Aarti Pharmalabs Ltd (NSE: AARTIPHARM) Q4 2025 Earnings Call dated May. 12, 2025
Corporate Participants:
Rashesh C. Gogri — Chairman
Hetal Gogri Gala — Vice Chairperson & Managing Director
Piyush Lakhani — Chief Financial Officer
Analysts:
Nupur Jainkunia — Analyst
Ahmed Madha — Analyst
Deep Gandhi — Analyst
Prakash Kapadia — Analyst
Mohammed Patel — Analyst
Madhav Marda — Analyst
Ankit Gupta — Analyst
Dhwanil Desai — Analyst
Nitesh Dutt — Analyst
Yash Sinha — Analyst
Neha Karodia — Analyst
Aman Madrecha — Analyst
Kumar Saurabh — Analyst
Keshav Bagri — Analyst
Kaushal Sharma — Analyst
Jai Shah — Analyst
Rakesh Banerjee — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Pharma Lab Limited Q4 FY 2025 Earnings Conference Call hosted by Valerm Advisors. 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 the 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 Ms Noopur Jain Kunia from Advisor. Thank you, you, and over to you, Ms.
Nupur Jainkunia — Analyst
Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Jain Kunia from Advisors. We represent the Investor Relations of Pharma Labs Limited on behalf of the company and Valorem Advisors. I would like to thank you all for participating in the company’s earnings conference call for the 4th-quarter as well as for the financial year 2025. Before we begin, let me just mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management’s belief as well as assumptions made by and the information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr Rajesh, Chairman; Mrs Hittal Gokri Gala, Vice Chairperson and Managing Director; and Mr Lakhani, Chief Financial Officer of the company. Without any further delay, I request Mr Rashish Kokri to start with his opening remarks. Thank you, and over to you, sir.
Rashesh C. Gogri — Chairman
Good afternoon, everyone. Thank you for joining us today on Hati Pharma Lab’s earnings call for the quarter Q4 and full-year FY ’25. I appreciate your continued interest in our business. I shall take a few minutes to walk you through our performance for the quarter ended 31st March 2025, highlight some of some key achievements and provide a future outlook. Consolidated financial highlights for Q4 and Q FY ’25 as as under. I was pleased — I am pleased to report that FY ’25 has been a landmark year for the company. Q4 serves as a strong finish to the — to a year defined by business expansion and operational excellence. Revenue for Q4 FY ’25 stood at INR564 crores, representing — representing an 11% Y-o-Y growth. On a full-year basis, the revenue came in at INR202,113 crores, a 14% increase Y-o-Y. This reflects an upward growth trajectory supported by strong execution and healthy demand across all the business segments. EBITDA for the quarter was INR146 crores, a 24% increase Y-o-Y. EBITDA margins expanded to 26%, up from 23% in Q4 FY ’24. For the full-year FY ’25, we achieved an annual EBITDA of INR464 crores, growing by 20% Y-o-Y and underscoring our strength of our operating leverages and efficiency measures. Profit-after-tax for Q4 FY ’25 rose sharply to INR88 crores, marking at 35% Y-o-Y growth and setting a new record for quarterly PAT. For the full-year FY ’25, the profit-after-tax reached INR272 crores, a 26% increase over FY ’24, driven by both top-line growth and the margin expansion. In FY ’25, our net cash from the operations remained strong at INR332 crores, providing us the financial flexibility to reinvest in the capacity expansion and R&D. In-line with the strong financial results and our commitment to enhancing shareholder value, the Board has declared a dividend of INR2 — of INR2.5 per share for Q4 FY ’25 and the final year — final dividend, bringing total dividend for the full-year to INR5 per share. Let me now represent — let me now present the business performance highlights. The company operates in three separate segments in the pharmaceutical industry, Derivatives Derivatives, API intermediates and CDMO, CMO segment. The derivative contributed to 34% of the turnover in Q4. And there was no significant change in pricing. The facilities operated at almost full capacity in Q4. The API intermediate business recorded the highest-ever quarterly sales and stood at 39% of the total turnover of — in Q4. The sub-segment-wise breakup is 52% in regulated market, 38% in ROW and 10% in non-rate market, which aligns with our long-term focus towards the regulated market. The CDMO CMO segment has contributed to 27% of the turnover in this quarter and we are currently working with 21 customers and the number of active projects are now 61 projects against last year’s 56 projects. Out of which 32 projects are at the commercial-stage and 27 are under the decent phases of development both at customers end. Let me share the progress updates on key growth initiatives. For our derivative business, the capacity expansion to 9,000 metric ton is progressing as planned with the phased commissioning of — commissioning estimated in H2 FY ’25. As promised in Q3 earnings call, we have completed the filings for regulated approvals of USGMS and CEP for the pharmaceutical market. The pharma market sales is likely to yield higher realization on a per kg basis. In the long-term, we anticipate the beverages market to continue as a large segment for this business. The greenfield project at Ratali, Gujarat is in final phases of completion. The mechanical completion is expected to finish around the end of this current quarter. We plan to get operationalized in phases and the full ramp-up is expected by end of this financial year. I would like to update you about our sustainability achievement. Recently, we earned EcoVadis rating ranking among the top 5% globally sustainable — in sustainability. Another milestone has been a the approval of GHG emission reduction targets by SBTI. With this, we have become the sixth Indian pharmace player to earn SBTI approval for all the three scopes. Let me highlight now about the forward outlook. Looking ahead towards the future, we are confident of building on this growth momentum. Long-term relationships and repeat orders from three customers remain the cornerstone stone of our stability. Our business strategy continues to be centered around growth, backward integration and financial discipline. On a standalone basis, we are guiding an EBITDA growth of around 12% to 15% in FY ’26 over the higher base of FY ’25. This should be supported with the increase in contribution from higher-margin products and improved process efficiencies and volume growth. The capacity of 9,000 is likely to be operationalized fully by Q1 FY ’27 and in next three years we are prior to-1, in actually. In the next three years, we aspire for a capacity utilization of 80% to 90%, which 50% targeted sales to beverage is a regulated customers. For API and intermediate segments, we are continuously working towards the product innovation and focusing on new molecules with patent expiry in next three to five years. On the back of strong manufacturing capabilities and sound R&D setup, the CDMO CMO revenue is estimated to grow around 30% to 40% in FY ’26 conclusion to conclude our FY ’25 has been a record year for us with highest-ever EBITDA and PAT driven by strong performance across all the three business segments. The performance is a testament to our team’s hard work, strategic focus and resilient business model. I want to express my deepest appreciation to all business stakeholders for their outstanding contribution to our investors for your continued belief in the growth journey of. We have entered FY ’26 with a strong fundamental, clear strategy and a solid platform for sustained value-creation. Now I request moderator to open the floor for questions. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question comes from the line of Mara with Unifi Capital. Please go-ahead.
