Aarti Pharmalabs Ltd (NSE: AARTIPHARM) Q3 2026 Earnings Call dated Feb. 10, 2026
Corporate Participants:
Rashesh C. Gogri — Chairman
Hetal Gogri Gala — Vice Chairperson and Managing Director
Piyush Lakhani — Chief Financial Officer
Analysts:
Unidentified Participant
Zain Gulam Hussain — Analyst
Ahmed Madha — Analyst
Rahul Jain — Analyst
Ankit Gupta — Analyst
Shikha Mehta — Analyst
Vikas Sharda — Analyst
Shubham Aggarwal — Analyst
Mohammed Patel — Analyst
deep Gandhi — Analyst
Presentation:
operator
Sa. Sat. Sat. Ladies and gentlemen, good day and welcome to RT Pharma Labs Q3 and 9 months FY26 earnings conference call hosted by Daulat Capital Markets Private Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Zain from Daulat Capital Markets Private Limited. Thank you.
And over to you sir.
Zain Gulam Hussain — Analyst
Hi. Good evening everyone. I am Zain Gulam Hussain from Dalat Capital Market Private Limited. It gives me immense pleasure to hold three QFY26RT Pharma Labs Limited Konkol. From the management team we have Mr. Rashesh Gogri, Chairman, Mrs. Hegri Gala Vice Chairperson and Managing Director and Mr. Piyush Lakhani, Chief Financial Officer. Now I pass it over to the management for their opening remarks. Over to you sir.
Rashesh C. Gogri — Chairman
Good evening all and welcome to Atifarma Labs earning call for the third quarter of the financial year 26. Thank you for taking the time to join us today. I will walk you through our Q3 performance and share key developments and provide insights into the steps we are taking to strengthen our growth going forward. Let me start with the summary of our standalone financial year financials. For Q3FY26 the revenue was rupees 425 crores which was earlier rupees 471 crore. A year back the EBITDA was rupees 103 crores as compared to rupees 115 crores for the corresponding period of the previous years.
The profit after tax for the Q3 Financial Q3FY26 was rupees 44 crore as compared to 74 crores a year back. I am pleased to inform you that the board has declared an interim dividend of rupees 1.5 per share. Now let me present you or present a few business highlights. Atifarma Labs operates across three key verticals. Xanthine Derivatives, API and Intermediates and CDMO CMO Services. The Xanthine Derivative segment contributed to 49% of our turnover. In Q3 the volume split was 63% Beverages customers and 37% Other. In terms of geographical split the Export sales was 51% and rest was 49% was local sales.
The API and intermediate business stood at 39% of the turnover. This sub segment wise breakup is 52% regulated market, 34% row market and 14% non reg market. API business continues to see some margin pressure while early indication of recovery are emerging. We remain vigilant and are directing all our efforts towards patent expiry over coming years. The third segment CDMO CMO has contributed to 12% of the revenue in this quarter. We are working with 21 customers and the number of active projects are 59 out of which 40 projects are in the commercial stage and 19 are under various stages of development both at customer end.
Apart from Q3 reported sales, another 49 crore worth of goods were in transit as of 31st December 25th. These groups could not be booked as sales due to accounting norms. We are confident of meeting our CDMO revenue guidance for FY26. However, exceeding that target which was earlier possibility now looks difficult due to certain project deliveries getting pushed by a few months. Let me now discuss the update of the expansion projects. Atali plant started production of qualifying batches in Q3 FY26 while ramping up phase one. We have encountered some starting hiccups which impacted the production plan and we have corrective actions in place and we expect the resolution by end of the current quarter.
The Xanthine expansion is progressing as planned and we are targeting the mechanical completion by end of March 26. The incremental capacity will become available for the production in Q1 FY27. However, utilization will increase progressively over subsequent quarters in line with the operation scale up and the order inflows forward. Outlook Looking ahead for the full year FY26, we expect EBITDA to be largely in line with last year with only marginal growth. This revision is mainly due to the delay in Atali plant stabilization and relatively softness in API and intermediate business. While this reflects the near term pressure, but our fundamentals remain strong and I am confident of mid to long term growth trajectory of RT Pharma Labs.
Our efforts are dedicated to drive operational efficiencies and scale each business segment prudently to create long term shareholder value. The moderator may now open the forum for Q and A session. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Ahmed Madha from UNIFI Capital. Please go ahead.
Ahmed Madha
Yeah, thanks for the opportunity. My first question is if I look at the CDMO business, the number of projects the commercial have gone from 33 to 14 last nine months, does that give you any visibility for FY27 growth? I mean next financial year? What sort of how considering the way the projects have shaped up. You’d like to give some comments, how is the the outlook for the growth shaping up?
Rashesh C. Gogri
Yeah, I think as you have seen the number of projects have increased on the commercial side and we are working with our customers in the starting of this year to work on this number. I think we will be able to give that guidance of CDM or CMO growth post our budgeting exercise which we will do in next month. So I think next financial year, but we are looking at good growth. I think we are strong pipeline of projects with these 21 customers and we are confident that we will be moving forward with very good growth.
Ahmed Madha
And in the incremental projects that have come, are those products already commercialized and scalable and we are being added as a secondary supplier or some of these products are getting launched probably a year down the line or next year.
