Thank you, Palak. Very good evening, and thank you for joining us today for Strides earnings call for the third quarter and nine months ended financial year 2026.

Today, we have with us Badree, Managing Director and Group CEO; Aditya, Executive Director; and Vikesh Kumar, Group CFO, to share the highlights of the business and financials for the quarter. I hope you've gone through our results release and the quarterly investor presentation that have been uploaded on our website as well as stock exchange website.

The transcript for this call will be available in a week's time on the company's website. Please remember that today's discussion may be forward-looking in nature and must be viewed in relation to risks pertaining to our business.

After the end of this call, in case you have any further questions, please feel free to reach out to the investor relations team. I now hand over the call to Mr.

Badree for his opening comments.

Thank you, Abhishek. Good morning, good afternoon, and good evening, everyone.

Thank you for joining us for Strides Q3 FY '26 earnings call. Like the previous quarters, I'll talk about the growth and the growth levers of each of those businesses we run, and I'll hand it over to Vikesh to cover all the financial highlights, including the balance sheet metrics, cash flows, and other metrics which are relevant for overall hygiene of the business.

Talking in retrospect, there are three strategic priorities which we took in the last six to seven quarters. The three key priorities were profitability, geographical diversification, and balance sheet strength, are the key themes on which we led this business.

Let me go one by one and update you on what we have done so far, and then I'll talk through each and every business. From a profitability perspective, the major focus has been to rebuild and structurally enhance profitability.

We are very very happy with the result. Our gross margins have touched 60% plus in this quarter.

Overall gross margins have reached about 59.8%. Overall, if you really see from a profitability standpoint, post-OneSource, the company has really bounced back on all metrics relating to the gross margins, EBITDA, PAT, and as well as the EPS.

EPS is very strong for us. It's currently at about ₹41.4, and expected to do well in the near term.

As far as the geographical diversification is concerned, while the US we have given a long-term outlook, the ex-US markets is the important highlight of this quarter. We have been reiterating in the last call that ex-US markets, which consist of two important elements, the other regulated markets and the growth markets, our endeavor was to mirror those markets in the long term, in two years from time now.

We find that this is happening much faster than what we thought. In the current quarter, the ex-US markets contributed 47% of the FY '26 Q3 FY '26 revenues, and 20% year-on-year growth in Q3.

The gap between the US and the ex-US market has reduced significantly. If you really see on a quarterly basis, the gap is about ₹500 million.

This marks a structural shift in the geographical engine. We are very happy that we are starting to see the results in terms of the global diversification of the entire business.

The third priority was to improve the balance sheet strength. As we speak, our debt by EBITDA is about 1.59.

We are on track to get to the targeted ratios. The overall debt, if you really see, it has reduced by about 170 crores, 1,696 million on a constant currency basis.

Return on capital employed improved to 15.8%, aided by consistent results, improved profit show, as well as the better balance sheet management, cash-to-cash cycles. If you see the three priorities in terms of profitability, geographical expansion, as well as the balance sheet strength, we are very very pleased with the results.

We will continue to focus on those as we build the company in the long run. Coming to the US performance, let me cover the important aspects of the US business as well as the overall business.

Let me start with the overall business. This quarter which went by had a 3.6% revenue growth, just mainly because of the institutional business, the growth was muted.

For that, the revenue growth has been upwards of 8.6%, and almost 9% year-on-year. This shows that other ex-US markets have contributed significantly to the overall growth of Strides.

What excites us more is the growth of ex-US markets because we believe that there are multiple geographies and which are in different stages of evolution. If you had seen the last few transcripts, we have been reiterating that this has been in a range of about $40 to $43 million in the last six quarters.

Now, it has broken the trend and it has gone upwards of $48 to $50 million in the current quarter. The gross margin crossed about 60%, aided by a better business mix because of the institutional business being scaled down.

We believe that it's a very good result from a Q3 perspective. As far as the EBITDA is concerned, the increase is about 12% plus year-on-year.

Operational PAT grew by 38%. I want to sum by saying that 3.6% increase in revenue resulted in 8% plus percentage increase in gross margins plus the 12% increase in EBITDA and almost 38% increase in PAT.

The multiplier effect is very very visible in the financials. We believe that if we maintain the same trend, we will be able to surpass the goals what we have kept for ourselves.

As far as the US market is concerned, it is the US revenue at $70 million, largely flat compared to the same quarter previous year. The core portfolio continues to remain strong.

