Hikal Limited (NSE: HIKAL) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Sameer Hiremath — Vice Chairman & Managing Director
Kuldeep Jain — Chief Financial Officer
Vimal Kulshrestha — President – Crop Protection
Manoj Mehrotra — President – Pharmaceuticals
Anish Swadi — Senior President – Animal Health & Business Transformation
Analysts:
Henil Shah — Analyst
Ankit — Analyst
Aman Bora — Analyst
Ravi Shah — Analyst
Gautam Gupta — Analyst
Manoj — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q3 and 9 months FY26 earnings conference call of Hicker Limited. This conference call may contain forward looking statements about the company which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 0 on your touchtone 4. Please note that this conference is being recorded. I now hand the conference over to Mr. Samish Yermath, Vice Chairman and Managing Director for Hikkel Limited. Thank you. And over to you sir.
Sameer Hiremath — Vice Chairman & Managing Director
Thank you. Good afternoon. Good evening ladies and gentlemen and thank you for your patience. A warm welcome to all of you. We appreciate your participation in HEICL Limited’s Q3 and 9 month FY26 results conference call and thank you for your continued interest in the company. The results are now uploaded on the stock exchanges websites. I am Sameer Hiremat, Vice Chairman and managing director Hytal Ltd. And I’ll be taking you through the highlights of our performance and the strategic progress during the period. Joining me on the call today are Anish Swathi, our Senior President and Head of Business Transformation and Animal Health Kuldeep Jain, our Chief Financial Officer Manoj Mehrotra, our head of the Pharmaceutical business and Vimal Marhotra Akulshetra, our head of our Crop protection business, along with Strategic Growth Advisors, our Investor Relations advisors Looking at the performance for Q3FY26 the global chemical and life science industry is beginning to exhibit signs of a steady recovery.
We’re observing a sequential improvement in demand visibility resulting in improved utilization and offtake of the products. However, the operating environment remains dynamic due to the global macroeconomic effects. We continue to monitor structural overcapacity particularly within the global crop protection segment, particularly coming out of China which continues to exhibit pressure on pricing and availability of products. Evolving trade policies are introducing a degree of volatility into procurement decisions and and supply chain dynamics. Despite these external headwinds, Heicls remains resilient with a diversified portfolio and deep rooted customer partnerships, many of which are over 25 years old, that serve as critical anchors to navigate near term uncertainties.
The consolidated revenue for quarter three stood at 494 crores with an EBITDA of 83 crores. This demonstrates a clear return to operational profitability supported by underlying strength of our core business which has now come come back. Having navigated a period of regulatory scrutiny over the last six to nine months, our transition to an optimal capacity utilization transition as a result of upgraded Quality systems and Operational excellence framework the Board of Directors at the board meeting concluded just recently today have approved an interim dividend of 0.2 rupees per share which is 10% of the face value.
For the nine month FY26 the revenue stood at 1193 crores with an EBITDA of 115 crores. We are pleased to inform you that both our businesses are on a path of recovery. The fundamentals remain robust with performance metrics trending positively. As we head into the final quarter of this financial year, Q3FY26 represents a positive turning point for Hyker. Having navigated the regulatory cycle in the early part of the year, we have successfully shifted from a phase of intensive remediation to one of proactive recovery. We are now strategically positioned to deliver sustainable higher quality growth within the pharmaceutical segment supply resumptions progressed in alignment with our internal forecast driven by strengthening of our quality management systems and processes.
We recorded a significant sequential improvement in volumes with capacity utilization improving in this quarter. Our immediate actions concerning the US FDA audit are progressing well and are almost complete. This process was bolstered by close collaboration with not only our global remediation experts and partners but also our global customers ensuring our systems, processes and infrastructure meets global regulatory requirements. Despite the challenges faced in the first half of this year, we expect, as mentioned earlier, a strong recovery in H2 which is visible in the Q3 results and which will improve in the Q4 numbers going forward. Driven by improved demand visibility, better capacity utilization and a commercialization of new products which is being ramped up as we speak.
The pharmaceutical division business revenue for the quarter stood at 337 crores with an EBIT margin of 12.3%. The performance in the last quarter has already begun to offset previous headwinds in the first six months of the year signaling a return to normalized trade cycles. We anticipate that the momentum will continue to improve going into Q4 as well. R and D efforts are yielding a robust pipeline of niche molecules as we strategically pivot to new technologies and high value complex therapeutic areas. Key programs in the field of oncology and CNS and gastroenteroenterology reflect our commitment to addressing complex patient needs while securing higher margin growth opportunities.
Investments made over the last 12 to 15 months are now which were made from a strategic intent are now operational. These include our state of the art high potency laboratory at R and D center in Pune and a new pilot plant in our FDA approved manufacturing site in Panoli. These world class facilities significantly elevate our value proposition in high technology segments and further sharpen our edge as a differentiated and a global CDMO partner of choice. We continue to benefit from the sustained global outsourcing trend which is reflected in our robust order pipeline which continues to grow with increased number of RFPs.