Rashesh C. Gogri
It is mixture of everything. So basically we are getting added, we are in certain projects, we are primary source, certain projects we are getting added as a secondary source and but largely I think it is more the products are getting launched or we are getting qualified in these projects as approved source. So with this happening I think we will have the number of projects which are adding meaningful value to our sales are increasing, you know, every year.
Ahmed Madha
Sure. On the API side I understand we had few good launches last year and the pricing pressure is the nature of the business. But going forward for the new launches on the diabetic side, the glyphosins and the onco side, do we have any new launches in the pipeline or for the next year we have to rely on the existing portfolio?
Rashesh C. Gogri
No, no, we have new launches.
Hetal Gogri Gala
Yeah, definitely. We are validating couple of or quite few APIs on encore side and also improving our manufacturing processes on diabetic sites. However, some of these APIs will have the patent expiry somewhere around 2728 and we will see, you know, more and more customers getting into our kitty with the validation completion in current quarter and in the next quarter as well. So 2026 also. 20:26 also we will have couple of new launches for the encore APIs as well and also we have a new CSO who has joined. So we will be. We are working very aggressive on you know, revisiting our strategy and working on, you know, capturing the, you know, Encore pipeline early on.
Ahmed Madha
Sure, sure, got it. My follow up question on that is, does that mean FY26 27 this year? Obviously we’ll have degrowth but FY2627, do we consolidate or we can grow from that base?
Rashesh C. Gogri
See, what we are doing is that we are trying to debottleneck the steroid line so there we can add more sales. Of course we have space in our general block where we are trying to get more projects validated and that validation has been done in this year. So those will get commercialized. These are some of the old products that we have taken up because we had space. So all that efforts and of course in 2026 we have few launches like Apexaban and a few other anti cancer products that are getting launched in 2026. So with those launches we will see, you know, 2026 to be a better year.
202627 to be a better year overall in terms of API and also API business numbers also consolidate the numbers of intermediates. So there are few inter that we supply from our range of intermediates for these newer launch drugs also. So those are also going to increase significantly going forward.
Ahmed Madha
Sure, that helps. Thirdly, on Atali, you spoke about the operational challenges. Can you just elaborate a bit what what sort of issues we are facing? And when we say the result by Q4N does that mean that we can shift some of our current intermediate from WAPI to ATT from Q1 and ramp up the utilization?
Rashesh C. Gogri
Yeah, basically. See we were, we were trying to validate several products there and in the validation there were certain challenges that company faced at Atali side because of the newer staff and newer nature of the plant. So those issues are getting settled I think with the operational team getting strengthened and the process team also being stationed there. Because all the entire new set of reactions and the equipment that we have commercially started in phase one are all large equipment. So that’s where you know, we are taking much larger batch sizes. So those challenges we anticipate to get over in the current quarter and the batches have progressed well now.
So overall that has led to, you know, some delays in the certain validation quantities that were supposed to go for the CTMO projects in the current fiscal, but they will get pushed little bit to next quarter from.
Hetal Gogri Gala
Yeah. And in FY27 we will have more products range getting validated from Atali and this will definitely help our intermediate capacity increase.
Ahmed Madha
Sure. A couple of questions on the number side. So gross margin.
operator
But if you have a follow up question please rejoin the queue.
Ahmed Madha
Sure. Thank you.
operator
Thank you. Our next question comes from the line of Rahul Jain from Credence Wealth. Please go ahead.
Rahul Jain
Hello. Am I audible?
Rashesh C. Gogri
Yeah.
operator
Yes sir.
Rahul Jain
Yeah. Thanks for the opportunity sir. First question is with regards to the impact of this consignment which is in transit where roughly we have cost to the extent of 30 crores and 49 crores could have been the revenue value. So just to understand what exactly is the impact on the numbers which have been declared for December, how is that being accounted and what is the impact in the December quarter with regards to same and what can be the impact in the next quarter? Coming in.
Piyush Lakhani
Yeah, so the impact in the. This is Piyush Vakhani. The impact is essentially what we have given in our note. So if we had been able to book the revenue in quarter three then our top line would have been higher by that amount, 49 crores and the PBT would have been higher by, you know, by the same amount.
Rahul Jain
So. Yes, currently how is it accounted? Is there some impact in the current numbers?
Piyush Lakhani
Yeah, so currently it is being shown as a stock, stock in transit. So that’s why, you know, it is carried at 30 crores, 30 point something crores which otherwise would have been 49 crores if we had been able to book the revenue.
Rahul Jain
Okay, so do I understand in the coming quarter what would happen is this 30 crores stock that will be sold at 49 crores so that 19 crores will be booked in quarter four. Correct?
Piyush Lakhani
Correct. Correct.
Rahul Jain
Yeah. Okay. And secondly sir, with regards to the Atali capex, what kind of cost, incremental cost we have incurred with regards to this Atali Capex underway till now. And what is the further cost expected and how do we see the ramp up in the coming quarters?
Rashesh C. Gogri
No, so we have done the capitalization of around 300 crores and the total project outlay is around 450, 50 crores. So that balance certain second phase is getting, you know, completed and we will have that completion happening in next couple of months.
Rahul Jain
Then I was asking also about the OPEX which has been. Because I can see some increase in other expenses and depreciation. So what kind of OPEX has already been accounted in say quarter three which has been flown through the pnl?
