Thank you, [Rutuja?] .

Very good evening, and thank you for joining us today for Strides' earnings call for the fourth quarter and financial year 2026. Today, we have with us Badree, MD and Group CEO; Vikesh, Group CFO, to share the highlights of the business and financials for the quarter and the financial year.

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 note that today's discussion may be forward-looking in nature and must be viewed in context of risks inherent in 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 Badree for his opening comments.

Thank you, Abhishek. Hello all, and thank you for joining us for the Strides Q4 and FY '26 earnings call.

Like in previous quarters, I will begin with an overall summary of the Q4 and full-year performance, focusing on growth metrics across revenue, margins, and operating performance. I'll then take you through a detailed review of the geographies.

After my section, Vikesh will walk you through the financials in more detail, followed by Q&A. Before I get into the operating performance, let me capture the three years' journey in perspective.

Over the last three years, we have been very clear on our priorities: geographical diversification, profitability, and balance sheet strength. These priorities were deliberate because we believe that sustainable growth can only be built through strong foundation of profitability and operational discipline.

The results of this strategy are now visible. Over the last 10 to 12 quarters, we have consistently delivered improvement across revenue, EBITDA, PAT, while reporting our highest-ever EBITDA and operating PAT on a sustained basis.

Let me cover the first point, the geographical diversification, which has been one of the critical pillars of our strategy. While US continues to remain the key market where we have long-term aspiration, ex-US emerged ex-US markets have emerged as the most important highlight of our performance.

Over the last few quarters, we have been consistently talking about a calibrated strategy of growing these markets, and I am pleased to say that this strategy is now delivering results faster than what we had actually initially anticipated. If you look at the last three years, we have delivered consistent growth across key metrics, with overall revenue growth at a CAGR of approximately 12%, supported by 11% CAGR in US and 19% CAGR in ex-US markets.

More importantly, the mix of the business has shifted meaningfully. Ex-US contribution has increased from 41% in FY '24 approximately 40 to 46% in FY '26, and on a Q4 basis, it is now close to 50%.

This marks a very important structural shift in our business model. It clearly indicates that we are moving away from a single-market dependency to a more diversified, balanced, and resilient portfolio.

Second, profitability: The profitability has been the cornerstone of our transformation journey, and we continue to see strong and consistent improvement. EBITDA has compounded at approximately 26% over the last three years, driven by the EBITDA margins expansion of 400 basis points to to close FY '26 at 19%.

This reflects improvements across our business, whether it is a better better portfolio mix, conscious deprioritization of low-margin institutional business, strong pricing discipline, and overall operational efficiency. Operating leverage is clearly visible at the bottom line.

Operational PAT has grown 18 times over the last three years, and EPS has increased to to ₹56 for FY '26, which is the highest for us, with a strong exit run rate of ₹14.7 per share in Q4. This shows that we are now operating with significantly stronger earnings engine where growth is translating into incremental profitability.

The third pillar has been efficiency, and particularly around cash generation and balance sheet strength. Our focus on working capital discipline and cost optimization and cash flow generation has led to a meaningful improvement in the financial metrics.

Cash flows have strengthened, cost structures have been streamlined, and asset productivity has improved across the board. This is reflected in our return metrics as well, with ROCE improving from 15.6 76% ROCE improving to 15.76% for FY '26 from single digits just two years back.

More importantly, our continued focus on profitability and cash generation has enabled us to significantly reduce debt. Today, we are operating with much stronger and more resilient balance sheet, which gives us the flexibility to invest in growth while navigating external volatility.

Coming to the full-year performance, FY '26 to be viewed in the context of a challenging external environment, particularly from a geopolitical standpoint. We reported a revenue of ₹48,587 million, that is ₹48 billion, representing a growth of 6.4% year-on-year.

This was impacted by a few specific factors, particularly in the US business. The flu season did not materialize as expected in the second half this year, which typically contributes meaningfully to our revenues.

In addition, the overall growth was impacted by access markets, which are currently facing donor funding challenges and remains tactical in nature. Adjusting for these access markets, our underlying revenue growth was much stronger at approximately 10%.

This growth was driven primarily by our ex-US markets, which delivered a robust 21% growth. Coming to US business, we delivered a revenue of $284 million for FY '26 and $70 million in Q4.

The performance during the year was impacted by a weaker flu season in the second half. Historically, the fourth quarter tends to be stronger for us given the seasonal flu demand in the US, which unfortunately did not materialize as expected this year.