There are a few developments which we want to keep you informed. The seasonal sales on account of the flu, unlike the last year, did not pick up in Q3.

Usually, the Q3 and Q4, the seasonal sales will be very good. We saw some new players coming in a couple of key products which we had a strong market share and a good run for the last few years.

We believe that the overall business is very intact. We also discontinued eight products that did not meet our profitability threshold for last nine months.

For the threshold for nine months. This shows our discipline towards profitability and also other key metrics with respect to the service levels and overall hygiene.

Also, we had a slower than expected quota allocations, which also contributed to the overall muted growth of US business. As we continue to build on this controlled substances business, we are creating a steady and strong track record that will help us to gain momentum over the next few quarters.

Despite this, our medium-term outlook for US business remains unchanged. We continue to focus on our revenue aspirations for FY '28, supported by relaunch of several products from our dormant portfolio.

Also, as we consolidate and strengthen the core, we are also accelerating investments which we call a beyond $400 million which $400 million target, which represents our next stage of growth. The investment includes IP purchases, partnered R&D programs, and targeted investment into complex generics such as controlled substances, nasal sprays, and 505(b)(2) programs.

All this represent differentiated high-value opportunities and are essential for evolving beyond pure generics and also need a different skill set and expertise. In this connection, we are also excited to have Peter Hardwick joining us as the CEO of North American business.

Peter brings in about 30 years of global pharmaceutical experience, including leading Apotex Corporation, one of the fastest growing generic companies in US. He was also serving as the Chief Commercial Officer for the global generics of Apotex.

He has extensive experience in commercial turnarounds, portfolio shaping, pricing discipline, and building high-performance teams. His skill sets will complement our long-term strategy.

At Strides, Peter will focus on driving sustainable growth, strengthening execution excellence, and building a resilient customer-focused organization across the North American region, which is one of the most strategic, important market. When I say North America, it includes US and Canada.

As you know that we are also concentrating on Canadian market, and we have identified that as one of the key growth markets beyond FY '28. As far as the ex-US market is concerned, we are calling the ex-US market as the other regulated markets as well as the growth markets.

In this quarter, we delivered a $64 million of revenue, representing almost 20% year-on-year growth. If you really see the gap between the US market and the other ex-US market, it's about 500 million per quarter.

We believe that this will be the trend going forward. In the next two years' time, we should be able to mirror those markets completely.

As far as the ORM is concerned, the other regulated markets, which is a subsection of the ex-US markets, they grew very handsomely. They broke the trend of $40 to $43 million.

We recorded almost about $48 million, year-on-year 21% growth. What makes this ORM a very important market is it has got a very high quality revenue, high entry barrier, predictable pricing, and strong B2B partnerships which drive this market.

Overall, if you really see, the gross margins are also very stable in this other regulated markets, and it creates enough stickiness and sustainability going forward. Our growth markets revenue has been about $16.6 million, delivering almost about 19 19% year-on-year growth.

We are seeing green shoots and early momentum in few markets, supported by a rising cadence of regulatory filings. The regulatory filings and execution will be the focus to grow this market.

To reiterate, the ex-US markets continues to be a important management focus in addition to the US market. We believe that we have got enough levers in place to take this business going forward.

In addition to Peter, we also have a management change. We have appointed Nandini Maityani as the Executive VP of HR.

She brings over two decades of experience in driving people strategy, leadership development, and cultural transformation, and workforce capability building across global enterprise. At Strides, she will lead the global people agenda across operations around the world, reinforcing culture and strengthening capabilities, and supporting the company's mission of making high quality, accessible healthcare in reality worldwide.

As the people capability is very important as we grow the company in the long run. Nandini's addition will be a great value add to Strides.

I'm also pleased to inform the ESG score. We improved the ESG score from 76 75 to almost 80, a 5-point increase over the last year.

This reflects our continued focus on responsible growth, compliance, and strong governance practice. Overall, it's a great quarter for us.

As we speak, we continue to focus on execution. We have a lot of work to do, and we'll be as busy as ever.

With this, I'll hand it over to Vikesh to cover some key highlights on finance.

Thank you, Badree. A very good morning, good afternoon, and good evening to all of you.

As Badree mentioned in his opening remarks, we've had a very strong strategic focus on profitability and balance sheet strength over the last few quarters, and we are very delighted to report that we continue to progress quarter-on-quarter on these metrics. The growth in our ex-US business and our profitability orientation has helped us to continue improving our gross margin and EBITDA numbers.