Rashesh C. Gogri
Yeah, so we had taken the complete depreciation as well as the OPEX numbers of Atali have also been accounted for for this validation program, whatever that we had undertaken.
Piyush Lakhani
So, so the depreciation on the entire 300 crores of capitalization has come in and on top of it about 1 1/2 crores of monthly OPEX that we are running at.
Rahul Jain
Okay, okay.
Rashesh C. Gogri
Quarterly will be around say 5.25 depreciation on 300 crore. So it will be 15, 16 crore depreciation in a year for that.
Piyush Lakhani
But then we’ll be capitalizing.
Rashesh C. Gogri
Yeah, additional. Once the additional gets capitalized then the depreciation will increase.
operator
Yeah. And last question sir, with regards to xanthine ramp up. So how do we see the xanthine ramp up over say next year with. This mechanical capillary accomplishment?
Rashesh C. Gogri
Yeah, see currently as I’ve informed all of you in the last call that we are currently running at around 500 tons per month capacity and slowly ramping it up. So I think with the new capacities coming up, we are adding close to 300 tons per month additional capacity so that you know, we will have that available. But I think quarter by quarter, you know we will have in first quarter maybe 3, 400 tons manufacture, second quarter we will manufacture more. And then in a year we should be at least able to utilize close to 50 to 60% of that capacity overall.
Rahul Jain
So the exit rate will be 50.
Rashesh C. Gogri
60% or overall average could reach to 50, 60.
Rahul Jain
Okay, average for the year could be in the range of 50 to 60%. Yes, sure, that’s quite helpful. Sure, sure. And so just last thing with regards to the API, so you mentioned in your initial commentary also and in the press release also presentation also just to understand, you know, where are we in this cycle of. So on one side you have mentioned there are some green shoots which are visible. At the same time the margin pressures continue. So is it that the demand has started picking up but the price rations have not yet moved up. So is that what we should. And plus how do we look it.
Rashesh C. Gogri
Forward now the API business, generic business, the prices never increase, they always go down only. So ultimately the game has to be played where you increase the capacity. So what we have done in our generic block also we have put the block blockfi expansion couple of years back. So that is available with us. And then we also mentioned that in this year we are also going to do the debottlenecking of the steroid block and our oncoblog. Eventually we will in future also we will do the debottleneck. So once we have the more capacity and the more products get off patent and to supplement our usage we have also undertaken few older projects where we have our own raw materials produce Intermediate produce in house which are large volume trucks.
So those also have been sold for the validation quantity. So all these efforts we see that gaining more customers for newer products or the older products, we will be able to do the growth in next year.
Rahul Jain
Sure, sir. Thank you so much, sir. Best wishes.
operator
Thank you. My next question comes from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Yeah, thanks for the opportunity. The first question is on the CDMO segment. So. And two parts to. And two parts to it. So if we look at our. I know the number of molecules that, that we have been working on. Although you know we have seen a significant jump in the number of commercial molecules from around let’s say 28 to almost and most of them have transitioned from under development to commercial. But overall the molecules that we have been working on has remained in the range of around 55 to 60 over the past six to seven quarters.
So if you can elaborate, how do you see this pipeline increasing? And that was the first part on CDMO and second part was on. If you look at our CDMO revenues currently they are largely concentrated on two to three molecules. So when do we see, you know, other commercial molecules which have increased from 28 to 40, contributing to our revenues and scaling up to, you know, five $10 million kind of thing. So when you see that thing happening, especially with the Tali coming in, you know, next year in a full fledged manner, how do you see this happen?
Rashesh C. Gogri
Yeah, as you know, you rightly mentioned that the overall, the least that are maintaining is a dynamic list of 60 projects. So we are reducing the number of projects which are not getting through as an approval. So it’s a dynamic list. So what is important is how many are commercial and whether they are increasing or not because those who are not getting approval are getting off the list also. Okay. And you know we are getting newer projects in the commercial range where we are quite hopeful that in future we will have revenue ranging significant revenue will come from.
Meaningful revenue will come from these projects in future. So whatever you are able to track is only export data, right. Largely. And that also quarter on quarter. I don’t know how much that tracking is being done this year. Largely in first three quarters we have not done too much shipment. So we have had total of only 120, 30 crores which plus of course this 50 crore. So in the last quarter we have bulk of exports also happening which will have these newer commercialized products getting exported. So you will see that in the data.
Ankit Gupta
Yeah, that should happen. Yeah.
Rashesh C. Gogri
Going forward, you know, as we are putting people on ground. We have someone in Europe and someone getting shifted to us. So more people getting on the ground. I think with the newer customers that we have been able to approach, I think and with our new enhanced strengthening of our R D team, I think in future we will have much more opportunities and you will see this list to grow.
Ankit Gupta
And then what some of the products which one of our products which got, you know, regulatory approvals in this financial year and one which is expected hopefully should get approval in Europe in second half of this in current year and USFD approval next year. So how do you see this molecule scaling up for us? You know, now, you know, at least one of them has been commercialized. The other two, the other one is also expected to be a blockbuster drug, you know, so if you can tell us whether what kind of projections or what kind of indications is, are the, you know, some of our innovators or our CDMO partners are giving for these two products.