Over the last couple of years, we have been consciously reshaping our portfolio, transitioning from smaller revenue products to a more meaningful products. In line with this strategy, we launched six products during the year, and some of our molecules have faced increased competition, and accordingly we have rationalized our market share while maintaining our focus on the profitability.

We exited nine products that did not meet our internal return thresholds, and reinforcing our continued focus on portfolio quality and profitability. We launched the controlled substances from Chestnut Ridge acquired ANDAs portfolio.

Given that we are a new entrant in controlled substances, allocations were lower than expected in FY '26. However, with a full year of operating track record now established, we believe that we are better positioned to secure additional allocations.

This improved this portfolio should add to our near-term growth. Over the past year, we have made targeted investments into global R&D programs.

We have spent 2,500 million, approximately $30 million, over the last 24 months towards IP purchase and partnered R&D programs focused on medium- and long-term growth. We expect the benefits of this investment starting in the second half of FY '27.

In parallel, our strategic partnership in US are progressing well, the B2B business, that should drive the incremental growth. Our pipeline continues to shift towards the more differential programs, with a clear focus on nasal sprays, transdermal patches, and films.

We also filed our second nasal spray in May '26, further strengthening the portfolio. We continue to focus our aspiration of reaching $375 to $400 million in the US.

Coming to the ex-US markets, this has been a very strong year for us, and more importantly, it reflects a structural transformation that has been underway over the last few years. As I mentioned earlier, we have grown this business at a CAGR of around 19% over the last three years, and we are now starting to see the benefits of the investments we have made across markets, partnerships, and product portfolio.

To put this growth in perspective, the ex-US business has scaled from $40 million per quarter in Q1 of FY '24 to about $70 million in Q4 of FY '26, a $30 million growth in 12 quarters, and this steady progression highlights not just the growth, but the consistency and sustainability of the business model we have built. In our other regulated markets, we are seeing strong traction across key regions such as Europe, UK, Australia, Nordics.

In the last 12 quarters, the ORM revenues have grown from about $31 million in Q1 of FY '24 to $52 million an exit run rate in Q4 FY '26, reflecting a consistent, sequential improvement and strong execution on the ground. At the same time, Africa continues to be a key contributor within our growth markets, where performance has been encouraging across regions.

Our focus here is evolving beyond just scaling revenues to increasing the share of branded business, particularly in the markets such as Francophone Africa, where we are already growing faster than the underlying market. The focus towards branded business will drive both sustainability and margin resilience over the long term.

We also announced the acquisition of certain products from Sandoz in February '25. With addition of the Sandoz portfolio, which is expected to start contributing from the second half of FY '27, we will further strengthen our presence in Africa.

The combined strength of our existing portfolio and the Sandoz branded business positions us well to become one of the leading pharmaceutical players in Sub-Saharan African region over time. Our continued focus has been building on high-quality, sustainable business across ex-US markets, and these geographies are characterized by a relatively high entry barriers, stable pricing, stable pricing environment, and strong partner relationships, all of which will contribute to the predictable and resilient revenues.

Despite the strong growth in ex-US markets, our our margins have remained robust. This clearly demonstrates that we are not compromising on our underlying business fundamentals, and in fact margin profile between the US and non-US ex-US business is now becoming increasingly similar.

This is an important milestone as it validates the ex-US is not just a growth engine, but also a strong and reliable earnings driver. What also gives us confidence is that the key growth drivers are now firmly in place, whether it is presence whether it is presence in the right markets, strong partner relationships, a diversified and expanding product portfolio, or a steady pipeline of regulatory approvals.

Looking ahead, our filing momentum in ex-US markets remains strong and will continue to drive growth over the middle-term medium to long term. Overall, we believe the ex-US markets will continue to grow faster than the company average and will remain a critical pillar of our strategy, not only for growth, but also for improving the resilience of overall business.

On some of the qualitative matters, I just want to cover some few points. One is with respect to ESG.

From a ESG standpoint, we are happy to report a five-point improvement in our score and inclusion in the yearbook for the second time, reflecting our commitment to responsible growth and governance. I also want to make some few comments on the external environment.

External environment remains challenging, with cost pressures across raw materials, logistics, fuel, and as well as foreign exchange. We are also closely monitoring these developments and remain focused on cost discipline.