We have several key programs now advancing from the lab into development and scale up phases. We have significantly improved our revenue visibility over the medium term. During the quarter our crop protection segment recorded revenues of 157 crores with an EBIT margin of 3%. The global crop business continues to navigate a return to normalization phase characterized by persistent pricing pressures and structured overcapacity. In response to these headwinds, we have accelerated our portfolio diversification strategy, the key milestone of which is the effort to transition to the specialty chemicals in particular the personal care segment at a commercial scale.
We anticipate meaningful revenue from this segment to commence in the next fiscal year marking our successful entry into a new high growth differentiated growth markets. As we move into the final quarter of this year, our visibility strengthens from a forward looking perspective with emerging from the transformative period and a remediation period over the last six to nine months to a more resilient organization defined by strengthened quality systems, elevated governance and a technology, advanced manufacturing and R and D infrastructure. While the intensive heavy lifting of remediation is now most of it is behind us. Our commitment to excellence remains steadfast.
We are relentlessly focused on institutionalizing these higher standards of quality compliance across every levels of our operations. This is a permanent upgrade to our organizational DNA designed to ensure long term operational business and excellence. With our supply chains restored and our strategic investments fully operational, the foundation for a robust and sustainable FY27 is now firmly in place. We look forward to the next chapter of higher quality growth and value creation for all our stakeholders. I’d now like to hand over to our CFO Kuldeep Jain.
Kuldeep Jain — Chief Financial Officer
Thanks Amir and good evening every all participants. I think Sameer has already appraised you about the action initiated in the organization on various aspects. Let me now take you through the financial performance of HYCAL for quarter three and nine months ended December 2026 and share key updates on our financial trajectory, capital allocation priorities and balance sheet strengthening for quarter three FY 2026 our consolidated revenue stood at least 494 crore. EBITDA for the quarter stood at 83 crore translating to a margin of 16.8%. For the nine months FY 2023 consolidated revenue reached at rupees 1193 crore and EBITDA of rupees 115 crore with a margin of 9.6%.
Finance cost for the quarter three to FY 26 was at rupees 48 crore. This is a reduction of 17% on a year on year basis on account of lower debt and lower interest rates. Depreciation remained in line with last quarter. During the quarter we have provided with 38 crore as exceptional item on account of new labor courts charges which were notified on 11-21-2025 and this has resulted in loss for the quarter. Adjusting for this, our profit before that grew by 21% to rupees 29 crores. Capital expenditure during the nine months period stood at rupees 100 crore.
Focused on de bottlenecking, regulatory upgrade and expanding CDMO capacities. Our capital allocation remains highly targeted. Prioritizing high ROI projects that align with our long term growth objectives. Our growth initiatives are financed through an appropriate mix of internal accruals and debts. A balanced funding strategy ensures fiscal agility to execute our long term exceptional expansion plans. We have maintained our debt equity ratio to 0.58 as on 31st December 2025. Now I would like to hand over to Vimal who will provide an overview of crop protection division performance. Over to you Vimal. Thank you everybody and over to you Vimal.
Vimal Kulshrestha — President – Crop Protection
Thank you Kuldeep. Good evening all the participants of this earning call. The global crop protection landscape is currently navigating a period of strategic realignment presenting both transient headwinds and substantial long term opportunities. While we observe a recovery in volume at end customer level, this moment is now translating into a quick uptick in order inflow and inquiries to us. However, the pricing environment remains highly competitive, primarily driven by over capacity and pricing pressure from China. In response, we are leveraging our integrated manufacturing model and operational excellence initiatives, mitigating these margin pressures. We view this as a normalization phase that favors players with proven supply chain reliability and superior quality system positioning us to capture a larger market share as industry stabilizes.
During the quarter our crop Production revenue stood at 157 crore with a bit of 5 crore margin. Remain under pressure as pricing pressure continues, the performance is expected to remain stable on analyzed basis. We are making significant stride in our specialty chemical, mainly personal care vertical, a cornerstone of our portfolio diversification strategy. During the quarter we deepened our engagement with global leaders in innovation and driven cosmetic space, leveraging our core competence in complex chemistry and sustainable manufacturing. This business is gaining traction marked by successful completion of initial production batches. We are now on Track to commercialize three to four products in FY27 which will broaden our revenue base and the market response has been positive.
To us, personal care stands as an important growth leverage. We have commercialized two products during Q3 and volume ramp up will happen over next 9 to 12 months. Additionally, during that quarter we have strengthened our global presence through an onboarding distribution distributors in Europe, Latam and Middle East. We continue to maintain a robust development pipeline of eight products with our R and D team serving as the engine for accelerated commercialization process innovation.