Rashesh C. Gogri
See, I think we are not speculating on these names of we are bound by the confidentiality agreement with our customers. So. But the project’s success depends on how well they are marketed and how well they are getting penetrated. Because for the same segment there are many drugs which may be there, but luckily for us the drugs which are there have very segment which is differentiated segment where there are not too many competitors operating in this space. So we are keeping our finger crossed and hoping that our innovative partners are able to grow these products. And of course we are there to support them.
So in future we could see healthy growth in all these projects. So which we are doing with our partners.
Ankit Gupta
Sure. Second question was on the API part, you know, last year in second half we had touched almost a quarterly run rate of 200 crore. We had in fact exceeded that. And this year we have been in the range of 150 to 160, 150. Of course you have alluded the reasons given the launches which are happening in the coming financial year. How do you see, you know, we might end up this year around 650, 660, 660, 670 crore kind of run rate for the full financial year given how the trend has been for the past three quarters and last year we were almost around 770 crores.
So next year should we be looking at going back to that 770, 780 crore kind of run rate or you know, we should also see some growth on that number or at least at this juncture we are just looking to go back to the FY25 API numbers.
Rashesh C. Gogri
Yeah, I think the first milestone is as you rightly mentioned, quarterly 200 and then the next milestone will be higher than that quarterly. So these are the milestones I think. Yeah. So that is what we will try to scale it up.
Ankit Gupta
But when do you see this happening? Let’s say you know going back to 200 crore quarterly run rate on APM.
Rashesh C. Gogri
As we get more and more, you know, commercialization of our products and the new launches happen. So that will happen across next few quarters. So I think it’s not going to happen in next quarter but I think it will take a couple of more quarters to come to that.
Ankit Gupta
Last question on the gross margin.
operator
But if you have a follow up question, please reach out to you.
Ankit Gupta
Thank you. Thank you.
operator
Thank you. Our next question comes from the line of Madho Marta from fil. Please go ahead.
Unidentified Participant
On the Xanthan derivatives business. If my understanding earlier was correct, we had 5,000 tons capacity and I think you if I heard it right you said we are running at 500 metric tons per month run rate right now. So just trying to clarify like that would mean 6,000 tons volume. So what is the basically what is the current install capacity and sort of volume run rate that we have in Xanthine today?
Rashesh C. Gogri
Yeah, so basically in Xanthine segment we are running two manufacturing sites. So what what we have done is the current mother side that we have there also we did some deep bottlenecking exercise. So that capacity increase has happened happened as phase one and the new site that is 300 tons per month that is getting installed mechanical completion by end of this financial year. By March and next quarter we’ll start the trial production and everything. So that’s how the production will reach to 800 metric ton per month. So that’s why we are saying that currently we are at 500 because that’s what we are operating.
Unidentified Participant
Okay, so effectively so you’re saying we are at 500 metric tons per month including the debottlenecking and at peak including the expansion we can get to 800 metric tons of volume from that is.
Rashesh C. Gogri
9,600 our installed around 9,000 considering 25 whatever. Yeah.
Unidentified Participant
Okay, got it. Understood. And how is the pricing trend right now in Xanthine across you know in the various end markets which we sell and the incremental volume will be selling it more in you know, pharma grade or will it be more beverages or you know any market mix you can give us. The pricing can vary so just wanted to check.
Rashesh C. Gogri
Yeah, so I think There is an interesting development is that the China has announced that they will withdraw the benefit rebate benefit on caffeine and its salts. So with that rebate withdrawal I think overall 13% benefit that is getting accrued to the Chinese manufacturers when they export the API that will go away. And we are hoping that this will push the prices of the product up by at least 8 to 10% in future. We are seeing some increase in the pricing overall. I think in the spot market we have seen around 5% increase in the price from lower level.
So we are seeing that the oil pricing has bottomed out. Secondly for the US market now with the overall trend I think there is a duty of 20% which is applicable on Chinese product. Whereas India has a duty free status currently because caffeine doesn’t attract the caffeine is in the annexure list which is free from these trump tax. So with this I think we are in a favorable position to do the exports to U.S. imports will and that other markets also we will have a higher overall pricing should improve. I think going forward.
Unidentified Participant
Is it a fair assumption that in FY28 we could you know run at full capacity on the like the 9,000 metric ton can be full capacity for us.
Rashesh C. Gogri
I think the efforts are you know going to basically achieve to 85 to 90% of that capacity. By that we always want to have some free capacity.
Hetal Gogri Gala
Yeah. And we wanted to reach top three in the world with this kind of capacity. So to have a good position across.
Unidentified Participant
And in the API business. You know our. Although the reported revenue obviously seems like there’s a decline. But just wanted to check like until last year we had a subsidiary, you know where the revenue used to be booked in the top line. Now it’s moved to the associate line item the JV which we had. So is the decline in API business because of that change in the reporting? Because of that there’s actually been a decline of.
Rashesh C. Gogri
See you have to look at the standalone business and standalone to standalone. What is the gap? That is what is important. See in this current quarter we have added 5 crore PAT below the line for that entity. So which had negative numbers in last two quarters have become positive and this quarter it has added 5 crores in this, you know results consolidated results. And we are hopeful that in the future also we will see similar positive numbers from that joint venture that we have.