We remain committed to achieving our long-term aspiration, and we aim to reach EBITDA margins upwards of 20% and gross margins in the 58 to 58 to 60% range, I repeat 58 to 60% range, and continue to driving operating leverage to deliver strong EPS and PAT growth. Lastly, the board has recommended a dividend of ₹5 per share.

Before I close, I'm pleased to announce to share an important leadership update. We are delighted to announce the appointment of Ramaraju, our current Chief Operating Officer, as an Executive Director.

Ram has been with Strides Group for more than 18 years and brings with him a deep experience across the pharmaceutical and healthcare sectors. As Executive Director, Ramaraju will be responsible for overseeing the global technical operations and strategic management of critical functions, including manufacturing, supply chain, and procurement.

With this, let me hand over to Vikesh for his comments.

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

FY '26 has been another year of strong, profitable growth, which has been anchored in our pillars of profitability, efficiency, and growth. At the core of this philosophy has been a disciplined approach towards profitability-led growth, a very efficient capital allocation, and a drive to achieve sustainable and resilient business model.

We are very pleased with the sustained progress across all of these metrics of profitability, efficiency, and growth over the past few years, as we continue to build long-term shareholder value. Over the last 12 quarters, we have significantly expanded on our profitability metrics, improved our cash flows, and strengthened our balance sheet.

Despite the challenging external environment in Q4, where we've seen additional cost pressures, we have continued to deliver consistent, quarter-on-quarter growth in our absolute EBITDA and operational PAT, which truly reflects the resilience of our business. I will now take you through the numbers, starting with the full-year performance.

For FY '26, we are reporting an EBITDA of ₹925 crores, which is a healthy 15% growth year-on-year, with EBITDA margins expanding by 140 basis points over FY '25 to 19%. On operational PAT, we have grown even faster, with a 50% year-on-year growth.

We are reporting an operational PAT of ₹518 crores, crossing the ₹500 crore mark for the first time. This was supported by sustainable growth in our EBITDA and lower finance costs.

Our EBITDA to operational PAT conversion ratio also significantly improved to 56%, which underlines the structural strength and quality of our profitability. Operational EPS also grew by 50% year-on-year, with an EPS for the year at ₹56.2 per share.

Our reported PAT for the year is at ₹575 crores, which is up 40%, with a reported EPS of ₹60.3 per share. Our reported PAT is higher than operational PAT on account of the sale of investment property that we had in Q3 of FY '26.

On the efficiency metrics, our cash-to-cash cycle is at 124 days, which is an increase of seven days year-on-year, and this increase is on account of higher inventory levels, which have increased by 21 days year-on-year. In addition to the superior growth that we've had in ex-US markets, which was supported by these inventory levels, we have also built resilience in our supply chain, adapting to the challenges that have been posed by the current environment, and therefore, stocked up adequately to take care of our business needs.

We had a corresponding increase in payable days in Q4, and we expect these to normalize over the coming days. After funding for this increase in cash-to-cash cycle, we've delivered an operating cash flow of ₹703 crores for the year, which translates to a 76% EBITDA to operating cash conversion.

We also invested in growth capital spends. We invested ₹418 crores across both tangible and intangible assets.

It includes ₹236 crores of tangible capex, where, in addition to the maintenance capex that we spend every year, we made very targeted growth investments in building our nasal spray capabilities, enhancing capacities to support our ex-US business, and acquisition of a new office space in UK to cater to the growing needs of our business. We spend ₹182 crores towards intangible investments, which included certain global product rights, which will drive our growth in the near future in both the US and the ex-US markets.

In the intangibles, the spends also include a very significant upgrade to our global ERP platform, as we migrated to SAP S/4HANA. While we made significant investments in growth this year, our superior profitability and cash flows have helped improve our net debt to EBITDA ratio from 1.9x last year to 1.55x as we closed FY '26.

This is despite a negative impact of the currency depreciation, which impacted our net debt by about ₹112 crores for the year. Our reported net debt as of March '26 is at ₹1,437 crores.

In addition, our investments in OncoSec valued at ₹337 crores adds further strength to our balance sheet. In terms of debt reduction, our net debt on a constant-currency basis reduced by ₹197 crores, which reflects the strong underlying cash generation and disciplined deleveraging in our operational business.

While there may be near-term headwinds due to our cash-to-cash cycle, we remain confident of improving our net debt to EBITDA ratio over the next few quarters. Our ROCE continues to improve.