Year-on-year, we've added ₹58 crores of gross margins, which has translated into a very healthy EBITDA and an equally strong PAT performance. For the quarter, our EBITDA grew 12% year-on-year to ₹236 crores, which is also our highest ever quarterly EBITDA.

Our EBITDA margins are at 19.8% for the quarter, which is an expansion of 160 basis points year-on-year. For the nine-month period, our EBITDA is at ₹686 crores, which is a healthy growth of 17% with an EBITDA margin of 19.4%.

We've improved our EBITDA margins by 180 basis points from FY '25. We had ended FY '25 at 17.6%, which reinforces our focus on driving profitability and sustainability across both our US and ex-US markets.

Our balance sheet strength is also reflected in our EBITDA to PAT conversion. It is now at 54%.

We are reporting an operational PAT of ₹128 crores with an operational PAT margin of 10.7%. It's a 39% growth year-on-year.

With this growth, our operational EPS is at ₹13.9 per share for the quarter. For the nine-month period, our operational PAT has grown even more healthily.

It has grown 65% to ₹382 crores with an operational EPS of ₹41.5 per share. It's very pleasing to report that we have already exceeded our full-year FY '25 operational PAT of ₹345 crores.

Last year we reported an operational PAT of ₹345 crores, and we have exceeded that in the first nine months of this year, and we've got a quarter to go. During this quarter, we also executed the sale of an investment property, which resulted in an ₹83 crore gain for the quarter.

Consequently, our reported PAT for the quarter is at ₹208 crores. It's the first time we're crossing the ₹200 crore mark, and our reported EPS for the quarter is at ₹21.9.

Our reported PAT for the nine-month period is at ₹445 crores, which is a 39% growth year-on-year with a reported EPS of ₹46.6. Our cash-to-cash cycle is stable at 124 days, and, as Badree mentioned earlier, we've improved our ROCE to 15.8%.

This is on a trailing 12-month basis. We've seen an increase in the cash-to-cash cycle on a Q-on-Q basis.

This is largely due to the business mix and reflects the significant growth we've had in our ex-US business, which traditionally has a longer working capital cycle as compared to institutional business, which is extremely lean on working capital, though it is a low-margin business. That's led to a slight increase in our inventory and receivable days.

After funding for this increase in working capital, we've delivered an operational cash of ₹484 crores for the nine-month period, which is approximately 70% EBITDA to operating cash. Our net debt has got impacted on account of our restatement to the borrowings due to the current exchange rates, the depreciation in the exchange rates.

On a constant currency basis, we have reduced our net debt by ₹169 crores in this nine months. We've also invested ₹284 crores in capex, in both tangible and intangible assets.

In addition to the maintenance capex, we have also made investments for growth, and we've acquired certain targeted global product rights, which will drive our growth in the near future in both the US and the ex-US markets. Taking into account the negative impact of currency on our net debt, which was of about ₹83 crores, our net debt stands at ₹1,436 crores.

Despite this impact, we have improved our trailing 12 months EBITDA to net debt ratio to 1.59x. We had ended at 1.9x in FY '25.

Overall operating expenses for the quarter are at 41.5% of sales. In absolute terms, there is a slight increase in cost, but that is largely on account of exchange rates.

The cost structure has remained well within range, and it continues to support our margin expansion. As you're all aware, there was a new labor code that got implemented during this quarter, and we have evaluated the impact of this code on our financials.

We're very pleased to report that we've not had a financial impact on our financial statements on account of the new labor code. We've historically followed a very simplified compensation structure, and that philosophy, we are now seeing it aligning to the requisites of the new labor code.

Our net finance costs for the quarter are in line at ₹39.7 crores, and for the nine-month period, the net finance cost is at ₹101 crores. Effective tax rate for the quarter is at 15%, and we expect it to be in the range of 15% to 18% for the year.

Overall, it's been yet another exceptional quarter with a very comprehensive operational performance, structurally resilient business, and with improving profitability, and we continue to focus on balance sheet discipline. Our focus remains on building sustainable growth.

Thank you, and we are happy to take any questions that you have.

Palak, can we open the Q&A, please?

Hello. Yeah.

Good evening, sir.

Yeah. Good evening.

Yeah. Sir, what is the contribution of the eight products that are discontinued?

Yeah. From overall perspective, it's not very a material number from an yearly standpoint, but it's not a very material number on that.

Okay. Sir, given this backdrop, just wanted to check what is the reason for lower or degrowth in US business on quarter-on-quarter basis or year-on-year basis?