Unidentified Participant
Just want to clarify this 167 shows approx API integrated business which we booked in quarter three. What was the like for like number last year? Like if I compare Apple to Apple for this business.
Rashesh C. Gogri
That number, I think even the percentage you will have to see last year Q3 was 40% of. You know, I think no, the breakup was around 44%.
Unidentified Participant
On what top line? Is it. On what top line?
Rashesh C. Gogri
I think it was around 180.
Unidentified Participant
180, yes. Decline is more like 5, 6%. Right. Rather than. Yeah, much larger number which comes because of that.
Rashesh C. Gogri
180 has become 160. 158. 160. Yeah.
Unidentified Participant
Okay, that’s the last question on the CD.
operator
If you have a follow up question, please rejoin the queue. There are a couple of parties, participants waiting in the queue. Thank you. Our next question comes from the line of Shikha Mehta from Time and Tide Advisors. Please go ahead.
Shikha Mehta
Good evening, sir. Am I audible?
Rashesh C. Gogri
Yeah, yeah.
Shikha Mehta
Congratulations on a recent set of numbers. I wanted to understand the gross margins a little better. So of course this quarter we’ve seen superior gross margin. So is this something we can maintain going forward? Is this sustainable or is there some kind of one off? And along with that, on our other expense side there is a significant rise. So is that just the Atali, you know, operational expenses that we were mentioning earlier or is there anything else? Part of it?
Piyush Lakhani
Yeah, the first one, I think quarter to quarter the gross margins will vary a little. But if you see nine months, it’s basically trending at the same, almost the same level. If you look at gross margin as well as ebitda, they’re around the same level. And second question about the expenses. Yes, mainly the increase is contributed by the Atali side. And there is one more site that we have taken on rent on lease where we are paying conducting fees. So there also, there is some contribution also coming in and there are corresponding, some expenses.
Rashesh C. Gogri
So that is getting good.
Piyush Lakhani
So that, that particular disclosure we had given in the Q1 that we have entered into a conducting agreement with one of the. One of the players who had some.
Rashesh C. Gogri
Extra capacity and empty plant.
Shikha Mehta
Understood. So the other expense should broadly normalize. Once we start seeing revenues coming in from Adali, it should move back to that 21, 22% of sales that it used to be.
Piyush Lakhani
Yeah, yeah. It will move more in tandem with the growth in the top line. And as you rightly said, it would move. Basically it will increase once the operations are stabilized and ramped up at Atali.
Shikha Mehta
Another thing, sir, in our presentation and in our opening remarks, we’ve mentioned that we’re looking to end FY26 on a flat to moderate growth on ebitda basis for FY26. So that would suggest a very large quarter on quarter jump in the Q4 numbers for EBITDA. It would lead to almost 50 to 55% of an EBITDA jump quarter on quarter. Is that understanding correct and are we, you know, geared towards doing that?
Rashesh C. Gogri
Yeah, as you, as we have mentioned in the Today’s presentation, also that 1 revenue we had to defer the 49 crore sales. With that we had to take at 30 crore COGS. So with that and the normal increase, I think whatever that we are projecting because a lot of CDMO sales are still going to happen in the last quarter. So with that we are anticipating good growth in the last quarter.
Shikha Mehta
And so lastly on the API side, I understand a lot of participants have asked this earlier as well, but I’m just looking to understand. So you know, last year Q3 and Q4 obviously were tremendous quarters for us. In the near future, maybe Q1 or Q2 in FY27, can we expect that kind of revenue and you know, margin or is that something to look at as a one off and might not happen going forward?
Rashesh C. Gogri
No, we are increasing the capacities now. Which quarter we will be able to grow will be, you know, whatever we are pushing.
Shikha Mehta
No, so I’m just trying to Understand that was Q3, you know, we had margins of EBITDA margins of almost 27% last year. Q3, sorry, last year Q4. So is that margin A1 off or is that something that, you know, in the imminent future we can expect at some point in FY27?
Rashesh C. Gogri
I think Q4 margin was driven by the CDMO CMO as well. So in the Q4 we had CDMO CMO almost going up to 27% of the sales. So overall I think the last year Q3, Q4, 4 both, you know, we had good API sales, you know, overall as well. So. But the bump was largely due to CDM or cm.
Shikha Mehta
Understood. So again as that continues to grow at this 30, 40% rate that we kind of. It should possibly come back.
Rashesh C. Gogri
Yes, yes.
Shikha Mehta
All right. So thank you. I’ll come back in the queue.
operator
Thank you. Our next question comes from the line of Ahmed Madha from Unifi Capital. Please go ahead.
Ahmed Madha
Yeah, few questions on the numbers. So did we have any forex loss in quarter three last quarter? We had some, yeah.
Piyush Lakhani
Yeah. So so basically you know, that gets parked in the other income. So so basically you know, we have gain on the exports and we have loss because the rupee is depreciating obviously. So loss on the import and on Top of it, the part of the interest on the foreign currency loan which is above, over and above the normal rate of borrowing in India or INR also gets net off against the export gains. So so basically the net impact which we are, which you are seeing in other income is because of that.
Rashesh C. Gogri
So total will be 5 crores. 5 crore is the total impact that so no.
Piyush Lakhani
So whatever gain we had almost, you know similar kind of loss behind.