It is at 15.8% for FY '26, compared to 14.9% last year, which reflects our improvement in operating performance. With the significant investments in growth during this year, which are yet to play out, we see this metric to continue to improve in the near future.

Overall operating expenses for the year were at approximately 40.6% of sales. Employee costs remained stable at 19% of revenues, while other operating costs increased to 21.5% due to both a business mix shift towards ex-US markets and the elevated supply chain and manufacturing costs, largely in Q4, due to the dynamic geopolitical environment.

Our net finance costs stood at ₹138 crores for the year, which reflects a consistent reduction from FY '25 levels, which has been supported both by lower debt and improvement in our borrowing costs. Our effective tax rate for the year remained at sub-15%, which is at the lower end of our expectations.

Quickly moving to the Q4 performance: For the quarter, our EBITDA grew 10% year-on-year to ₹240 crores, which reflects our continued growth in absolute profitability. Our EBITDA margin for the quarter was at 18.1%.

EBITDA margins were impacted on account of cost increases that were attributable to the escalations in logistics costs and air freights, which were seen to be significantly higher than previous quarters. These costs were to the tune of ₹20 crores, which would have otherwise added to our performance for the quarter.

Despite these challenges, we are delighted to report growth in absolute numbers, and we continue to remain focused on building a resilient and sustainable EBITDA profile. Our PAT and EPS continue to expand on a quarterly basis.

Operational PAT at ₹136 crores grew 20% year-on-year, with an operational PAT margin of 10.3%. Operational EPS for the quarter at ₹14.7 per share reflects our continued improvements in earnings quality.

Our reported PAT for the quarter is at ₹129 crores, with a reported EPS of ₹13.8 per share, which is grown by 54% year-on-year. Overall, FY '26 has been another year of disciplined execution with strong growth in profitability, significant improvement in operational PAT and EPS, improved ROCE, balance sheet discipline, while we continue to invest for future growth.

The growth momentum in our ex-US business, along with our profitability orientation, has enabled us to drive improvement in gross margins and EBITDA, with a significant expansion in PAT and EPS over the last couple of years. We remain focused on building a structurally resilient business with sustainable growth, disciplined capital allocation, and continued strengthening of our balance sheet.

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

Hi. Good evening, and thank you.

My first question on the US portfolio. While we have reoriented and we're doing exceptionally well in our other regulated markets and the growth markets, but if you can touch upon what is happening in the US markets because you're seeing product discontinuations, even the product launches that we had anticipated or planned for didn't go through.

Just one comment on US, what is happening there.

Sure. Pratik, from a US perspective, just want to give you some few things which did not happen in the last year.

One is the seasonal aspect. Second is we need a past history.

We need a good stable year of controlled substances before the growth comes back into this because it depends on quota and then production and then the actual commercialization. The third one is in terms of the portfolio.

If you really see, we have got a lot of launches coming up from the second half of this year, which will continue till about '28. We just don't want to lose profitability discipline as far as the US business is concerned, and that has been a stated policy.

If you really see, our growth is quite good from an 11% perspective over the last two to three years. Overall, if you really see, this is a conscious effort to maintain the profitability at the marketplace.

We believe the growth should start from H2 onwards with a higher trajectory.

Correct. It's a steep growth, I believe, because we still hold onto our target for next year.

This would be driven by combination of everything, your nasal sprays and your controlled substance, the new launches?

Aspirationally, we have kept this $375 to $400 million. If you remember, the $400 million was given in the context of some two years back.

We want to chase that for the simple reason that we have got the drivers in place, and we are also working on till the last dollars to make it happen. That's what we are focusing on, and we should be able to get to that growth trajectory very soon.

Just double clicking on this. To maintain this margin, we have either not launched as many products or we have let go of a few.

This increased competition or pricing pressure is coming from where? Other peer Indian players who are doing this?

There are a lot of peer players, right, also. We have explained it in the previous quarter also, there has been intense competition in few of the molecules.

The most important part, Pratik, you should know is that we still have leading positions in 37 of the 70 products. Right?

The market leading positions in 37 out of 70. If all of this plays out, and I think we should be there.

It's not a very difficult situation. The only thing is we will have to focus on few things, and we've got eight quarters to make it happen.

Correct. Second on debt--

Yeah. Hi.

Thank you for the opportunity, sir. Yeah.

Sir, my question is related to the flu season. Sir, I'm fairly new to the company, my question could be a bit basic one.

