this new greenfield capex start coming online?

Can we expect first phase of it to come somewhere in FY28?

We are expecting land allotment and handover will happen in the Q4 this year, financial year. Capex will start from maybe second part of FY27, and we expect qualification and validations only 2 years from now, not before.

Okay. My second question is to Krishna Chaitanya garu.

Currently if you see, there is significant wave of demand coming to India on small molecules side from innovators. Basically what I understand is that the innovators are chasing for capacity, yeah?

With this background, how is Laurus prepared to handle this surge of demand? Are the current capacity is sufficient to satisfy the CDMO demand?

Are we considering scenarios like freeing up generic capacities and allocating that to CDMO?

I think one of the strategies that we've adopted is investing ahead of time, and that was the case over the last couple of years where we continue to do significant amount of capex. That was in line with what we were expecting from capacity requirements and customer additions.

Therefore, that has positioned us strongly to meet some of these new opportunities that are coming about. That's also in line with our current guidance on capex for this year and the next year.

This is to create capacities for our partners and opportunities that we are seeing.

Basically we didn't lose any business because of not having capacities basically till now.

That's a fair statement to make, yes.

Okay. Thank you.

Thank you very much.

My last question is to Soumya garu. It's on generics.

Recently, a 3 billion tablet capacity has come online in Unit 2 for Krka. May I know from when do we expect to generate revenue from this new capacity?

We've already started using the additional capacity, and we will see a little bit of increase or jump from next calendar year from next financial year, next quarter Q1.

Okay. Thank you.

Thank you very much. That's it from my side, yeah.

Thank you, Bharat.

Thanks for the opportunity. First question is related to peptides.

As you are making ongoing investment, just want to understand how much or what kind of the investments you are making here, let's say over the next couple of years, and when you see the revenues starting from this particular segment? Thank you.

I think we'll give more details at an appropriate time, Vivek, on this, but what I can give you a glimpse. We are creating capacity for a fully integrated programs, backward protected amino acids, unnatural amino acids, fragments, final peptides, and purification and isolation.

The capacity being created is fully integrated. Yeah.

We'll give you more details at an appropriate time.

Yeah. Just try to understand more.

Is it like that you already have some contracts or talks with some of the big pharma, or is it like you are creating the capacity first, and then, for example, you are expecting some kind of business from this facility?

I think I can't give you more details on this.

No problem at all. In CDMO, actually, just harping on the comments that you have made during the call, in 4Q, you are expecting growth Y-o-Y.

Just want to understand, is the growth is expected to come from a supply of a new commercial molecule, or is it kind of a late-stage molecule? If you can provide some more color.

Most of the revenue in Q4 is going to come from commercial supplies of molecules what we supplied earlier.

Okay. Understood.

Just last question on CDMO. In calendar year 2026, right, how many commercial molecules or the new commercial molecules you are going to supply?

In the last 18 months, I can give you this because we did had a review internally. We supplied three commercial NCEs in the last 18 months.

Okay. Just lastly on the generics, right.

In CDMO, you commented about that Q-o-Q growth Y-o-Y growth in the fourth quarter. How to think the performance of generic business in 4Q?

In this quarter, actually, that there is a significant step-up. I just want to understand what is the sustainability of the step-up in 3Q, and how to look this particular segment in FY27?

Thank you.

In the generic space, lion's share of revenues are coming from ARVs, both APIs and Formulations. That business is pretty stable.

Actually, we were able to increase our market share in both API and Formulations in that. Our North American Formulation and European CMO sales also going up.

I think we believe those numbers what we did in Q3 are sustainable. Yeah.

Understood, sir. Thank you.

That's from my side.

This is to Mr. Ravi Kumar.

Just I want to understand why there was marginal growth in CDMO business quarter-on-quarter as compared to our generic business. You are telling for 9 months, of course, I understand.

For this particular quarter, why growth was not visible?

Can you just repeat your question?

Why CDMO revenues are not growing, that's

If your question is why CDMO revenues are not growing, it is as we indicated, you can't compare on a quarter-on-quarter for a CDMO revenue. You have to see on a year basis.