Ahmed Madha
Okay, sure. And in terms of the capital structure, how much gross debt we have? Nine month ending?
Rashesh C. Gogri
650. 650.
Ahmed Madha
650 crores. Okay. And post all the capex are done. I mean the balance of Atali and Zen theme, everything what number should we end by? Q4?
Piyush Lakhani
I think we should look at that net debt to equity of around 0.3. Between 0.3 and 0.35. You know depending upon how Q4 goes.
Hetal Gogri Gala
Yeah, 0.3.0.
Ahmed Madha
Got it. And on the Atali you spoke about 450 crore capex of which 300 is commercialized and 150 is the balance remaining for Xanthine how much will be your block which will be capitalized.
Rashesh C. Gogri
In total the project that we have approved is around 150 crore with both the sites together.
Ahmed Madha
Okay, sure. Lastly on the CD follow up please join the queue. Sure.
operator
Thank you. Our next question comes from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Thanks for the opportunity. Again on the venting side you know we will have the entire capacity of 9,000 ton per annum by end of Q4. And we as you’ve been indicating that you know we’re looking at will should end FY27 with a decent capacity utilization of the incremental of the new plant as well. So you know new capacity addition as well. So are we looking at a scenario next year and that you know our volume growth in the Xanthine should be can be around 25 to 30% plus given how things are there on the China because of this anti involution thing we should also have some 5 to 10% kind of jump in realization in benzene.
Rashesh C. Gogri
Yeah. So I think every overall as I have indicated that the new plant will start up and we’ll see how that goes. Overall target we have set of what we want to commercialize from that. But what we did is that from the current site itself by debate on the we are Anyway operating at 6000 level today for this quarter. So that really gradual thing also helps us in pushing the number because you are not taking a Sudden shock of increase from 5,000 to 9,000, you already are at 6,000. So it’s easier to reach seven or seven and a half thousand going forward.
Yeah. So another thing that I think everywhere we don’t compete with China. So wherever we are competing with China, you know, definitely we will have this advantage of margin but I don’t think that will ever substantial because we have certain context which have logged in on the pricing. So.
Ankit Gupta
Yeah. Okay.
Rashesh C. Gogri
But rupee depreciation definitely helps us overall.
Ankit Gupta
Sure. And on the CAPEX part on you know, for FY27 and FY28, you know we were also looking at incremental blocks coming in Atali. So given some visibility on the CDMO part are we looking at some expansion coming in for the new block at Atali in FY27?
Rashesh C. Gogri
Yeah, yeah. We will have at least one block coming up in Atali in next year. So we will get that CAPEX approval going forward.
Ankit Gupta
Okay. And it should not be a large capex even.
Rashesh C. Gogri
It won’t be a large capex.
Ankit Gupta
Okay. So does it also imply that, you know that huge capacity is coming up and we are also looking at, you know, new block coming in for the cbmo. We have very good visibility on how CDMO should ramp up post the first phase comes in. The first block comes in.
Rashesh C. Gogri
Yeah, yeah, yeah, we have good visibility. So of course you know we have to keep our finger cross. We, our partners have to make sure that their launch drugs are being successful and they don’t have any hiccups. So everything is contingent to how they are performing post launch. So that’s what we are waiting to see. And I think because everyone prepares for the launch and the first year there is always a dip post launch and the second, third year again it picks up because you know they are certain about the market targets and they are actually trying to expand the market.
So that’s where I think we will be in different phases with different drugs.
Ankit Gupta
Continue showing.
operator
Thank you. Our next question comes from the line of Vikas Sharda from NT Asset Management. Please go ahead.
Vikas Sharda
Yes. Hi, good evening. One question that you have pointed out. What is a goods in transit? What would be the normalized goods in. Transit like every quarter so that we can know that how much higher it is this quarter?
Rashesh C. Gogri
8 to 10 crore. I think 10 to 12 crore will be.
Piyush Lakhani
You know this was a specific case of an incoterm being a dap delivered at place. So so basically you know, we deliberated, you know, the possibility of booking it in the last quarter itself. But then you know, we deliberated with the auditor also and internally also. And it was basically as per the accounting terms. It gets booked at the, at the time of delivery itself. So. But normally we do not have too much sales with this incoterm. So. So normally it is not that high as far as FG is concerned.
Rashesh C. Gogri
Yeah. So it will be around 1012 crore typically which is at the transit at the dock.
Vikas Sharda
Okay, that’s helpful. And secondly, so you have revised down. The EBITDA growth guidance from last quarter to this quarter. So besides some push out in the CDM sales, any further negatives that you headwinds do you see for this year?
Rashesh C. Gogri
I think as I have mentioned API overall growth that we were seeing that there would be some growth. But there has been degrowth. Okay. In the API sales segment that we have seen. So that is also one of the reason why, you know, overall we have not been. But the engine segment has done as what we were targeting. CDM or cmo. Little bit of pushback and API is little slow. So I think these are the three factors. And then we had capitalized the tally and then all the expenses have started coming in. So we have depreciation and all that.
Also the running expense OPEX have also come in. So whereas the initial hiccups that of course will get solved going forward.
Vikas Sharda
Yeah. And in the API segment is the pricing pressure across the board or how. Is it like few specific molecules and. How is the volume growth overall safely. For API and intermediates?