Our medicines are given more when the patient is in the hospital or at home? How does the prescription work for it?

Because I was just reading on the net that the influenza-related hospitalization was third highest since 2010-'11 flu season in US. While towards February, March, the cases in fact started increasing a lot.

What is exactly impacting our growth for this flu-related drugs? Yeah.

Your thoughts on it.

Sure. From your perspective, what you are seeing is a very general thing.

From what we need to see is what is based on our portfolio. Right?

Our portfolio usually it acts quite well in the H2, and that has been the past trend for the last three years. Somehow this year, because of the better discipline with the wholesalers and all of these things, the demand uptake did not happen.

Right? It's not that it can come back next year also, we don't know.

What we can say is that definitely the uptake which happens between the H2 and H1, what we have seen in the last three to four years, did not happen in the current year. Usually, if you really see, the entire growth, the 100% is divided into 45% in the first quarter and 55% in the second quarter.

Whereas if you really see, this year is more or less it's 50-50 from that standpoint.

Yes. Sir, thank you for that.

Sir, the second question is on the controlled substances. Now can you help me understand a bit about this product?

Again, through my limited research, I could understand it's a difficult business to do and also at the same time has a very strong EBITDA margins. Can you throw some light?

How should I look at this business? From your plan for the next two, three years perspective, how do you plan to scale this up?

Yeah.

As far as the controlled substances is concerned, it is an in-US for US strategy for us. We have launched four products in controlled substances.

One of the important things you should know is that it has got a stringent regulatory process. First is you have to apply for quota.

That's the first step. Once you get a quota, for getting a quota you have to demonstrate your past history.

In the sense if you have been selling controlled substances in the past, the quota will be restricted to the way you sell. Right?

For a company which is entering newly into the controlled substances, it takes at least one to one and a half to two years to settle down and display that past history. Right?

Last year was the first year where we had a full year of controlled substances. Then what we do is once we demonstrate the same, we go back to the DEA again and apply for a additional quota, because the government wants to be making sure that you are able to deliver what you take, and based on which, and if you are able to give that assurance, then you get more quota.

That's how it works. Then we will have to get the API, and then we will have to produce.

Then you go to the sell, and then go back to the DEA again. This is the entire process.

The controlled substances started somewhere in the year of 24 25, the second half of the third quarters. It's almost about 18 months or 19 months we have sold controlled substances.

Last year was the first year we had a full year. We will go back to DEA with a request for additional quota, and that should drive the future growth for us.

Got it. Sir, on the profitability front, is it going to significantly influence our margin trajectory going forward, the 20% guidance?

I think the profitability is more or less similar, okay, differs from the product. I don't think so the profitability is going to change dramatically because of controlled substances.

That's for sure.

Got it. In overall scheme of things, we should look at Strides as a operating leverage play going forward to improve the margin, or it's going to be a mix of product mix as well?

I have covered that in my speech, our long-term aspiration is to get to an EBITDA upwards of 20% and also staying 58 to 68 to 60% in a gross margin range. That's what we've been working internally, and we have been working relentlessly on various line items together.

the opportunity, sir. I hope I'm audible.

Yes.

Thank you. Sir, in nasal spray, you mentioned that it's a $600-$700 million market opportunity-wise.

We are planning to launch three products this year. How much of that market are we tapping in the first year?

I think I did not refer anything on the $600 and $700 million.

Where did this number come from, Rudraksh?

I think in some previous calls or communicate.

No, I don't think so. We have not communicated.

We have stayed completely to the same theme in the last two, three quarters. I don't think so we have communicated in any forum, at least as far as I remember, in the recent past.

Okay. Sir, is it possible to disclose what kind of market size are we trying to target?

No, no. See, we are giving the overall guidance, the overall outlook, how we are looking at the business for the next two years.

Right? We have to stay with that.

Are you talking about specifically controlled substance, is it?

Nasal spray market, sir, specifically.

Nasal spray,

this is beyond FY '25 strategy for us. The market has to form.

We have just filed the one product last year. We have filed one more this year.

We are building capabilities in our Chestnut Ridge plant. At least it is another 12 months away from commercialization.

Once we get a better clarity, we'll come back to you.

FY '28 is when you'll see the impact of this.

Yeah.

Understood, sir. Understood.

Sir, would it be possible to disclose capacity utilization across our different manufacturing plants?