The year as for a 9 months, we, as Dr. Satya said, we already achieved a 50% growth.

For a year also, we're expecting to have an higher growth. Then don't compare on quarter-on-quarter.

I hope your question is that.

The margins are sustainable, sir, even for the next quarter?

Yes.

Thank you. This is from my side.

Similar to our strategy across different areas, right, like, for example, human health, animal health, and crop science, OLED represents another potential opportunity where we could be a potential player in the OLED materials, which are again small molecules or chemically synthesized compounds, right? For that, that's an MoU that we had agreed upon with Lordin, and we don't necessarily expect to see any meaningful revenues this year or the next, but that gives us an opportunity to potentially play in this very lucrative market.

Understood, sir. Thank you.

Hi. My question was similar to what was the previous person asked.

Just to add on to the question, what would be the total TAM of the market in the OLED segment, maybe '27, '28?

It's still an emerging development given that the partner program that we're working on is also a developmental program. I can't necessarily comment on the market size itself because that's an emerging space that's currently under development.

Understood. Okay.

Thank you.

Hi. Thanks for the opportunity.

Many congratulations for the fabulous results for quarter three. One of my question on the business is already answered.

Thank you for that. I have one question on the financials for quarter four.

If you look at the last year quarter four, we have a other income of around 40 to 50 50 crores, which has led to a higher profitability. My question is, was this a one-off, or we can expect a similar level of other income in this quarter as well?

We are not expecting an other income in the quarter four.

That was a one-off for last year.

Yes.

Okay. Thank you.

Hello. Can you hear me?

Yes.

Yeah. Yeah.

I have two questions. One question is with regards to the asset turnover.

May I know what is the asset turnover currently? 0.9.

0.91 actually.

Okay. 0.91.

I'm just look at the generic business and the FDF, Mr. Chava had mentioned that you have entered into some new products, and the volume growth was a significantly, right?

How sustainable is this, because we've seen that the API and the FDF sector has been fluctuating over the last 24 months actually, 24 to 36 months if you see. Now this has been a significant ramp-up in the FDF and API, both sectors.

Is this something that we can expect the company to continue to grow on, because you also have new capacity that has come online that was mentioned on

the call also? Growth in generic API business, we believe, is very sustainable.

When it comes to growth in our other FDF business, we're also eventually sustainable despite up and down in few quarters because increased capacity for our CMO business in Europe with a European customer will yield revenues starting from this quarter and fully operational by next quarter. We expect those numbers are also sustainable in the long run.

May not be in Q4 this year and Q1 next year, but eventually we expect to do well there as well.

Okay. One last question with regards to the peptides sector that is happening.

We understand that you are working with a American biotech company, and we want to understand the timelines of these projects. Is it 24 months, 36 months, or 48 months, or is it really, really unpredictable?

We have seen some data that there are some trials going on in the US without disclosing the company, of course. If you can understand because you've invested billions of dollars in your company, and you are looking at the future of this sector, which is obviously, it is ADC and peptides, which is a revolutionary thing in pharma.

We wanted to understand what is the timeline if you have any visibility or anything like that.

I think you have to bear with us for some more time. We will give you the details at appropriate time.

Yeah. As you mentioned, we are investing significant amount in peptides as well as also significant amount in ADCs.

Yeah.

In that part, can we conclude that you are trying to move from being an API or CDMO sector to a biotech company that is the longer-term vision for the organization?

No. See, our investments in biotech, for example, cell therapy, gene therapy, ADCs, are most emerging fields globally.

We wanted to invest ahead of the curve and wet our hands to capture opportunities. In the case of peptides and all, we are well-established.

We have investments. We have programs running right now.

Answer to your question is, we are more focused on small volume CDMO than large volume CDMO right now. Large molecule CDMO, yeah.

Got it. Thank you.

Thank you.

Hello, am I audible?

Yes.

I have a question for Dr. Chava, and thank you for the opportunity.