Ahmed Madha
Yeah, thanks for the opportunity and congratulations on good set of numbers. I had a question on the CDMO business. Just to understand the CDMO business model better. I have two questions. One, in most of the products which we have in our pipeline are already commercialized, are we the primary source supplier, say, first or second source supplier? Are we with the third or rather a second grade supplier? And could you quantify in whatever projects about 30 of them commercialized? How many — can you quantify them into two different buckets, whether we are primary or secondary?
Rashesh C. Gogri
Yeah, currently, we are primary and secondary in different projects. So we are currently not quantifying them. And however, each project is important and you know the commercialized products are being sold as commercial products by innovator in the marketplace. So that’s where the — wherever we are a second source, we have represented RT as a viable option, creating our value proposition and allowing them to shift from their other sources to us. So those businesses are also as important as you know the first source opportunity that we have.
Ahmed Madha
Got it. And from the total 53 commercial projects, how many of them contributed to revenue in FY ’25?
Rashesh C. Gogri
Yeah, that number we will have to work-out, you know exactly how many we have in FY ’25. I think we should have worked on at least 75% of the project roughly exact number, we’ll have to double-check, but roughly 70%.
Ahmed Madha
Got it. And on the CDMO business side, you have said 30% to 40% growth. Going-forward for the project, we see we have pushed the timelines for about 3/4. Last quarter you spoke about Q1 ’26 commercialization, now FY ’26 and commercialization. So if you could give some light on when you see the project ramping-up in terms of revenue contribution? And secondly, on a website, we see that you have mentioned about ramping-up the capacity towards 1,100 kiloliters incrementally in a few years. So if you will give some guidance beyond FY ’26, how do you plan to see the capacity addition in
Rashesh C. Gogri
Yeah. So basically, we would like to correct there that the mechanical closure of Phase-1 will happen by end of this quarter. Then being also the facility from where we will do the GMP intermediate supply, we have to go through the qualification and all that. So those things will happen over next three, four quarters where we take the validation batches and. So that’s what we have given and that was also originally the — you know the target of getting all these things were anyway going to take. But however, we may be able to get few products commercially out also early stages out from this site and we are very hopeful that we will be able to utilize the asset for continuous production of some of the products and we may shift some of the intermed also at the Atali site and wait for the qualification. Secondly, regarding this 1,100 KL capacity is our overall capacity currently which we have in all the multiple plants that we run, whereas we are adding 450 KL capacity — additional capacity. This is over and above the capacities that we have in the dedicated assets that we have. So post this implement project getting completed, we will have almost 1,500 plus capacity, which will be available with us. And subsequently, annually we will add the capacities because Atali then being a brownfield expansion, we’ll be able to our weaker and it should be able — we should be able to do that in a 12-month time-frame whenever we require additional capacity at.
Ahmed Madha
Got it. I have few more questions. I’ll join back-in the queue. Thank you.
Operator
Thank you. Thank you. Next question comes from the line of Deep Gandhi with PMS. Please go-ahead. Yeah, hi, sir. Congratulations on a very good financial year. So sir, my first question is on the CDMO side. So in our past interactions, you always explained that we have shifted from a preclinical model to a commercial project model. But now do we seems that some of the molecules which have scaled-up recently for us have such molecules where we still — where the innovator is still going ahead with the FDA approval. So just wanted to understand more about this that is it fair to assume that such products which we are catering to will make our CDMO business much more lumpy? And secondly, could you comment on how the shipments will work here? Will it be a recurring shipments or will it be lumpy? And are we going to target more such opportunities or was this like a one-off opportunity for us? Thank you.
Rashesh C. Gogri
Yeah, see, first of all, we have 21 customers with 60 product baskets. So we have a very wide basket and very wide number of customers. Second of all, you know, we are specializing and we are pitching ourselves as a manufacturing specialist. So we would like to take-up the projects for CMO opportunities at Phase-3, around Phase-3. What happens, as I have explained to everyone earlier also on the call that the manufacturer or the innovator would like to change and make their source is more efficient and the products ROS is also more efficient and that is where we try to push our expertise and get those projects. So that is where our target is. And I think Phase-3 to final approval, if you see the chances of those are also almost more than 50% generally in the small molecules. So with that, we have very-high probability of product getting success. I am not saying that we don’t have any products in phase — clinical phase or early clinical Phase 1/2 also. We have some products there also. However, we have a large basket of commercialized products where we have just delivered some initial quantities for their validation, etc. So those also we expect them to commercialize in coming years. And the innovators do not take campaign every year. So some campaigns are alternate here and then depending on their API manufacturing locations also, they also have scheduled. So it takes little time. But once we are in, I think it’s a long-term business and that’s what we like. So instead of volatility, I think this business is going to give us more stability overall.
Deep Gandhi
Sure. So is it fair to assume that the products which have contributed significantly for this quarter, you think should remain sustainable going ahead or there will be some lumpiness, if you can clarify that?
Rashesh C. Gogri
No, no, they will be sustainable. The product that we have in this quarter, large products will be sustainable.
Deep Gandhi
Sure, that was helpful. And sir, secondly on the ACI side. So if I look at from the export side, could you comment a bit on the pricing of some of our key products, particularly on, say, outside where I see some of the products like cars will have very-high realizations. So do you think the FY ’25 growth and realization for some of these products are sustainable or were there some factors like, say, some shortages which hurt our business?
Hetal Gogri Gala
So basically, the 40% world product range is very stable. There could be some pricing correction, but however, these products go in very limited quantity. So it is very difficult for our customers to change the source the sir, this would remain a continuous business for us.
Rashesh C. Gogri
So pricing will be stable, more or less, maybe tight lower, but quite stable.
Deep Gandhi
Sure, and sir, just one last question regarding this only. So our top price products in API in terms of exports contributed 70% of our revenue in FY ’25. So could you comment on the outlook about these products for FY ’26 in terms of growth. And are this product itself expected to grow quite well or are you expecting some new products also which should start contributing well, say, in FY ’26, particularly in the ATI side?