To contrast the current aggressive pricing environment, we have undertaken cost optimization initiatives including focus on procurement optimization, energy efficiencies and yield enhancement. Despite persistent market volatility, the fundamentals of crop production business remains in place. Our strategic focus on operational and portfolio excellence ensures we are well positioned to deliver sustainable Growth as a global inventory cycle rebalance. Now I hand over to Manoj who will provide you overview of pharmaceutical business.
Manoj Mehrotra — President – Pharmaceuticals
Thank you Vimal and good afternoon ladies and gentlemen. Let me now walk you through the performance of our pharmaceutical business. For quarter three, FY26 pharmaceutical segment delivered a revenue of Rupees 337 crores with an EBIT of Rupees 41 crores. While performance was temporarily impacted by shifting customer offtake patterns following the regulatory developments at our Bengaluru facility, we have now reached a turning point. I am pleased to report that our remediation measures are now substantially implemented. The rigorous risk assessments conducted by our global partners have been successfully concluded. Our focus now shifts from remediation to maintaining a steady state of compliance and operational excellence.
Our R and D engines continue to gain momentum as we advance a robust pipeline of niche molecules into high barrier therapeutic areas. We are making significant strides in oncology, antimigraine, new age anti ulcerative and urologic treatments to address critical patient needs while simultaneously expanding our footprint in the CNS and anti diabetic segments. To ensure long term sustainable growth, we are actively diversifying our geographical presence. Our expansion in Japan, Latin America and South Korea is progressing according to plan. These markets represent critical pillars in our strategy to reduce regional dependency and capture global market share in emerging and developed economies alike.
Our development pipeline remains robust with eight to nine molecules currently in advanced stages. We are maintaining our launch velocity of two to three new products annually in strict alignment with the medium term strategic roadmap. To fortify our critical resilience, we are aggressively executing a dual site validation mandate for all critical APIs, effectively mitigating regulatory and supply chain risks. The CDMO landscape is undergoing a structural shift as innovators prioritize capital efficiency and supply chain resilience. We are capturing this momentum witnessing a sharp uptake in early stage RFPs, particularly for high value small molecules and advanced intermediates.
This demand is increasingly driven by global innovators and emerging biotech firms seeking to de risk the supply chains. While commercial scale up timelines remain staggered due to the inherently long cycle nature of CDMO engagements, the velocity and technical complexity of our projects funnel have significantly improved. Our pipeline is both robust and diversified with several critical projects successfully transitioning from early development to pilot scale. As the industry shifts towards partners with proven regulatory credibility and integrated manufacturing platform, HEICL is uniquely positioned to convert this demand into long term high visibility revenue. Crucially, our key starting materials for global innovators have progressed into phase 3 clinical trials with commercial launch scheduled for FY28.
To sustain this momentum of getting into supply chain of NCEs, we are expanding pilot scale capacity at our Pune RNT center in the Food and Nutraceutical segment. We are on track to achieve peak output in FY27 for 2 of our custom products supported by a robust portfolio expansion to be commercialized in next two three years. The inauguration of a high potency laboratory makes a strategic entry into the high growth oncology market.
Our R and D infrastructure is now fully equipped to provide an integrated suite of advanced services to our innovator partners. Looking ahead, we anticipate a steady volume uptake in APIs driven by pending regulatory clearances and deeper penetration into high potential semi regulated markets over the medium to long term. We remain focused on expanding our API portfolio for global markets while steadily converting CDMA opportunities into sustainable long term business growth. Now I would hand over to Anish who will provide an overview of our animal health segment followed by business strategy.
Anish Swadi — Senior President – Animal Health & Business Transformation
Thanks Manoj. In our animal health business we continue to see some sustained momentum. Outsourcing activity in the animal health APIs remains steady as innovative companies continue to focus on capital efficiency and supply chain resilience. The animal health CDMO segment is seeing gradual interest from customers looking to outsource manufacturing and engage in lifecycle management while maintaining reliable supply chains. Our current long term contract with our global innovator customer continues to gain traction. We are supplying commercial quantities for the portfolio that we had validated. As more approvals globally come through for our customer, we expect some of these volumes to pick up and eventually gain additional traction.
Currently we have received several RFPs for new development projects from global customers. These are a mix of both new chemical entities as well as niche molecules already present in the market. We are confident of successfully winning a few of these to add to our healthy development and commercial pipeline. We are seeing steady demand growth for animal health therapies across developed markets such as Europe and the US as well as certain penetration in Japan as well. Our current commercial pipeline is strong and our customers are gaining additional market share with the molecules we commercially supply. As these molecules mature and cost competitive becomes critical.