Sir, I have a question on the CDMO space. We have been seeing the many of the Indian pharma players, they have been expanding their capacity in towards this CDMO segment.

As per your understanding, how big and long is this opportunity, and given that Laurus has invested so much in the last couple of years towards expanding the capability and capacity, what is the competitive advantage that Laurus Labs has as compared to its peers? That's one of my questions.

I don't say we have advantage. We are well-prepared to take the opportunity.

I'll put it that way. People look at us if there is a complex chemistry, if there is a scale involved, if it is a flow chemistry, if it is biocatalysis, if it is high-energy chemistry, and involves scale, and we are the perfect partners.

We have invested in these modalities and created capacities.

Okay. Sir, as per you, whatever these capability that you talked about, is it a fair assumption that developing these capability is a very long-term process, and any pharma company just cannot hire scientists and just foray into these, because these are very skillful operations.

Is it fair that developing these and getting the customer approval is a very big thing, because the capability matters a lot as compared to the capacity? Is it a fair assumption?

I think initially we're creating capabilities and then investing in capacities. What I mentioned, Laurus currently uses enzymes at commercial scale, Laurus uses flow chemistry at commercial scale.

We are going in phased manner. First, we create capabilities and then create capacities, and we believe projects will come.

Sir, my second question is for the CDMO space only, that you have constantly guided that we intend to reach that 50% of our share which should be driven from the CDMO segment overall. Is it the ceiling, or once we reach this 50%, we will look beyond breaching this 50% ceiling also?

That's the second question.

I think our first goal is to reach 50%. Yeah.

For a long Not Over a long term. It is not going to be there in the medium term.

It is a long-term goal for us to get there. Yeah.

Okay. Thank you very much, and all the best.

Thank you.

Good evening. Really thanks for giving a good result for this quarter.

I want to ask this, what is the exchange benefit for this quarter? Because of the huge depreciation in dollar.

Yes, sir, but not very significant.

Sir. Sir.

Thank you. Most of the things already clarified.

Very nicely. Thank you.

Okay. Thank you.

Thank you, Kodandapani.

Hi, sir. Thanks for taking my question.

Sir, on the ARVs, you've been earlier mentioning that the business will sort of stabilize around ₹2,400, ₹2,500 crores. We seem to be running significantly ahead of the run rate in the current year.

Sir, has something changed, sir, in the ARV space per se which has enabled us to improve our scale in this business, and is this sustainable?

See, earlier we guided 2,500 plus or minus 200 crores, but you're right, current run rate is a little beyond that. The main contributor for that is we have expanded our API capacities to meet our customer demand.

That's driving our positive growth there. Now if I have to restate that, currently we are at 2,600 plus or minus 200.

I'll put it that way. Fundamentally hasn't changed much.

Sir, given there were some changes in the market landscape, has the profitability of the business also improved versus the dip it had a couple of years back? Is it a much better business from profitability-wise than it was maybe a couple of years back?

It's profitable if we sweat assets more. That's what we're doing right now.

Yeah.

There you don't see any major change in the competitive intensity in the business, in that part?

No. We're not seeing any Nitin, actually what happened actually, we suffered for few quarters because of the steep price reduction, but that we could able to recover those things because of the some process improvements, raw material prices, and productivity improvements.

As we have been indicating for the last six quarters that we have been working on the ARVs, that has been resulted in this quarter. We believe it's sustainable.

API sales.

Sir, secondly on the formulation non-ARV formulation business, what are the dry growth drivers for this business, when you look at next 12 to 18 months?

We expect to sustain those because of additional capacities coming up for our CMO partner in Europe and also volume gain in US and also some new launches in North America, both US and Canada.

Okay. This will so this is because this quarter was probably the first decent quarter of ramp-up which happened.

We had pretty meaningful ramp-up actually this quarter. Is this a run rate from here on, or there will be lumpiness in this business as we go along?

I think we expect little lumpiness, but is not significant. Yeah.