Rashesh C. Gogri
No, our top products, though we have not specified which are our top-five or whatever the top-10, but we know for sure that these products are great products and we are continuing to build our strategic position in this product and we are continuing to grow this market. We don’t see any product under threat currently. And definitely, we have few new launches also coming up in next couple of years where wes see good anti-diabetic products or some other anti-cancer products for which we see that there would be a good scope for us to create market-share.
Deep Gandhi
Yeah. Sure, that was so large if you ask you more questions. Yeah, yeah.
Operator
Thank you. Next question comes from the line of Prakash Kapadia with Spark BMS. Please go-ahead.
Prakash Kapadia
Yeah. Thanks. Couple of questions from my end. You know if CTMO segment is expected to grow 30% plus in FY ’26, shouldn’t the 12% to 15% EBITDA growth be higher? And should we expect — is it right to expect 25% kind of EBITDA margins on a standalone business.
Rashesh C. Gogri
But currently, you know, we are on a very significantly high base of FY ’25 because we have grown over last year-by almost, you know 20% to 24% on EBITDA. So over and above, I think we should be happy with the good growth.
Prakash Kapadia
And on — just to get some more direction on the revenue side of the company. So with commissioning of the new plant for sometime next year, what is the kind of growth we would expect in that segment?
Rashesh C. Gogri
See, as we have mentioned that the capacity will get fully operationalized by Q1 FY ’27 and capacity utilization will happen over 90% over three years. So I think it will be a gradual growth there. But we hope to consolidate our position with our large buyers and this segment will grow in terms of overall quantum of revenue for sure. There will be a good growth in this along with CDMO growth as well.
Prakash Kapadia
Yeah. Okay. Okay. And on the API intermediate segment, we’ve seen a big growth this financial year. So what kind of a growth we would expect on this base in ’26? And if you could give some insight into, again, the growth will be led by regulated markets or rest of the world because we’ve grown pretty well this year. And lastly on the CDMO side, you said 30% plus growth. So again there, if you could help us understand the driver in terms of products or certain geographies, that will be helpful. That will give us more insights into the kind of potential revenue we are looking at.
Rashesh C. Gogri
Yeah, I think overall growth in API is driven by regulated markets and growth in export market or exports backed market basically, so even if we are giving to India, but ultimately the end-consumer is exporting the products to — regulated markets only. So that is where our focus has been and that’s where we have been more-and-more successful in pushing our product. And in future also the same will continue. And in terms of the CDMO or CMO growth, we have given guidance of 40%, we expect 30%, 40% guidance and we expect this to be achieved by our current product mix of almost 60 products that we have with 21% and we plan to grow it. So in last one year, we have added almost 20 new products with six new customers. So you have seen the growth of customer addition as well as the number of projects that we have — we have done over a period. So I think we continue to maintain a strong R&D position, a time base, time-bound you know, commitment to achieve the turnaround of the product inquiries that we receive and grow the overall CDMO market in a very fast pace. Yeah.
Prakash Kapadia
Okay. And lastly, yeah, if you could quantify the US share in exports and any impact of the current uncertainties given whatever US pharma is stocking or whatever US is trying to do, any impact on that part of the business?
Rashesh C. Gogri
Yeah. Overall US direct US export is not very, very significant as such in overall total revenue. But API is exempt from all these duties. So we don’t anticipate APIs will come under duty because if there is any impact, I think it will be more on the formulation front, not on the API front. And then there will be shifting from supplying these APIs to Indian players who ultimately end-up exporting there too directly to US players who will ultimately buy our API and then supply in the US market. So we don’t feel as of today, any threat to our API current situation of the business.
Prakash Kapadia
Okay. Okay. That’s helpful. And any CapEx number you could share for FY ’26?
Rashesh C. Gogri
Yeah. I think FY ’26 overall the capex number is around INR400 crores INR450 crore total capex that we will end-up doing in FY ’26 as well. So that is a remainder of current capex of the Atali and then there are expansion capex, which will also be spent. So overall, we expect around — so this year, we ended-up spending almost INR400 plus crores and next year also it will be the similar number plus or minus 10%, yeah.
Prakash Kapadia
Understood. That’s helpful. I’ll join back if I have more questions. Thank you. Thank you.
Operator
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Mohamed Patel with Edelweiss Financial Services Limited. Please go-ahead.
Mohammed Patel
Yeah, hi. Sir, can you give approximate share of US in all three segments, direct and indirect?
Rashesh C. Gogri
Yeah, I think we will have to work-out that number and get back to you with that number.
Mohammed Patel
Okay, okay. And sir, what is the breakup of this capex, INR400 crore INR450 crores?
Rashesh C. Gogri
Yeah, total capex is broken into the remainder of Atali capex, which is almost around INR200 crores remaining there and some capex of project around. We have spent close to INR100 crore-plus there and then other maintenance capex and other R&D capex. So all this put together, we will have close to this number.
Mohammed Patel
Okay. And if you can just reiterate the capex commercialization timeline. So for separately for Brownfield CapEx as well as project
Rashesh C. Gogri
All will be commercialized in this current financial year.
Mohammed Patel
Okay. And my last question, any comments on Zhangin pricing, especially in the US market and any comments on how pharma grid caffeine can contribute to our volumes and improve overall realization?
Rashesh C. Gogri
Overall, the entene derivative brands are stable. Of course, they are low but stable and we understand that the prices have bottomed down. And the pharmaceutical market, of course, is a regulated market where we require to you know, communicate with the FDAs and the you know, medical agencies of different countries. So that’s why the pricing is little different and it is definitely higher. So now we are continuing to get newer inquiries and the focus is towards selling the products in these regulated markets so that we can you know, accelerate our position in this segment.
Mohammed Patel
Okay. Thank you.
Operator
Thank you. Next question comes from the line of Madhav with Fidelity. Please go-ahead.
Madhav Marda
Yeah. Just wanted to check on the caffeine zantene prices currently. Do you expect prices in the next year or so to be at similar levels or to move a bit higher? And what are the key factors to watch out for price recovery from currently lower levels? And second part of the question is, how different are spot versus contract prices for us? If you could give us some sense that is helpful. Thank you
Rashesh C. Gogri
Yeah. So you know, derivatives are sold-in different markets and different markets have different pricing dynamics. So of course, for confidentiality reasons, we can’t explain all that. But overall, we are quite confident that the low-end prices of the which are prevalent in certain market segments, they have bottomed down. The higher-end prices will come down a little bit and lower-end prices will go up. So I think it will be a balance, generally which will happen and overall with the expanded capacity, we are still going to see the expansion in overall profitability of this business for next few years to come.