The capacity utilization we have got enough capacities to cover the next two years' volumes. We have been driving operational efficiencies.

It's always good to have some spare capacity because to meet any emergencies. We have been operating at a fair level, typical of any pharma company which will operate in this space.

All I can say is that we don't need additional too much capacities for us for the next one or two years, excepting for the incremental capex which will give us the incremental growth.

Hi team. Thank you for taking my question.

Badree, just wanted to understand a little bit more on the US business, right, the $70 million run rate, right? One of the things that I wanted to double-click on was that, apart from the controlled substance launches which were delayed because of the reasons that you explained, were there any other launches which were also delayed, and was competition the reason there, or because you mentioned you had some plans to launch, but you did not.

Was that comment specifically for controlled substance or was it for outside the controlled substance as well? A question related to that would be what are you expecting in next two quarters for you to You say that the recovery or growth will start happening in H2.

Why would Q1, Q2 will still be on a weaker side, right? What are the reasons that you are seeing in the next two quarters for you to say that the growth will start happening only in H2 of FY '27?

That's my first question.

Yeah. What I want to say here is I want to correct you here.

Like if you really see, my comment was not limited to controlled substances. That is number one.

Second thing is we also have 150 products in our portfolio. Right?

Strides our Strides policy has been to, the launch when the market actually it gives an opportunity. We are not in a hurry to launch.

There are host of products which are there, which are available for us to launch at any point of time. That's what we will do.

We'll wait for the market disruption to happen, be it our API, or be it a new player coming being it any player going out. That's been a practice because that's that helps us to maintain the overall company-level gross margins.

As far as your next two quarters is concerned, I am only saying that the the full potential of the growth you'll start to see from H2 onwards. It's not that it's not just that it's muted or it's not like that.

There'll be definitely be a growth, but it's all see, we have to look at it from a long-term perspective. Some Some things take at least 16 to 18 months, or sorry, 18 to 24 months to solve for.

Right? While the quarter-on-quarter there'll be growth, the full potential of the growth with more launches, you will see the impact of it more in the H2 onwards.

That's clear, Badree. Thank you so much.

The second question would be on the margins, right, on the controlled substance, right? You mentioned that they would be similar to our existing US business, but one would have thought that because this is more specialized, the margins would be higher, right?

Where is that understanding wrong? In that context, right, while right now you are seeing the convergence of non-US and US margins, but over the period of time, once controlled substance and nasal spray and some of the new products becomes a decent part of our US revenue, don't you think that US revenue are structurally pointing towards a higher than the company average or the non-US part?

As far as the controlled substances are concerned, I just want to say that it's an in-US for US strategy. See, you have to understand that we are a very new entrant to controlled substances still.

Right? We have just had one and a half years of experience, last seven quarters we have been launching.

Right? We have been in the business of controlled substances.

We have to see how it pans out, because at the end of the day, our endeavor is to improve the margins. We all know that US margins are at a Gross margins are much higher compared to the company-level margins.

The good part is that once the history is established, we should be able to And once we come to a reasonable size, our ability to do many things in that business becomes much more stronger. From a nasal spray perspective, it's just at least another one year away for us to launch.

Our endeavor is to see how much we can gain market share at the time of launch. If you really see the overall context, the US business has to be understood because we are also equally investing in R&D.

That's also very important factor you need to take into consideration. Overall, I think your observation is right, but the controlled substances will take its time to build that profitability and the operating leverage that we are looking for.

That's it from my side, Badree. Thanks a lot and all the very best.

Thank you.

Hi sir, and thank you for giving the opportunity. Sir, first question is on this, you described the tangible and intangible investments to the tune of around ₹350 crore plus.

What is the broad run rate, let's say, for the next two years in these two buckets?

At least it will be around a ₹300 crore is what I think, because the tangible portion is almost coming to an end from a fact. We need only the maintenance capex.

There will also be some intangible as global rights which we may acquire to fast track the growth. I think it should be about ₹300 crores is what I think.

Understood. Secondly, sir, just sorry to harp on this point again, but the US guidance for FY '28 of earlier we were saying $400 million, now we are saying $375 to $400 million, but is it a exit run rate sort of a guidance, or is it what we want to achieve in FY '28, number one?

Secondly, this translates broadly to 15 to 20% CAGR from the current base. Does it look achievable in the context of the kind of growth we are seeing currently?

I just want to give you a perspective of this $400 million. This $400 million is there for the last two to three years, right?