Rashesh C. Gogri
I think we are seeing pricing growth happens. That is the nature of API business. I think overall there is always a pricing growth. We had few launches last year which have, you know, they the partners with whom launch they took significant quantities and this year they are little bit slow in taking up more quantities from us. So that’s one of the reasons. Second thing, you know the in terms of intermediate capacities, you know we did not have too much intermediate API capacity. We were running the CDM operations in our intermediate and CDMO combined facility. So now with the Atali coming in, I think we will again focus on these intermediates.
Of course the as the launches happen of the APIs which are getting expired, we’ll start supplying these interface. So those sales also will get added into the API segment. So both this will happen. So that will drive the number towards growth.
Vikas Sharda
Perfect. Thank you.
Rashesh C. Gogri
Thank you.
operator
Thank you. Our next question comes from the line of Shubham Agarwal from Burman Capital. Please go ahead.
Shubham Aggarwal
Hi sir. Thank you for the opportunity. I just wanted to understand that Bayer got an approval USRD approval in October of 2025 for one of their key products in the menopause and hot splashes category. And they repeatedly categorize that as a blockbuster opportunity with 1 billion euros of sale. What we understand is that there are some key intermediates that you are supplying. So just wanted to understand how are you looking at this opportunity? Can it become a 15 to 20 million dollar kind of opportunity for you? And yeah.
Rashesh C. Gogri
We are not commenting on specific molecule because of the CDA that we have with various customers. So unfortunately I won’t be able to answer this question.
Shubham Aggarwal
Understood, no problem sir. Just wanted to understand on the general CDMO part like you know, from the time you ship a product from India to the, you know, receptors of goods at the customer rate, what is, you know, the general time lag and you know, between that shipment as well as the revenue recognition.
Rashesh C. Gogri
See generally we, most of the products which are more than a lakh rupees a kg we do mostly air shipment. So this is being delivered in 5, 7 days whereas the sea shipment takes 30 to 40 days. If it is going to Europe or if it goes to us then it will be 60 days. So by sea shipment but by air it is seven, eight days. But I think the sage six shipment was C. So that’s where the issue came up.
Piyush Lakhani
And in most of the cases we are able to book the revenue as at the time of shipment itself. Yeah, so this is the one, one.
Rashesh C. Gogri
Of, that’s why we have to disclose and it moves the number significantly, you know, for this quarter because it’s a very large shipment that we did for one of our customers.
Shubham Aggarwal
But you said earlier right that there were a lot of shipments that you know, might be seen in export there. But you know that usually happens later on. So just you know, understanding from that perspective that you know, is there like a 1 million average, sorry, 1 month average kind of, you know, map between shipment to revenue recognition?
Rashesh C. Gogri
Not really because most of the shipments are air shipments. So I think there is only few days of delay. But not all are DAP terms. So some of them are only dap, most of them are CIF FOB and stuff like that. So it depends on the inco terms.
Shubham Aggarwal
Understood sir, Just one last question if I can squeeze in. Usually sir, when you, when an innovator is you know, kind of receiving a US FDA approval, is there like a build up of an inventory that they would see on their end and you know, then obviously that will follow a normalization period, you know, and possibly destocking of that in the you know, that one year kind of range or usually it’s more, you know, stable. Just wanted to understand that perspective.
Rashesh C. Gogri
So I think every innovator has a different plan and if they are getting approval of different market at a different date then anyway the launch launches are deferred. But once they have key approvals in key markets of Europe, UK and US and other important market like Japan or whatever. So then I think they are at a full potential of sales and that’s where it depends on how they are prepared for each launches. They don’t get a day one approval for all the markets. So it all the regulatory agencies have a different clock.
Shubham Aggarwal
Understood. Thank you sir. And all the best for the future.
operator
Thank you. My next question comes from the line of Mohammed Patel from Edelweiss Public Alternatives. Please go ahead.
Mohammed Patel
Am I audible?
Rashesh C. Gogri
Yes.
operator
Yes sir you are.
Mohammed Patel
One question is related to the CDMO business. So the number of customers were 21 at the start at the end of FY25 and the number is same currently in the nine months. So are we expecting addition of customers in the near term?
Rashesh C. Gogri
Yeah, yeah. We expect this customer number to go up in calendar year 26.
Mohammed Patel
Okay, a follow up question on that. So can you give some color on the current CDMO inquiry pipeline?
Rashesh C. Gogri
I think starting this year we are having good number of new inquiries that have been generated by our BT team. And you know our team is really responding to these inquiries and we hope to win few of these RFPs going forward.
Mohammed Patel
Okay. We are expecting 1000 crore of CDMO sales. So then we should expect FY27 growth also to be similar to FY26 number.
Rashesh C. Gogri
That is the target that we have.
Mohammed Patel
One bookkeeping question. So what was the net debt? You mentioned the gross debt, what was the net debt? Q3.
Piyush Lakhani
Net debt around 650 crores. And we don’t keep too much cash.
Rashesh C. Gogri
Yeah.
Mohammed Patel
Okay, last question on the Zen thing you one of the previous participants where you were discussing the lock in thing. So I just wanted to understand what percentage of a business will be locking.