Madhav Marda
Yeah. And should we assume that volumes in the segment for FY ’26 will be flattish because we’re running at full utilization. So volume growth is more FY ’27, is that how we should think about it?
Rashesh C. Gogri
Yeah. Yeah. Basically what we have earlier also guided from a 4,500 to 5,000 plus capex. So we will have increase in the overall volumes of. I think we will do phase-wise commissioning. So there also we’ll get certain capacities for last couple of quarters, last quarter also. So with that, I think the overall use anything that we will produce much higher — much higher than last year, but of course, it will not touch the capacity, but on an annualized basis will be higher.
Hetal Gogri Gala
In FY ’27 will or higher capacity.
Madhav Marda
So essentially you’re saying two years to ramp-up the new capacity. So FY ’27 if we start Q1, so you’re saying by FY ’29, it should be fully utilized. That’s how we should look at it?.
Rashesh C. Gogri
Yeah, in next see, basically, 80%, 90% we can always place the product in the spot market. But our idea is to get 50% targeted sales in the beverages and regulated customers. So to achieve that, it may take little longer, you know?
Madhav Marda
Okay. And my last question was in the CDMO business where we have about INR200 plus crores sale, could you give very broad sense in terms of how much of the revenue comes from commercialized molecules versus those which are in say Phase-1, Phase-2, Phase-3 kind of stages?
Rashesh C. Gogri
So bulk of the molecule — bulk of our sales is coming from Phase-3 onwards, you know. So currently, Phase-3 and commercialization product would constitute to be more than 80% — 75% to 80% of our overall value of sales would come from that and a smaller amount from the early phases?
Madhav Marda
Okay, got it, got it. And sir, is there any of our, let’s say, Phase-3 or like late-stage molecule which has like a clinical readout in FY ’26, is there something like that, which is liked up for us?
Rashesh C. Gogri
Yeah, we expect certain products to get launched in next coming couple of years.
Madhav Marda
Next couple of years. Okay. Okay.
Rashesh C. Gogri
Yeah, these current year and next year. So probably it depends on the approval when the FDA is approving. But I think next two years, we expect two products to move and big products for us. Yeah.
Madhav Marda
Okay, got it, got it. Thank you.
Operator
Thank you. Next question comes from the line of Ankit Gupta with Capital. Please go-ahead.
Ankit Gupta
Thanks for the opportunity and congratulations for a good set of numbers. So my first question was on the CDME side, sir. So if you look at the last two years, I think we have two molecules which have contributed to the overall scale-up that we have seen in the CDMO revenues. So you know, and given how our pipeline has increased over the past 12 to 18 months, do you think we have a few molecules lined-up, which have a potential to turn out to be a INR500 crore kind of contributor to our sales over the next year or two.
Rashesh C. Gogri
Yeah, I don’t know about which two products you are mentioning, but we have good products which have grown bigger and I think we are going to have much more products we can — which will grow still bigger, you know.
Ankit Gupta
Sure. And given our pipeline has increased significantly the — both the number of customers and our molecules. So the scale-up from this newly added molecules is expected to happen over the next two, three years?
Rashesh C. Gogri
Yeah, yeah. Yes.
Ankit Gupta
Okay. And sir, when do you expect Phase-1 to be, let’s say, optimally utilized at 70%, 80% will be starting this year and hopefully ramping-up in FY ’27 from Q1 onwards. So when you expect that Atali Phase-1 will be fully ramped-up and we’ll have to go for the second phase of Hatali because we have lot of land and we do have plans to build more blocks there.
Rashesh C. Gogri
Yeah, yeah. So we anticipate we don’t want overall occupancy to go much higher. We will build newer capacities. So I think we are every year we will commission additional blocks in, that is what the current plans look like and we are very hopeful that you know, so every second year that we commission the manufacturing facility, say, for example, now we are commissioning in FY ’26. By FY ’28, we will completely exorb that capacity. And by ’27, we will have another capacity up and running. So we always have one capacity which is available, one block available as to meet the increasing demand of the customers. So that is how we are going to keep up with the pace at which we keep the you know production capacity is built-up.
Ankit Gupta
So what you’re saying is as we have guided earlier that for the Phase-1, INR400 crores is the amount we are spending which will have some common infrastructure for the like for other also, but — and that should give us 0.9 times to one-time or 1.2 times kind of asset turnover. So that we should expect that most of that is expected — revenue we can come by FY ’28?
Rashesh C. Gogri
Yeah, see, ultimately that complete revenue breakup on the final sales may not be that faster, but it will overall contribute towards the sales growth in our ATI Pharma’s intermediate as well as CDMO business because this plant is configured towards meeting the demand of intermediates and CDMO it’s a common facility which we will be utilizing for both the assets. And what happens is that we initially we will shift the early stages in this site and get additional capacity freed up with the approved site, which we have currently. So that is the idea. And then we will also get our also approved for the newer projects that we. So the Atali will also have signation capabilities and other capabilities, which will be unique and for which like how we have in customs and business division, the current CSG plant, we have hydrogenation capability here, we will have dynation capability along with our signation capacity that we have in these plants that’s where we are adding up.
Ankit Gupta
My last question was on the guidance of EBITDA of 12% to 15% for FY ’26. So sir, things like are we being conservative mainly because CDMO, you’re guiding for 30% 40% growth in revenues for this financial year. API also despite the kind of growth we have seen last year — in last con-call, you were confident that we still have — we still have decent capacities available for good growth and we do have lot of new products coming up, especially on the anti-cancer front, which will be getting launched and the existing products will also ramp-up in this in FY ’26. Zentin also, the added capacity will contribute a little bit towards growth for FY ’26 as well. So no, like have we been conservative in our guidance of 12% to 15% in FY ’26?
Rashesh C. Gogri
Yeah. Along with as whatever you mentioned, you will — once we commercialize our, the expense will also start adding up there and it will not add any meaningful revenue or contribution in the initial phase, suppose. So for the second-half of this year, I will have to expense that out also. So we have considered all that. And then we have given the guidance, I think we prefer to be — to meet the guidance and
Hetal Gogri Gala
Very realistic,
Ankit Gupta
Yeah. So given all this FY ’27 then is expected to be a very big year for us. Will have all the phases coming in. Atali Phase-1 will be — will have a validation in all approvals then and hopefully API also the debottlenecking project that we were talking about in last con-call also been done. So FY ’27 should see a significant growth for us is what we can assume?