Yeah. As far as the US is concerned, we have said very clearly that profitability remains our focus.

We don't want to compromise gross margins. If you really see the entire pipeline, we have got 60-plus products which we said we will launch over a period of last three years, and few products have already been launched.

We are on course to get there in '28. We are working on number of things and we invested ahead, and we believe that the growth will start reflecting in the coming quarters.

This quarter was mainly because of the flu season. From a flu season perspective, it came in maybe the last few days of December.

We'll have to watch out. Usually, it will be a good Q3 and good Q4.

It was delayed this time, and that's the reason you're seeing the muted growth. Plus the discontinuation of the six products.

We believe that, even after this, we'll be able to have a market leading positions in 37 out of 68 products. Overall, if you really see from our standpoint, while that growth can be muted at this point of time, but the overall strategy is intact from a long-term perspective.

Okay. Sir, another question.

What is the sustainable gross margin? The increase in gross margin is due to rupee depreciation also.

Any thoughts on that?

See, as far as the gross margin is concerned, while this quarter has been 61%, because of the business mix, and also the institutional business being lower than the overall revenue. We believe that it can be between a 58% to 60% range.

Don't hold us on for each and every quarter. Our endeavor is to reach the higher end of the range always.

Okay. Understood.

Sir, with respect to debt, what is our debt in dollar terms, and the increase in the debt due to rupee depreciation, will it not be routed through P&L in the March quarter?

Vikesh? I will take that question.

As far as the debt restatements are concerned, they are already reflected in the P&L. Some of the long-term loans, they don't get routed through the P&L, and they are directly restated on the balance sheet.

As far as the P&L is concerned, it is a fair reflection of the position where we are today and factors in for the currency rates on the debt as we stand as of 31st of December.

What is this amount, sir, and on which line item is it added?

The loans are restated on every single line item, and the debt number that we're talking about at ₹1,436 crores is restated line by line at the current currency rates because we have loans across different currencies, and those get restated, and that is what is reflected in this net debt number. What we are saying is because the currency depreciated much faster than the average rate for the year, there is an impact that has happened to the debt, and therefore, on a constant currency basis, there is a debt reduction that you see.

No,

understood, sir. My question is if it is charged to the P&L, whether net finance cost has gone up because of that, or where it is getting impacted in the P&L is my question, sir.

Anything that is relating to working capital is already part of the EBITDA. Okay.

Anything that is pertaining to long-term loans does not flow through the P&L because those loans are in overseas entities, and it goes directly to CTA.

Okay. Out of ₹83 crore of currency impact, what is the impact which has been reported in the P&L, sir?

I'm not able to understand it properly, sir. That's the reason I'm repeating, asking it again.

See, it is going to be difficult to segregate between what is the impact to the P&L versus what is not in the P&L. What I can tell you is that the entire impact, the way it has to be in the P&L is fully reflected in the P&L at the current exchange rates.

While like you said, there is a benefit of rupee depreciation, there is also the impact of the loan book. On a net basis, we are still on a positive hedge.

Because we've been following this philosophy of natural hedging, it has played out well for us.

Sir, what is the debt number in dollar terms? Or it consists of many currencies, difficult to

It's roughly about $160 million.

Okay. How much is long-term out of that because that will not be getting routed through P&L?

What would be that number, sir?

We have it in the presentation.

Okay, ₹605 crores? Understood, sir.

No, this is ₹659 crores. Okay.

Thank you, sir. Thanks a lot.

Hi. Thank you for the opportunity.

I have two questions. First one is that over the last few quarters, our overall revenue has been in the range of $135 million to $140 million.

Where do you expect the next leg of growth to come from?

See, as far as the overall revenue is concerned, we have given a very two-year long two-year horizon view. Our endeavor has been to is to reach about $400 million in US, and we have also said that ex-US we are we are we we want to mirror the US markets in the two years' time.

If you really walk out the on a quarter-on-quarter basis, it it will be a fairly a consistent growth, which is what we expect. We are not looking at each and every quarter as it is, but you have to look at us from a two-year two-year time frame from that perspective.

The growth will be led by many levers, which are all part of this. As far as the US is concerned, we have got a number of number of dormant products.

The controlled substances should pan out quite well for us in the near term. We're also investing for on long-term growth.

As far as the other regulated markets, as well as the growth markets are concerned, all the pivots are in place to deliver a consistent growth.