Rashesh C. Gogri
No, no. So basically we have, you know certain, you know commitments which are quarterly and annual nature. So our percentage of logged in may differ for customer to customer for different quarters.
Mohammed Patel
On an average what would that number be on an average? Very approximate number is fine.
Rashesh C. Gogri
See the capacities are increasing, the sales is also increasing. So that number is a dynamic number. I wouldn’t like to comment on that.
Mohammed Patel
Okay. Not even directionally.
Rashesh C. Gogri
Around 50%.
Mohammed Patel
Thank you.
operator
Thank you. Our next question comes from the line of Madhav Marda from file, please go ahead.
Unidentified Participant
Yeah, thanks for the follow up. So I just wanted to check on the CBMO business. I think this year we’ve got it for 30, 40%. I missed the comment. So you said FY27 also could be similar growth. Is that what you indicated in one of the earlier questions?
Rashesh C. Gogri
No, I think we will formulate the we will have the budget prepared by March and I think once we have the results of this financial year we will be able to to do the proper guidance. So.
Unidentified Participant
Okay.
Rashesh C. Gogri
But there will be growth.
Unidentified Participant
Okay. Business, you know, it’s the basis most if you get like one or two good commercial opportunities, the growth can be pretty substantial. Which is why I was just trying to understand if we had, you know, good projects in the pipeline.
Rashesh C. Gogri
Yeah, but see it is dependent on so now January, February, March is a good time to understand what customers will buy in the and that’s what will get projected in the numbers. And you know, that’s how every year it works. So that’s why we could give the guidance last year also that this is what looks.
Unidentified Participant
Just last question in quarter three, you know, versus the reported margins, we did allude to some initial OPECs that we booked for Atali, maybe for the Xanthine plant. Also maybe some costs would have come in so any cost which is upfronted in quarter three for some of these new expansions. If you could clarify how much that is so we have some sense on the base business margins excluding new expansions.
Rashesh C. Gogri
I think we may not have that breakup. So probably we can get you that breakup.
Unidentified Participant
Okay, thank you.
operator
Thank you. Our next question comes from the line of deep Gandhi from I thought pms. Please go ahead.
deep Gandhi
Hi sir, am I audible? Yes, the first question is on the CDMO side. So as you have indicated in the past that you’ve been trying to increase wallet share and even in this call you made a comment that some of the new commercial products are going to be significantly larger in the pipeline. So can you, I mean broadly help us explain that in say in last two, three years how the wallet share has improved with the innovator partners if you can try to quantify that.
Rashesh C. Gogri
Yeah, I think see we have good five, seven projects where there are multiple number of intermediates which are meaningfully adding the gross turnover of this business and others are shaping up basically in future. So that’s how the current nature of the business is 80% sales is anchored by these few projects, 7, 8 projects and the balance is by the other projects that we have.
deep Gandhi
Sure, but sir, can you, I mean say, quantify, say for example, can a single product, do we have such products in the pipeline where a single product can be more than 100, 150 crores turnover? I mean that has happened and even much larger for other CDMO companies, a single product scale. So do we have such products in the pipeline which gives you the confidence also to reach the thousand crores turnover from cdmo? Is that a fair understanding? And if you can help us quantify.
Rashesh C. Gogri
Yeah, see we have got single pos which are in millions of dollars. So in single digit millions of dollars. So we are in that range of products, you know.
deep Gandhi
Sure. And so the second question I have is, so, I mean in the past you’ve tried to explain that you are also trying to bypass, you know, work. I mean you are trying to directly work with the innovator companies in the CDM and bypassing the partners. So how has been that journey in last one one and a half years if you can give us some explanation? I mean are we, are, are we seeing any new products where we are directly working with the innovators now instead of working with the innovative partners?
Rashesh C. Gogri
See, I think we are working with whoever wants to work with us. So we are agnostic, you know, we have a lot of chemistry strength where we can do the regulatory starting material, key starting material, GMP intermediates and API. So with different partners, we are working with different things and we have innovators also. We are CDMO partners also and we have some traders also, not largely, but I think smaller biotech companies also with whom we work on APIs as well. So, so it’s a mixed basket. But there are. Yeah, yeah. There is no deliberate attempt to bypass any of the CDMO partners because in the early phase of patent, I think all the innovators which work on these blockbusters have to have the supply chain secured in the US and Europe only and they have to work with those who don’t have their own manufacturing capacity, have to work with CDMO partners.
And you know, we don’t have capabilities of doing this production in this geography. We have to work with the large CDMO partners.
deep Gandhi
Sure. Answer this last question. This again coming back to the wallet share question. I mean if you can’t quantify in terms of value, but can you help us understand are there any new products where you are doing almost a 60, 70% of the intermediates for innovator partner? I mean, are you taking wallet share more in that sense, is that a fair understanding in last one one and a half years compared to what it was in the past. If you can quantify that, even that will be helpful.
Rashesh C. Gogri
Yeah, we have few projects where we have that kind of wallet.
deep Gandhi
70, 80%.
Rashesh C. Gogri
So you stick to one number. 60, 70, we may have.
deep Gandhi
Okay, sure. Thank you.
operator
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Rashesh C. Gogri
I would like to thank all the participants for taking the time and joining the call. Good evening. Thanks.
operator
Thank you. On behalf of Daulat Capital Markets Private Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.