Rashesh C. Gogri
Yeah, in FY ’27, of course, it depends on the way in which the approvals come from the CDMO marketplace and how we are able to shift and get the newer projects, you know, for which the approvals are expected from the FDA how they do. So on that business, I think the CDMO business will grow. And I think other two businesses are anyway going to grow organically as mentioned earlier in my speech that both the businesses will have organic growth with the capacity addition in API as well as the intermediate R&D, right?
Ankit Gupta
Sure, sir. Thank you and wish you all best. I’ll come back-in.
Operator
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Dwanil Desai with Turtle Capital. Please go-ahead.
Dhwanil Desai
Hi, good afternoon, everyone, and congratulations for a very strong set of numbers. Sir, most of the questions are answered. Two questions, one on gentin. So I think we are doing around INR180 crore to INR200 crore quarterly number on them, so INR720 crores to INR750 crores top-line. So with increasing capacity by 80% and the product mix changing towards more regulatory pharma side where the realizations are higher, as and when it gets optimally utilized at 90% plus, should we expect INR1,300, INR1,400 kind of crore kind of a revenue? Is that the right number to look at?
Rashesh C. Gogri
Yeah. As you rightly mentioned, the current number is around whatever you stated probably plus or minus zero there. But we expect — we have to see how fast we are able to push the product to the regulated customers and the additional market-share from the beverages customer, it all depends on that. And I think the range would be from INR1,000 crores to INR1,200 crore in any number from that could be the growth area of. I think we can go up to INR1,250 or so INR1,000 crore to INR1250 crore depending on how fast we are able to get commercial and how the prices sustain for the other market.
Dhwanil Desai
Sure, sure. And second question on CDMO side. So you know what we have observed is that if you look at some of our data on the product side, some of the products where which are in four six years or after, so maybe we are second or third source supplier in that. And of lately, probably we are also supplying two products which are going to be launched and maybe there we are primary supplier. So in terms of maturity of our business model of CDMO with customers, how do we see this progression happening over the last three, four years? And are we seeing incrementally more projects coming to us where we are primary suppliers or where we are working on lot of products which are going to be launched, hence forth in next two years? Is that proportion rising?
Rashesh C. Gogri
Yeah. Yeah, as you rightly mentioned that we have good products and touch would we expect them to get launched in next couple of years. We have — we are quite comfortable doing the products which are commercial because we know-how big the market is and where we have a value proposition where the innovator is transitioning this product from other vendor to us, I think that’s a very, very big step. And as we pride ourselves that we are the manufacturing specialists for these products, we give them a value proposition. I think there are lot of products which are shifting from China to India and I think few of them are what happens is that I think the new product development and getting entry into the new products also is quite a challenging task. I think shifting if we are able to get as a third, fourth source also, but we are part of this commercial product or gives us a clear viability and visibility of what we will be able to do there. And that’s what we like. So we like both kind of projects actually and because we like the stability and we like to be part of the new-age truck which will get launched in next few years. Yeah. So we like both the we don’t differentiate between them.
Dhwanil Desai
Okay. So just to follow up on that, so I think you know, some of these newer drugs may be requiring slightly more evolved capability like peptides etc and I’m sure last, you know, last one of the calls you had mentioned that you guys are kind of preparing yourself in terms of the R and D setup etc to kind of get into peptides and all. So where are we in terms of that process and you know, are we kind of building that capability? Are we still, you know, far away from that? Any thoughts on that?
Rashesh C. Gogri
Yeah, I think we are. Clearly we understand peptide is where the entire market is going to grow. Biotech products, peptide products, anti cancer products. So we like that area of products. And of course you know we currently do more small molecules but you know we are attempting to do more higher molecular weight products which are not very large, you know, molecular weight peptides, but relatively mid sized peptides. We have started attempting them and we have a few projects which we are going to get ourselves, you know, getting a shot at those projects as well. So we have started that journey. Eventually we will do more solid phase products and then see how we take it up.
Dhwanil Desai
Very good to hear sir, thank you and wish you all the best.
Operator
Thank you. Next question comes from the line of Nitesh Dutt with permanent capital. Please go ahead.
Nitesh Dutt
Hi, thanks for the opportunity. My first question is on Xanthine. I think you had previously mentioned that you’re doing the expansion in two phases. First to 7,500 metric tons and then to 9,000. Just wanted to confirm that we’ll reach the 9,000 number by Q4 that you mentioned. And in which quarter do you expect the first phase of the 7,500 metric ton to?
Rashesh C. Gogri
It will be mostly in second half only. So it will be in the last four months. I think something will come November, December. Something will come November, December, January and something will come by March. So basically it will be in the second half where the capacity addition will take place.
Nitesh Dutt
All right, next question on API intermediate. So we have been around 190200 crore quarterly run rate since the last three quarters. So do we have enough capacity available to drive growth in in API intermediate segment in FY26? And what are our current utilization levels and can we quickly like add capacities if required?
Rashesh C. Gogri
Yeah, yeah. As mentioned earlier, you know the Atali side will also have intermediate manufacturing facilities. So that is where we will add newer intermediates. And in our API site at tarafu unit 4 also we are debottlenecking our current new block. So we are adding one additional line. So with that, you know, our capacity will go up by almost 15 to 20% of the current capacity that we have in overall, you know, general products that we do. Of course we are also looking at the plans to enhance our capacities for steroids as well as the anti cancer product in future. So we’ll come out with those announcements also in future. So we will have enough capacities to meet the demand in future.
Nitesh Dutt
Correct. On CDMO cmo, sir, in this financial year, were there any products basically revenue from any products which might not get repeated in FY26 and hence do you see any, any kind of risks on the 30 to 40% guidance that you’ve given?
Rashesh C. Gogri
No 30, 40% guidance we have given based on the orders that we have, the visibility that we have. So in CDMO CMO we are already in May and most of the businesses are in Q3, Q4 deliveries. So we already know what we are supposed to make and what we are supposed to give. So we have large part of this number already booked in the system as orders. So there will be certain products which will not repeat. But you know, depending on the innovator preference of doing annual campaign or multi year campaign depends on that and depends on how we qualify with one of their sites or the second site and all that. So it’s a complex thing but we are confident to, you know, meet and beat this number.
Nitesh Dutt
And lastly sir, on Atali you mentioned that there will be certain costs in second half of FY26. So possible for you to quantify the fixed cost that will come in this financial year. And also how should we think about expected utilization or ramp up from FY27 onwards? Assuming FY26 revenue would be negligible for Matallo.