Got it. Sir, next question was that could you please explain the reason for the increase in cash-to-cash cycle, and do we expect it to increase further as we focus on ex-US market?

As far as the cash-to-cash cycle is concerned, that we have said that while it follows a range, we expect it to be in the range of 120 to 125 days depending upon how the market conditions are. If you really see from an institutional perspective, institutional markets have got one of the lowest cash-to-cash cycles.

Today, that market is very lower compared to the overall mix, and that's the reason you see a increase in the cash-to-cash cycles. Plus because of the holidays and a few other factors, the cash-to-cash cycles slightly one or two days high.

I think overall, it will be within that 120 to 125 range.

Got it. Thank you, sir.

Hi, sir. I have a couple of questions.

Firstly, regarding US business, US revenue has been range-bound around the low $70 million mark for the last three quarters after achieving $77 million in Q4 FY '25. What has been the developments in the US business that could explain this?

Secondly

Let me answer this question for you. As far as the US business is concerned, I clearly articulated that the season which used to play traditionally did not play through this year.

Usually, we get a very good Q3 and Q4. We saw the season playing out in last two, three days, and again, it is back to normal.

That's also because of the buying pattern of all the buyers. Most of the people are ready with adequate stocks in their warehouse.

From that perspective, the seasonal thing which used to play out in Q3 and Q4 did not play out the way it used to be in the past. As far as the second thing is, we also had in terms of the controlled substances, in terms of the quota approvals, you need a past track record to get more quota.

There has been a slight delay there. Overall, we believe that the growth trajectory is intact, and you should look at the entire US business from a long-term perspective.

Okay. Secondly, despite the recent $70 million quarterly run rate, you have already mentioned that you're reiterating the $400 million guideline in US by FY '28.

Could you outline the key growth drivers for the same?

As I said that it's there in the presentation itself, but for your purpose, I'll re-reiterate for you. There are a number of dormant products which will contribute to that growth.

Plus I also talked about the controlled substances coming to a normalcy in the next few quarters from now. Plus, we have also invested in R&D programs, which will start delivering revenue in the next 12 to 18 months.

Okay. Lastly, we discontinued more products than we launched in nine months.

Can you share some color on the product pipeline that helps us drive growth in the future?

See, as far as our focus has been that we are focused on the profitability. Anything which is not meeting our threshold, we just discontinue it.

We have got a strong portfolio, we have got a number of dormant products, and we have identified number of products which will drive the revenue in the long run. There's no specific therapeutic focus.

It is more into generic space.

Okay. All right.

Thank you, sir.

Thank you.

Hi, Badree. Congratulations on good set of numbers and gross margin improvement.

First question, Badree, on ORM, there is a comment on the presentation slide number 10 that it is driven by B2B partnership in Australia. Some color on how Europe is doing.

You seem very confident about ORM growth. Finally, European approvals, do you have visibility now?

Can we see Europe growing every quarter for next four, five quarters now,

and get

to a desired run rate?

As far as Rupesh, I just want to confirm to you that our long-term objective has been to mirror the US markets, right? Europe is a very high entry barrier markets, and we have been investing in it for our last many years.

We have onboarded many partners. The lead time to onboard a partner is also quite high in that business.

Plus, once you onboard, the stickiness is going to be there in that market for a long time to come. It's very difficult for the partner to switch from us to somebody else.

If you really see the last six-quarter, seven-quarter trajectory, this has been in the range between $40 to $43 million. This is the first quarter we have crossed that $48 million, almost $48 million at this point of time.

If you really see, the growth is going to be seen across the markets in the ORM. We believe that we have got enough pivots in place to grow in the long run.

That's good to know, Badree. I think a lot has been asked on US, Badree, but two questions there.

Controlled substances, when do you expect to get our allocations, whatever you are expecting? The second question now is to get to $400 million in FY '28, we pretty much need $100 million a quarter.

We are at $70 million, and there are five quarters from now till then. I don't know.

Controlled substances is a $5 to $10 million Rupesh,

I think just to get to this, controlled substances, we said that we have been reiterating from the last two, three quarters. Also, it depends on the quota.

I think it will get sorted out because we need one full year of operation to demonstrate our ability to manufacture and also get more quota. I think that one cycle has to be finished.

We are going to finish that cycle in next three months, one full year of controlled substances. I think the next year should be fairly better.

As far as the $400 million is concerned, we talked about FY '28. There are nine quarters which are left.