Post that, we had a demerger of our softgel business. That's number one.

We did not change this $400 million because we want to chase an aspiration, and we believe that we can be between $375 to $400 million at this point of time. Right?

We are working towards it, and what is more important is that while you harp on US business, but there is also an other regulated markets which is also growing at a very healthy rate and it is growing much faster than the US market. From our perspective, we look at the overall company, and as a basket, and together we should be able to give the economic long-term result.

That's the way I look at it.

Presently, this is a target for full year of FY '28, right?

Yes, that is correct. We have not taken any exit run rate and all that.

The reason why we are saying is that we have got another eight quarters to go. We want to try to reach as close to the $400 million as possible.

Understood, sir. Thank you and all the best.

Yeah. Good evening, gentlemen.

Thanks for opportunity. Badree, your opening remarks really helpful to understand company.

Congrats to Mr. Ramaraju.

Sir, my question was regarding our top 37 products contribute around 75% of US revenue. How vulnerable are these products?

Can you highlight upon it, how is the pricing erosion, competition side, and even customer concentration side?

One of the things I just want to highlight here is that Sanjay, thanks for your question. As far as the 37 products is concerned, it's widely spread across the entire US revenue.

That's the first thing. There is no great customer concentration.

Second, in terms of the pricing pressure, we have had marginal pricing pressures, but it has been offset by most of the other measures like we have some COGS improvements. That's the reason we are able to keep a gross margin between that 58 to 60% range.

In fact, if you really see the last three years, that disciplined approach has helped us to improve gross margins by more than 300 basis points and as well as the EBITDA margins by almost 400 basis points when we started post OneSource when you adjust for OneSource, 15 million 15% to almost about 19%. As far as the customer is concerned, I just want to say that we have got a very wide customer base.

In fact, the big customers contribute almost the reasonable portion, but there are also many customers which contribute to give the portfolio a great support, because these are the customers where you don't see price erosions much. We are able to maintain it within a range.

I think overall to answer your question, the vulnerability is not there from a customer or a product perspective. Second thing is the objective has been to maintain the gross margins.

That is what we have done. Consistently, you can see all the eight quarters we have demonstrated the gross margins between that 58 to 60, and we will continue to work on it to get to that range.

Right. Sir, we are investing heavily on complex generics like nasal spray, transdermals, and films.

What are the execution capabilities still need to be built internally, and what timeline can we expect before meaningful commercialization of the said product? Yeah.

As far as the nasal spray is concerned, see, one of the strategic acquisitions we made many years back was from Endo through Chestnut Ridge facility. Today, that facility has got that capabilities to manufacture nasal sprays and not the patches and films, and controlled substances.

I repeat again, the Chestnut Ridge has got a capacity to manufacture nasal sprays and controlled substances. As far as the R&D is concerned, we have got a combination of the third-party manufacturer as well as the in-house manufacture.

These all should contribute meaningfully beyond '28, that is FY '28 and beyond. That's what we are expecting, while one or two nasal products can be commercialized much earlier, which we believe we can if everything goes right.

You will see bulk of the revenues coming in '28 and FY '29 onwards.

That's great. Thank you very much.

Very helpful, and congratulations to the team.

Thank you, Sanjay.

Thanks for taking my question. Badree, two things.

One is, hey, on the newer sort of growth engines we're talking about, we've talked about nasal sprays, we've filed a couple of them, they'll begin to contribute '29. There are some other modalities that you mentioned in the presentations.

Can you give us a little more color on what are the timelines for those modalities?

These are all again, it is a '28 beyond. It's not going to contribute anything much to '28.

We already started all the programs. It's all going in full swing.

We should start filing in next 18 months, and then it'll be beyond '28 for us.

In those, apart from nasal sprays, which is the sort of second one modality to probably start to become commercial for us?

Patches and thin films. These are the two areas of domains we have identified.

The R&D is in full swing. We should be able to file for that in the next 12 months, 12 to 18 months, and then commercialization later.

On the nasal sprays, apart from the three control for the nasal spray that you guys have mentioned earlier, what are the total pipeline that we probably are looking at, say, from a two-, three-year filing perspective?

There are a few items we have added. In fact, there are some third-party programs we have added at least another five or six of them.

I don't know the exact number, but definitely there is a portfolio that's being built on nasal spray domain because we are completely backward integrated in terms of Chestnut Ridge catering to those business.