Rashesh C. Gogri
So overall I think it’s a large manufacturing site. And you know, of course we have the budgeted number, but we it will be, I think we will have to really look at the number and give you some number guidance on that at this position. You know, we are currently not ready to give you that number. But there will be expense. We have run this kind of size facilities in past in Customs division and other sites. So there will be significant expense. But of course in FY27 and FY28 as I mentioned that the year that we commission next year and year after that we should turn, you know, positive on the Atali asset that we ramp up, you know, and then by that time we will have newer asset also. So in Atali we will continue to invest in newer and newer block and will build up so that’s our investment program that we will do there and we’ll try to beat. So I think in totality we have to look at the integrated business because initially it will be only we will be only able to transfer our certain project from our current site to Atali. So I think overall if you see the growth of CDMO and intermediates business I think that will really mirror the Atali utilization and the way in which it is going to go at
Nitesh Dutt
Understood. So one just last bookkeeping question RP USA is there zero business coming by this entity? You had mentioned last quarter that you are going to wind it up and also if you could provide FY25 capex breakup of roughly 400 crore that you
Rashesh C. Gogri
You want to answer RTUS?
Piyush Lakhani
Yeah so hi Piyush here. So basically you know we never said we have winding up the business is likely to go down because whatever business we RTUSA was doing for Aarti industries that’s going to decrease. So if you have to give you a number, you know in last quarter Q4 the top line was 7 crores or around 7 crores or so. So it is definitely coming down but it’s not going to wind down.
Rashesh C. Gogri
Yeah and on the capex also we have given the number 400, 450 crore kind of a number of overall capitalization that we will have in FY26 and I think it will be mix of remainder of projects that we have for Atali and for Xanthine and there will be certain new projects which will have certain capexes over the current year.
Operator
Thank you Mr. Dutt. Please rejoin the queue for more questions. Next question comes from the line of Yash Sinha with MIPL Family office. Please go ahead.
Yash Sinha
Yeah I had two questions first around Xanthine I just broadly wanted to understand the difference in realization between the pharmaceutical usage of Xanthine and the more consumer focused usage of Xanthine.
Rashesh C. Gogri
Pharmaceutical and consumer focus there would be 20% difference
Yash Sinha
And volume wise what volume did we do for consumer and what volume did we do for pharmaceutical usage in FY25?
Rashesh C. Gogri
So I think we have given the breakup this time that how much we have done with the beverages I think we have done around 54% of our total volume and other is all pharmaceutical and unallocatable volume. So in pharmaceutical also the regulated is different spot is different so it’s a mixture. So beverages is 50 54% this last.
Yash Sinha
Yeah got it. And on the CDMO side I just wanted some color on the late stage projects if you are allowed to release the name of some of the larger clients that you have and what specific drug usage dealer the late stage projects are for that would be.
Rashesh C. Gogri
We are bound by confidential so we can’t reveal the names of the newer.
Yash Sinha
Can we talk about?
Rashesh C. Gogri
Yeah, they are lifestyle, Some of them are lifestyle, some of them are anti cancer kind of products that we have currently which are cute to go in,
Yash Sinha
You know the lifestyle includes things like skin care, weight loss. Is that understanding correct?
Rashesh C. Gogri
Yeah, all kind of life lifestyle, you know, anti hypertension, you know.
Yash Sinha
Okay, got it. I think that’s it from my end. Thank you and congratulations on a good set of numbers.
Operator
Thank you. Next question comes from the line of Neha Karodia with Abacus Asset managers. Please go ahead.
Neha Karodia
Yeah, hi, thanks for the opportunity. My first question was on the CDM question business. So just wanted to understand that industry wide CDMO business is more skewed towards H2 but for us at least for this year it was significantly skewed. So let’s say 10% in H1 and then 90% in H2 kind of distribution. So just wanted to understand going forward, let’s say in FY26 or FY27, do we expect this to more of normalize as in about 40% in the H1 or 60% or maybe some normalization versus the current excluder?
Rashesh C. Gogri
No, no, it will be volatile. If we have large volume customers buying at certain period of quarter, you know we are helpless. We have to supply them then. Yeah, but we are confident about the growth that we have anticipated. But there will be no linearity in the number.
Neha Karodia
And sir, I also wanted to understand why the other income was negative for the quarter versus a run rate of about 4 to 5 crores per quarter.
Piyush Lakhani
Yeah, that’s because of the forex losses. So when we started at the beginning of the quarter it was heading in one direction, rupee against dollar, but towards the end of it it came down. So it’s basically the forex loss.
Neha Karodia
Understood. And just lastly on the Ganesh polychem business. So we did about 14 crores EBITDA in last quarter from that business and this quarter it has significantly come down. So just wanted to understand how should one look at it going forward and like is it more. The business itself is more skewed towards Q3 and Q4 is usually lower. How should one look at it?
Rashesh C. Gogri
Yeah, for the Ganesh business that we have actually there have been some slowdown in overall demand and what we have done is, you know, produce a significant quantity in earlier quarter and then we are actually upgrading our facility to move to a lower cost production route of synthesis for this product. And that’s why you know, we have a shutdown which is ongoing for that side which is almost three, four months. So that’s why you will see in the current Q4 as well as Q1 of these financial year the numbers will be impacted. But then once we start I think we’ll be able to make up the, you know, we will, we will be able to come back to the normalization of numbers.
Neha Karodia
So since you mentioned that it will be lower cost. So going forward, should one expect a margin expansion over the Ganesh polychem business?
Rashesh C. Gogri
No, we will be able to, you know, be a competitive source and we will try to get. So once the market recovers, you know, we will definitely be able to garner more market share of certain products. Whereas we are trying to expand other product that we have and which has aerospace application. So that product is being used for jets and all kind of drones and stuff like that. So that product we are trying to expand our volume and that also will happen in coming year where we are doubling the capacity from earlier years. So with that I think couple of quarters of pain but ultimately the overall overall in future it looks sound.
Neha Karodia
Understood. And so just lastly on the our guidance, so we have guided for a medium term to grow about 15% for next three years. So any change in that or like over the medium term are we more bullish or any change in the guidance?
Rashesh C. Gogri
So out of the 15 years guidance in three years we have achieved 24% in first year. So but still we are guiding for 12 to 15% growth in current year and I think will grow faster. It looks like, you know,
Neha Karodia
Understood. Thank you so much sir. Thank you.