As I said that we have also invested in some R&D programs, also have global rights for certain IPs, which is going to lead us to get to that revenue beyond 12 to 18 months.

Yeah. Badree, FY '28 starts five quarters from now, right?

You need to start at 95 and maybe end at 115. I don't know how the phasing is.

If

it's

five See,

all I want to say here is that we are working towards it. Just because you had one or two quarters of slightly muted doesn't mean that the future growth engines are not intact, right?

We are working towards it, and if you really see, the company is working on number of things to get to that. Our endeavor is to reach that in the long run.

How many product launches maybe you have visibility in over let's say next five quarters?

If you are at a

$10 million plus, maybe $10 million plus, significant product launches in ORM or in

We don't want to comment on any specific product to product because we never commented in the past, and market dynamics are changing every day, right? Suddenly when product goes into some disruption, a $3 million product can become a $10 million product, and $10 million product can become a $3 million product also, right?

From our perspective, the way I look at it is that we have got a lot of ANDAs to be launched, and we will have a structured launch. We are not going to compromise profitability.

We will be able to get there. What is more important for you is the diversification.

Don't focus on any specific geography. Ex US is something 20% growth is something nobody saw it till now, right?

From that perspective, I think overall in a two years' time frame, we should have a much better economics across the board.

Okay. Final question

Just one quick clarification. Just because this ₹83 crore currency impact, this is just an accounting entry, right?

Because we are in whatever US dollar, euro, and the debt is in US dollar, euro. This is just an accounting entry or a restatement, right?

Any depreciation

This is a restatement.

It's a restatement, right.

Yeah. Okay.

Yeah. Thank you.

Yes, hi. Thank you for the opportunity.

Coming again to the US market, you mentioned some competition in the newer launches. Do you see some heightened competition, or is it usual?

Are you concerned? Is it across the portfolio also, or is it only for the new launches?

See, as far as the competition is concerned, you and me cannot predict anything, honestly. If you ask me, the competition will always be there.

We have to respond to the competition at all points of time, right? There can never be a situation there will be no competition, right?

It is not specific to launches, specific to anything, it is across the board, right? If you really see the last six quarters, eight quarters, we have grown quite well.

In the last two years, we have grown extremely well. Just because you have got a one quarter of a $70 million and all of this, it doesn't mean that we do not have the focus from a long-term perspective.

I think the competition is there, and we are seeing competition. It is not across the board.

It can be in select molecules. We are working towards how to launch many products as we go along.

The US portfolio has to be always be balanced by the launches as well as which will cover up for all the erosions from the competition. You have to look at it from a next two to three years perspective.

Understood, sir. Sir, on the other regulated markets, so as you mentioned, we've seen a good growth.

We've seen that range, coming out of that range. What have we done right, and what is going well for us in those markets?

See, what we have done right is our investment in the last two years. If you really see, we have spent a lot of time building those markets.

We have made it extremely sticky, and our regulatory strategy has played out. Portfolio maximization is playing out there in those markets.

We have onboarded very good partners, and conversion of the partners to the actual revenue has taken quite a bit of time. Now we are in that revenue stage, hopefully from now on, things should pick up.

Sure, sir. Thank you.

All the best. Thank you.

Thank you.

Thank you. Congratulations, team, for a pretty another solid set of numbers.

Badree, on the ORM market, the ORM plus growth markets, the target that we talked about, US, we're talking about a $400 million number by FY '28. When does this segment start to hit around that number in your assessment?

From our perspective, see, the mirroring has already started, Nitin. From a '28 perspective, my view is that it'll be closer to that.

I don't know the exact quarter or anything at this point of time. We have to keep working as we go along for the next two to three quarters.

Maybe much clarity will come by the end of FY '27, and please watch us very patiently till about next three to four quarters. Our intention is to get a very diversified company, and if you see the gap between the non-US and the ex-US and the US, it's come down to almost about ₹50 crore, the difference in the revenue for the quarter.

Next, maybe about next five quarters, we'll get a solid clarity, and in next nine months, we should be able to do that, is my belief at this point of time. Of course, each market is has got a has reached a reasonable size.

Of course, the pressure will be there also in terms of once it reaches a good size, the pressure on growth is always be there. I think it'll take about two years, I think.

Secondly, in these markets, are we looking to enter any new markets, or largely it's going to be about expansion of portfolio in the current geographies where you're present in?

It is more about the expansion of the portfolio. We are not entering any new markets.

There are definitely a lot of new partners, new customers there. What I can say is, broadly, the regulatory pathway is very clear, the products are clear, path is clear.