These will be all controlled product nasal sprays?

Controlled as well as other nasal sprays also. Right, okay.

Okay. With all of this going on, how do you visualize the R&D spend going forward now?

We said last year also that R&D spend is going to be higher. It will be upwards of 25 million, $20 to $25 million, for sure in the coming two two years.

We believe that we have got the enough growth engines to invest on the R&D and also in the scale up of the business.

Right. Lastly, for me, a second one, on the growth markets, if you can just let us know about how should we think about the Sandoz transaction and the impact it makes for the growth markets.

Overall, any update on any positives to call out for the growth markets growth for this year?

Yeah. As far as the Sandoz transaction is concerned, it is expected to fructify in the second half of FY '27, that is between October and March.

The next year, it should contribute meaningfully to the growth. The third thing is in terms of overall the branded portfolio will definitely technically double for us, more than one and a half times as with this portfolio.

We think that overall long-term, we should be able to build a good brands portfolio as a part of the overall revenue of the company. It's growing quite well.

Far in the last few quarters, we have grown faster than the market. Our brands was more related to the Francophone region, wherein we have done quite well.

With this Sandoz portfolio, we get a much more broader presence in Africa. We think this will add very meaningfully to the margins, because as the brands have higher margins compared to generics.

Right. If you can give me a last one, how should we think about this quarter's SG&A expense spike?

Should we look at it annualized? What should be the base to analyze for when we model next year?

It'll be in that range, but because last quarter was sudden increase in the freight cost, and we are watching the geopolitical situation very closely. I covered it in my opening speech also, there has been increase in prices, and we are working very closely with the customers how much to pass on.

We are working on multiple strategies to maintain the gross margins between that 58 to 60% range. If you're able to do that, the operating leverage automatically plays out.

Having said that, the logistics costs have increased. Maybe you can put some discounting factor on the Q4 and then maybe you should take it.

Thank you so much. Best of luck.

Thank you.

Hello, good evening. Thanks for taking my question.

I'll be asking on behalf of Shilpa Saboo. I have a first question on the controlled substances.

Sir, as discussed in previous concall, now we have completed one year in controlled substances. Are we eligible for higher quota allocation for US market?

If yes, then what is the revenue potential?

We don't want to give a very specific revenue potential on controlled substances. All we can say is that this will be an engine of growth.

We have completed a full year. Because it's very difficult to commit without getting the quota.

Right? It's a chicken-and-egg story.

All we can say is that the last one year, we have demonstrated whatever the quota we have received, we have been able to sell and we are able to demonstrate, and we'll go back to DEA. If there is anything additional quota, it'll anyway get reflected in the growth as we go along.

Okay. Second question is on 505(b)(2).

For 505(b)(2), we had around eight to nine products in pipeline. Will be three to four be commercialized this year, and what will be their market size?

We have not had any 505(b)(2) as far as I know. I don't think so it is there.

Maybe verify it and come back.

What will be the market size?

No, no, we don't have. We don't have at all.

That's it from my side.

Thank you.

Sir, I wanted to confirm that you mentioned that there will be a Q-on-Q growth. Like last year's, when you guided at the start of FY, that sequentially Q-on-Q there will be a growth.

This year also, we can expect the same?

Yes, of course.

Sequentially, there will be growth, right?

Like from

this Q4 to Q1?

Last quarter, right, in Q4, we have grown at 11%. If you adjust for institutional business, we have grown at 14%.

Okay. The margins will also there was since you are seeing that

I have clearly said that margins will be between that 18 to 20% range. The endeavor is to get to, on a long-term, margins of upwards of 20%.

For controlled substances, you mentioned in last two, three of some call that from Q1 also you will see some uptake. Are we on line on that, or still not decided until this quota is See,

we have got a past history to go back to DEA at this point of time. Once we go back, and once we get an additional quota, and then if it gets into commercial revenue, it anyway gets into the growth.

Right? That's what we are working on, and we are very happy with what we have done in the last one year with the quota what we received, and we have gone back to DEA on that.

We have already gone back. Quota results will be out in this quarter or next?

It will come anytime soon. There's no specific timeline to this.

We have gone back.

All right, sir. Thank you very much.

Thank you.

Thank you very much for all your questions, and should you require any more follow-ups, we are there available at the Investor Relations team, along with me and Vikesh. We'll be able to clarify all the queries you have in near future.

Thank you.