Operator
Thank you. Next question comes from the line of Ankit Gupta with Bamboo Capital. Please go ahead.
Ankit Gupta
Thanks for the opportunity again sir. On the margin front, you know in one of the earlier calls you had stated that the margin difference between CDMO and API segment is not as what you know, analyst community used to expect and it’s around 4, 5%. And how much will be the margin difference between let’s say APIs and the Xanthine business will also that also be like 4 or 5% or more or lower.
Rashesh C. Gogri
We are not giving this the absolute margin difference between both the businesses or any of the business. CDMO is higher margin business and Ranchin is an API are reasonable margin business.
Ankit Gupta
You also stated about you know, entering into peptides and you know, weight loss drugs. So is it on the API side or generic side or on the CDMO side as well.
Rashesh C. Gogri
CDMO side not wait long. But you know we are attempting to get into. However if we become successful then we will be attempting newer drugs also.
Ankit Gupta
It’s still in the pipeline. Not something that we have got in our. It’s still in the works and not something which we have in our pipeline is what we can understand.
Rashesh C. Gogri
Yes.
Ankit Gupta
Okay. Thank you.
Rashesh C. Gogri
We end up developing 2025 products every year and these products are in different categories and indifferent. So we have done fewer large molecular weight products also there which are part of the peptide manufacturing.
Ankit Gupta
Okay. Okay. Thank you sir. Thank you.
Operator
Thank you. Next question comes from the line of Aman Madhuricha with Augmenta Asset Manager llp. Please go ahead.
Aman Madrecha
Hi sir. Thanks for the opportunity. Sir, I just wanted to understand as you mentioned that the margins in CDMO is higher than the maybe the API in the Xanthine business. But if we see the quarterly contribution were recorded somewhere around 20 to 23% EBITDA margin on overall basis wherein your CDMO portion was higher, Xanthine was lower. But the sense we are getting is that CDMO is somewhere diluting the margin. Correct us if we are wrong over here.
Rashesh C. Gogri
I don’t know from where you are getting this margin data. I don’t know what numbers you have because whatever I stated is that the CDMO overall gross margins are reasonably higher than the API and the other, you know, two businesses.
Aman Madrecha
Okay, thank you.
Operator
Thank you. Next question comes from the line of Kumar Swarabh with Scientific Investing. Please go ahead.
Kumar Saurabh
Hello. Thanks for a good set of results. So my question is on the margin side like in last three, four years we have done very well to improve the margin from 17% to 22% despite of a tough scenario on Xanthine. And given Xanthin margins are at bottom, how sure we are that we will be able to retain this 22% margin despite of whatever margin pressure comes on, you know, API or the CDMO style.
Rashesh C. Gogri
Yeah. So basically as you rightly stated the Xanthine prices are at bottom for the spot market. Okay. So they are different in our average is still healthier overall. And I think you know we are just expecting a growth in overall EBITDA. You know, the margins may move 1% year or there but I think we are quite confident that we’ll be able to grow the ebitda. Of course there could be some volatility depending on the product mix and what we are doing. Because the top line we don’t, you know, too much bother about the top line. We Bother about more bottom line growth and that’s what we are guiding basically.
Kumar Saurabh
Sure, sure. Answer on the cdm, I know you don’t want to talk about the customer or molecules, but from a competitive side, can you, you know, elaborate? Like with whom do we compete on the CDMO side we have an advantage.
Rashesh C. Gogri
Yeah, we are competing European, Indian and Chinese. All three in. In different products. We have different competitors and that’s how overall basket is lined up.
Kumar Saurabh
Are these competitors of similar size or they’re bigger advantage compared to them?
Rashesh C. Gogri
Yeah, they, some of them are bigger size. So however, you know we have also grown overall, overall top line and all that. You know we are close to $250 million company so I think others may be higher than us also. Yeah.
Kumar Saurabh
Sir, if possible, if you can name your top two, three competitors for studying,
Rashesh C. Gogri
You know, we, we compete with all the large who’s who of China, India, Europe.
Kumar Saurabh
Okay, okay, okay. So best wishes for the forthcoming quarter. Thank you. Thank you. Thank you.
Operator
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Keshav Bagri with Panyawal family office. Please go ahead.
Keshav Bagri
Yeah, so my question pertains to the API segment where for FY25 we have grown by 28%. So is it possible for you to bifurcate this growth into price, product driving volumes and new launches? This 98%.
Rashesh C. Gogri
Yeah, I think we had few good products in FY25 and certain products have done very well in FY25 and we have exciting launch coming up in FY26 and 27 also. So we have newer products and we have to see whether our partners are able to get the market share and how it goes with our partners. Because completely the model that we have is wherever we are primary source there we have to rely on the partners ability to retain the market share. And secondly what we do is where we are very strong and where we have backward integration, we try to get into these companies as a second source. So there are certain such opportunities also which we are targeting and with those approvals I think will be gradual in certain products that we already have commercialized. And so we work with both these strategies in our API.
Keshav Bagri
Okay, so can the growth of FY25 be extrapolated to FY26? I’m talking particularly for this segment given the fact that we have some new launches coming up and we have the new positions with the innovators. Of course it is contingent on the fact that your partners, they get or they retain the Market share. But just to get an overview,
Rashesh C. Gogri
I think we can’t say pinpoint, you know, depending on how it goes. But overall I think we are confident about the EBITDA growth overall of the company. That’s what we generally guide for individual businesses. I don’t want to give a guidance because overall I think it averages out and we grow our ebitda. That’s what the goal is that how do we grow our bottom line?
Keshav Bagri
Thanks.
Operator
Thank you. Mr. Baghri, please rejoin the queue for more questions. Next question comes on the line of Kaushal Sharma with Equinox Capital Ventures Private limited. Please go ahead.
Kaushal Sharma
Yeah. Hi sir, my questions has already been answered. Thank you.
Operator
Thank you. Next question comes from the line of Ahmed Madha with unifi capital. Peace. Mr. Madha, please go ahead with your question.
Ahmed Madha
Yeah. Am I audible?
Rashesh C. Gogri
Yes. Yes.
Ahmed Madha
So my question is on the capex side. We spent about 400 crores in FY25 and you are guiding for 400 to 450 crores for FY26. So cumulative 800 crores. 850 crores. Can you please break it up for us in terms of segment wise for Italy, how much for a brown period expansion? How much for solar plant, how much and for any other purpose is how much. So just we can understand the breakup better.