That's what gives us the confidence to grow in the near future.

Lastly, Vikesh, also we've had a pretty decent performance on our overheads over the last few quarters, which has given us a lot of operating leverage. Does the business still have opportunity left for sweating out more on the cost, on the overheads?

I think, it has been in this range, and we expect it to continue in this range. We still have under-recoveries in our facilities, and as we keep reducing those under-recoveries, we'll continue to see the operating leverage play out.

Okay. Vikesh, what sort of tax rate should we look forward to for the next couple of years?

15%

to 18%. If I can squeeze one last one.

Maybe a couple of years is 15% to 20%, when you take it to a couple of years, I think a 15% to 20% range is a fair number.

On the capex, how should we think about capex for the business?

Like we said last quarter as well, from a maintenance capex standpoint, we are on track in the ₹100 to ₹125 crore kind of a range. The rest of the numbers are more kind of opportunistic, and we saw opportunities there.

These were global rights for both US and ex-US markets, and that is the reason we made some targeted purchases. We would not put a number to it.

Those we will look at opportunities and then see what works best for us.

Thank you so much, and best of luck.

Good evening, sir, and thanks for giving the opportunity. Just one clarification which I needed was, if I look at your 9M FY '25 to FY '26, your gross margins in absolute amount has increased by around 200-odd crore, but EBITDA has increased by around 100 crores.

We were under the impression that the opex is more or less not going to increase. What has caused this 200 crore to reduce to 100 crore by the time it reaches EBITDA?

Vikesh, you want to take?

See when you look at it quarter-on-quarter, the increase in opex is not significant. It is a marginal increase that you see in opex.

Plus the ex-US markets, we have our own front ends, and there are certain costs to it. At the end, what we look at is from an EBITDA standpoint, it has to be accretive.

If there is a superior gross margin, and there are costs attached to it, but from an overall EBITDA standpoint and from a PAT standpoint, it is accretive, then we go for it. The idea is that EBITDA margin expansion is the focus, and if that means that we need to take certain products with higher gross margin and therefore spend some higher costs, across the line items you see those variability, but at the end from an EBITDA standpoint, we've been targeting our desired outcomes.

Okay. On the ORM side, we have seen a good quarter this time, but do you think that the growth with respect to ORM is now going to be consistently being there?

Are their drivers in place and execution in place now that we can see consistent growth from here on, or is it going to be start-stop kind of a play if you can throw some more color?

As far as the ORM ex-US markets is concerned, I clearly reiterated that we have got a regulatory pathway in place, we got products, we have got strategies, we have got markets, we have got customers, right? From our perspective, the build phase is already over as far as the ex-US market is concerned.

That this is the market which has been trailing for almost about between the range of $40 to $43 million for many quarters, right? From that perspective, I think we believe that we have got enough engines in place to grow this market, and our long-term vision is to mirror those markets.

You should not look at us on a quarter-on-quarter basis. You look at us over a period of nine quarters, I think we should be close to the US market.

Any advantages that you see because of this India-EU FTA accruing to you in terms of either margins or in terms of higher revenue opportunities from here on?

As far as this current thing, while it is early days, our initial view is that generics will not get any benefit from this deal.

Okay. Thank you, and all the best, sir.

Thank you.

Yeah. Thanks for the opportunity.

Sir, only one question. Can you just comment on the pricing trends for our finished products as well as raw materials?

Any specific therapies that you would like to call out?

See, we don't want to give any product-wise details. Overall, if you really see, the price erosions are part of the generics business.

Some prices will go up, some prices will come down, but overall it's a portfolio. I think the price erosions will always be compensated by the better COGS improvement, and that's what is getting reflected in the gross margins going forward.

Sir, I was referring also from industry perspective. Can we make a case that pricing pressures is behind, and probably there could be some case of beneficial pricing scenario for some time?

We can't say all of this because it is very difficult to comment on all of these things because it goes by the current trend that is prevailing. There is nothing called that a something is over because it's a function of market and players, right?

We can't say this at this point of time, but this is a part and parcel of the risk of the business, right, that you run.

On the raw material side, are there any different trends where we are seeing more pressure versus the finished products, RM prices are going up and finished products are largely stable kind of scenario?

No, see every company has to plan its supply chain. It has to create multiple sources, right, to manage the COGS better.

This has been going on in this industry for years, it's a very time-tested process.