Sir, lastly, on the CDMO business, versus the kind of conversations we were having with investors or rather with our partners a couple of years back to the kind of conversations we're beginning to have now, what has been the change? If you can qualitatively indicate the change in the quality of discussions we're having, scale and scope of discussions we're having with various partners on CDMO?

Krishna, you want to answer? Any change in

It's a long answer to that. To just summarize it, I think the tone of the conversations continue to remain the same in terms of what kind of capacities, capabilities, and credentials that the company has.

I think that's what primarily attracts customers. With that being said, I think the global landscape has been a tailwind for potential conversations with customers, but the fundamentals need to be sound, and that'll only drive the business is our understanding at least.

Sir. Thank you so much.

Yeah. I had a clarification with regards to the CDMO business.

You mentioned animal health and crop sciences. Animal health will continue in FY27, and crop sciences, one product has been commercialized, and meaningful supply will happen in 1, 2 years.

I remember in the previous concalls, you had mentioned about human health CDMO contracts also. Is that still on track, or is there approval pending, etc.?

In the human health space, there's several different programs that we currently work in with several partners, and there's, as Dr. Satya mentioned, there's several commercial supplies ongoing in the human health space.

Okay. If percentage-wise, can you give a break-up?

Is it possible to say what are you looking more at? Is it crop science, is animal health, or is the future going to be human health, because that's where I think a lot of companies are talking about it.

Just a picture, if not to be too specific, but just a

Our largest share of CDMO is in the human health space by far, and that'll continue to be the case. After that, we have a sizable portion coming in from animal health, and the third one, which is again currently very small, is in the crop science space.

This ranking of human health, animal health, and crop science will be similar if I project a couple of years down the road as well.

Okay. The crop science is it a patented product or no?

I'm asking this question because next year and or in the next 2 years, a lot of products are going off-patent, I just wanted to understand if it will affect you or not.

The commercial one is technically a patented product, and some of the other opportunities that we're working on are also on the patented ones that we're looking at here.

Sure. Thank you.

Thank you.

Thanks thanks for giving me this opportunity. I just have couple of questions.

The first question being, see, many CDMO players are talking about peptides as an opportunity today. Neuland or like Piramal, etc., right?

They say that that this is a $10 billion opportunity. Dr.

Chava, I just wanted to understand what out of this $10 billion opportunity, how much will probably come to India, or is it only Indian opportunity, and relevant players will get like what kind of market share out of this overall overall? You can just give me in a 3 to 5-year 5-year timeframe maybe.

Yeah.

It's a very difficult question to answer. See, we don't have visibility on who is investing what capacity, what products they have.

Whoever gets the GLP opportunity, see, people are investing in amino acids, protected amino acids, fragments, and some of them investing in small volume, some of them investing large volume. Opportunity is going to be meaningful for good number of players, and I will not be in a position to comment any further on this.

Got it. My second question, Dr.

Chava, is basically, if you're saying that ARV will be more or less in the range of this ₹2,500 to ₹3,000 crores, what is the expected growth in the API segment going forward, API and the formulations? How will they grow in the next 1, 2 2 to 3 years?

We grow in the next year, but significant growth will come in FY28 because we are adding capacities for large-scale from generic APIs and Formulations. Growth will be significant in FY28, but there will be some growth in FY27 as well, the generic API as well as FDF space.

Understood. Got it.

Thanks, Dr. Chava.

I think that's all from my side.

Yeah. You said while answering one of the questions from the participant that your asset turnover is 0.9, what is the maximum achievable fixed assets turnover ratio?

If you look at our one of our slide in the investor presentation, our 5-year average asset turn was 1.1. Our first target is to reach 1.1.

Maybe 0.9 to 1.1, we will reach, but our peak asset turn was 1.4. We are not anticipating 1.4 at this moment, but we are targeting 1.1 over a period of time.

Okay. That means you are almost at full capacity utilization.

0.9 to 1.1 actually, we can reach.

Correct, correct. Okay.

Thank you very much. Thank you.

Thank you, everyone, for asking very insightful questions and thank you.

Thank you.