Rashesh C. Gogri
Piyush, you want to take it?
Piyush Lakhani
Yeah. So Atali cumulative would be about 400, 425 crores out of 800 that we are talking about. Solar was around, you know 85 crores gen expansion would cost us anywhere about 150 crores. And then there are other smaller projects. So that’s how it adds up to the 800 number. And then there is R D also. We are doing about 40 crores every year.
Rashesh C. Gogri
Capitalization.
Piyush Lakhani
Yeah. Yes.
Ahmed Madha
And solar plant. What will be the savings for us? Already done for Q3, Q4. If you can quantify the amount and what kind of savings you expect from the full year, next year from this.
Piyush Lakhani
So I think. Yeah, yeah. So I think, you know we are, what we are we began with was a payback period of around, you know, three and a half to four years. And we are on track to basically have that kind of payback. So you can do the maths.
Operator
Thank you. Mr. Madha, please rejoin the queue for more questions. Next question comes from the line of Vivek Gautam with GS Investment. Please go ahead. Mr. Gautam, please go ahead with the question. Mr. Gautam, if your phone is muted please unmute yourself and go ahead with your Question. Since there is no reply. Mr. Gautam, we’ll take the next. It’s Jaisha from GS family office. Please go by now.
Jai Shah
Hi. Congratulations for a good set of numbers. I wanted to ask a question on the API and the CDMO side. It’s a bit of a strategic question.
Piyush Lakhani
Hello. Hello. I think we have lost him. Hello.
Rashesh C. Gogri
We’ll take the next question.
Operator
Please press star in a month to ask a question.
Rashesh C. Gogri
Yeah, the queue has somehow got disrupted. So I think we’ll take a last question probably.
Operator
Once again a reminder to all the participants. Please press star on one to ask a question.
Rashesh C. Gogri
Yeah, Let us take Jaish.
Operator
Yes, we have a question. It comes from the line of Rakesh Banerjee with Rap capital. Please go ahead.
Rakesh Banerjee
Am I audible?
Rashesh C. Gogri
Yes. Yes.
Rakesh Banerjee
Yeah. In recent past we have seen there is a bit of selling by the promoter group. So is there any further plan for offering the promoter stake in the company? And if you can give some color on that.
Rashesh C. Gogri
Yeah, I think those, you know different promoter groups have different appetite to and long term plans. So I think there will be minor selling here or there but it will not affect overall control of the company or anything. So I don’t expect very large change in the promoter holding.
Rakesh Banerjee
Okay. And regarding the total borrowings that we have currently we are having around 400 plus crores of borrowing. So what do we see the borrowing in the next one year to go from here. And yeah, if you can just you know give a color on this.
Piyush Lakhani
So next year, in current year I think the borrowing is likely to go up by about 100 to 125 crores. Which would basically mean on you know debt equity of roughly in the range of 0.23 to 0.25. That’s great. And so you have guided for 15% growth in revenue and 30, 40% growth in your CDMO business. Going by that, I mean we just calculated that it comes around around 6, 15, 16% of the total revenue. Is my interpretation correct that in the next year you’re looking for a CDMO revenue contributing around 15, 16% of the entire revenue?
Rashesh C. Gogri
No, we have not guided for the revenue. So we have guided on the EBITDA whereas we have guided on the top line growth of cdmo. So.
Rakesh Banerjee
Okay. Okay, got it. Thanks. Thanks a lot. Thank you. Thank you.
Operator
Thank you. The last question comes from the line of JJ. Shah with GS Family Office. Please go ahead.
Jai Shah
Hi, can you hear me?
Rashesh C. Gogri
Yeah, yeah.
Jai Shah
So as previously I have connected. Yeah, I was asking that, you know you mentioned that over the next to five years a lot of molecules are going to go off patent. What I want to know is how does the management basically look at entering into new molecules? And is it via backward integration that you choose the molecules apart from, you know, the chemistries that you already are in? And what is the amount of backward integration even you have currently in terms of your top 10 API molecules? And second question is, you know, as you keep on increasing your wallet share in API, do you think there is in future an overlap possibility of one of your API intermediate clients getting into the CDMO basket, you know, as the comfort of the client increases?
Rashesh C. Gogri
No, largely, you know, there will be certain products which will, for which the patent expires, which happen. And as earlier mentioned, you know, we have almost 8 to 10 APIs which are constantly under the development and then we are able to commercialize some of them every year. And we have more than 50, you know, U.S. eMFs already filed. And with those different, you know, forms of, and different formulations also keep on expiring in future. So with that we get a chance to grab additional market share from the generic market perspective. Now in case of overall the strategy that we have backward integration on almost 60, 70% of our portfolio, barring I think some of the steroids at current situation because you know, most of the steroid intermediates we have to source because of the fermentation based product unavailability in India and those are the only products where we don’t have backward integration. Most of the other products we have at least good amount of backward integration. And as a model, you know, we also sell our intermediates in sort of these products. So we have almost our intermediate basket of more than 100 plus products also which we offer to the other generic manufacturer who are vertically integrated. So that gives us overall, you know, additional market share for these large products where the integrated players will win the market. So that is how the strategy works and that’s how we expect the growth to happen.
Jai Shah
Understood. And on the second question, is there any possibility of an overlap between the existing API intermediate clients and the CDMO clients?
Rashesh C. Gogri
I think first what happens is that innovator has to lose exclusivity and then only they become generic. So I think it will be ulta, you know, it will be first cdmo, cmo and then once it becomes generic, we enter the generic space. And I think that is what mostly unlikely to happen because the innovator still continues to be in the market and the market once the product expires also. Still there are so many countries where difficult to reach by the generic players. So that market share still remains with the innovator. And that’s where the current market, the innovator, still continues. And once innovator decides to sell off the product or do something with the product lifecycle management, that’s where the product can move from innovator driven to the generic space. Whereas, you know, the CDMO business that we are focusing largely on, it’s more for the newer products and not for the older products. So there are certain older products which have been genericized and still Innovator wants to buy and they add us as a source. But our model is towards patent protected products. Largely
Jai Shah
Understood. Thank you so much for answering patiently.
Operator
Thank you. Thank you. Ladies and gentlemen, due to time constraints we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Rashesh C. Gogri
Yeah, I would like to thank everyone to take the time out and attend our FY26 final conference call. Thank you.
Operator
Thank you on behalf of Aarti Pharma Lab limited that concludes this conference. Thank you for joining us. You may now disconnect..