Thanks for giving me opportunity to ask my questions. Congratulation to entire Strides team for delivering great set of numbers consistently.

Best part is ORM market has also started delivering fabulous numbers. As management has put in more efforts in last two, three years for ORM market.

I'm having two question for Strides management. First question is, MS Pharmaceutical has recently received US FDA approval for ranitidine tablets.

This approval marks re-entry for acid-reducing drug into US market after five years of absence. Whether Strides Pharma will be relaunching ranitidine products in near future, as ranitidine was the important and the highest revenue generating product of Strides Pharma five years back, which got discontinued from March 2020 due to potential NDMA impurities?

Hi, Omkar. Aditya here.

As we did manufacture this product, and there was a class-action suit issued to several players who were selling the product at that time, which caused the discontinuation. At this point, the SMS Pharmaceuticals company is the only one with an approved ranitidine formulation.

Are we getting any probability whether Strides will launch near future, or as of now, there's no probability?

Our history. We don't disclose any product-specific details of any of our products current or pipeline, and we maintain that stance.

Point noted. Last question, whether access market revenue will improve in next one to two quarters, and what is the current order book on donor funding for access market?

A good question. This has been subdued for a period of time now.

Several countries have reduced their funding to large donor institutions like the Global Fund, which has caused a significant reduction in the amount of orders from these institutions to not only us, but all the other manufacturers. The period for the allocation is rolling over because they haven't fulfilled their obligations as well.

However, certain countries are adding more to their contribution to do a fill-up for the gaps caused by countries like the US, but that gap is very very big to fill. While the current outlook looks muted, perhaps in the near future that should ameliorate a little bit.

Great, sir. Thanks for taking my question, and all the best to Strides management.

Thank you.

Thank you, Omkar.

Hello, sir. Thank you so much for the opportunity.

Sir, as you mentioned during one of the answers in reply to one of the questions that there was a season delay because of the flu season in US. Can we expect a better Q4 this time?

That's my first question.

As far as we are concerned, don't go by the quarter-on-quarter thing. Our endeavor is to grow, and nobody can predict any season at this point of time.

If definitely like last year it plays out, we will grow. That's the way it is.

Right. Sir, another question is, you mentioned again in the responses that it is difficult to penetrate into the Europe market.

What is the difference? I am very ignorant, I would like to know from you.

It will help me. Thank you.

Aditya here again. The easy misconception is to think of Europe as just one market.

However, as it's filled with 28 countries. A lot of times, our partners require approvals across various countries to make sure that they can launch with a meaningful launch order, MOQs, and all of those things.

While you get one centralized approval, DCP approval, you have to get country-specific approvals as well. Those countries have their own timelines.

It's usually a function of getting the optimized timeline and then having the right critical mass to launch.

Sir, and what can be the most negative development which can happen with the Trump administration? Because it's a very volatile environment right now with the US administration.

What can be the worst which we can expect in terms of generic pharma in US?

No specific. These are all very difficult to comment, okay?

All I can say is volatility can be taken as both negative as well as positive.

Sir, can you please highlight how it can be taken as positive?

As far as we are concerned, the third of the revenue comes from our own in US and for US strategy. I think we should closely watch the developments.

At this point of time, the the the entire impact is not on generics. I only hope that the things stay as it is, and we go we go from here.

Thank you so much, sir, and wish you very best.

Thank you.

Hi. Thank you.

Good evening, everyone.

Just

if you can talk a bit about your nasal spray portfolio, the one that has been filed and those which are under development?

Yeah. As far as the nasal is concerned, one is already filed.

It's undergoing a review with the US FDA. There are two more products which we are looking at in the next wave of filing.

It is expected to get filed in next two quarters, maybe by May, June. That's the time frame.

We have completed all the intermittent milestones on time. In addition, we are also partnering on few other programs.

We have also identified few other programs which we are working with partners. I think in the next two quarters, we should have filed for three.

When is the first approval going to come?

It depends on the US review. I think the revenues should start peaking in from '27, '28, I think.

Okay. Another year or two to go, yeah, for that.

Year or two, yes.

How substantive can these nasal sprays be?

It's a very attractive space, but the market dynamics keeps changing all the time. We have to figure out the go-to-market, and it varies between product to product and the channels.

Closer to the approval timeline, once we cross all the technical milestones, I think we'll have to figure out how it pans out. At this point of time, we don't have any specific number in hand.

Great. Thank you so much.

Thank you.

Thank you, everyone, and I wish you a very happy weekend. Thank you.