Suppliers with strong R and D, robust manufacturing infrastructure and multi site reliability, we are well positioned to gain a share of wallet from our customers and attract new ones. Additionally, the trend of increased outsourcing by global animal health companies combined with diversification of supply away from single geographies creates a favorable environment for a strategic quality focused Indian manufacturers such as ourselves to deepen relationships, expand product portfolio and improve our Margins in this segment over the medium term. Now with that I’d like to open the floor to Q and A.
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 their touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Henil from Equicrop. Please proceed.
Henil Shah
Thank you for the opportunity sir. I’ve got some questions first starting with the macro ones. So, so what is the status of the CAPA that we are going to submit in the December end and what the status on the month on month follow ups we are doing with the US FD and when will there be a re inspection from them?
Sameer Hiremath
Okay. Manoj, want to take that? Manoj, you want to take that question?
Manoj Mehrotra
Yeah, I’m taking it. So we have given our remediation plan to usfd. We don’t give them a monthly update but we are giving an Update once in six weeks. The last two updates were given on December 16th and one as recent as this Monday which is February 9th. Now after completion of the warning letter which will have six months which will just get over in the next two weeks, we should be hearing back from them and then we’ll get to know whether they are satisfied with the progress of our remediation plan.
Henil Shah
Okay. The second coming to the impact on the Chinese government policies. One is on the floor spar where they declared it as rare earth minerals also which would bottom at the supplies. Second on clawback of some export incentives. So how does that actually impact us and the peers and overall in the industry side especially the agrochemical side?
Sameer Hiremath
Vimal.
Vimal Kulshrestha
Yeah. So we are continuously in touch with our supplier. As of now we do not see much impact the products what we import from China but we are carefully watching this.
Henil Shah
Okay, so there is, there’s not been any near term or impact from these policies as of now.
Vimal Kulshrestha
Yeah. And we don’t buy much needed products out of China. It’s a very small part of our procurement. Yeah.
Henil Shah
Okay, so also coming to the HPAPI lab that we’ve actually put up what is the capex that you put for the HPAPI lab And also what is the incremental revenues going to invest into the HPAPI part for ABC’s oncology and other products from that or peptides in that particular area?
Vimal Kulshrestha
Currently we only invested in a laboratory. So it’s only about 10, 11 crores of investment. So this is the investment for the phase one. Then in FY28 we will be building up a commercial scale plant. But as of now it’s only a laboratory investment. Yeah.
Henil Shah
Okay, so also there do we plan to get into the ADC’s ASAP or it’s after FY28 that you plan to get into the ADC’s part?
Manoj Mehrotra
Yeah, we have started offering ADC services at lab scale. But once you build the plant it will be common for hpapis as well as ADCs. But you mentioned peptides also. Peptides not part of this plan as yet, but we are evaluating that also.
Henil Shah
If I consider the ADC’s part. So actually if you see some of our competitors have been putting a lot of money into the commercial facilities. And right now we just got out from a US FDA shop. Whereas in ADCs we require an O5 certification which is a very complex one and plus it takes 2, 3 years of gestation 3x the normal plant Capex. So how do you see this entire thing given our current cash flows and given a current balance sheet price?
Manoj Mehrotra
We already have OEB. We just got approved by OB5.
Henil Shah
No, not the large scale one, the FY20.
Manoj Mehrotra
But it is not impossible. So many companies have got it. We are getting it on the Capex part. Maybe Sameer can answer or Kulip can answer that.
Kuldeep Jain
Yeah, I think the FDA thing is that we’ve had a 25 year old track record. This is our first FDA inspection that we’ve had lots of favorable inspections. So we know exactly what is to be done. And what we’ll be building is that the investment will be on a small volume production. These products, these Capex, these plants aren’t very large. So we’ll be building a pilot plant type of facility first as phase one, then we go to commercial after that. Takes time to ramp up.
Henil Shah
Okay, so coming to the oral anticoagulant space. So what is the status of, I mean orders and pickup from the Paxiban side since we have been seeing this for the last 2/4 or 3/4 plus, are we seeing any big commercial orders?
Manoj Mehrotra
Yeah, we are getting commercial orders from Latin America. And so Epixaban is ahead. Next is Evoroxaban. That is a little slow, but Epixavan we have made good progress.
Henil Shah
Do we have plans to get into Milwex inside? Because I think so. One of our peers is listed on one of the Big pharma sourcing supplies and will be a big opportunity once it goes off patent in 2026.
Manoj Mehrotra
No, no, we are in the supply chain of Meliwexian so we have no generic plan as yet. So as the product gets approved we’ll supply the KSM which is still maybe one to two years away.
Henil Shah
So we are, we’ll be supplying it to the principals, right?
Manoj Mehrotra
Yes.
Henil Shah
Okay.
Manoj Mehrotra
Launched next year. Yeah.
Henil Shah
So we’ll be launching the the mandex in KSM next year in FY27.
Manoj Mehrotra
Yes.
Henil Shah
Okay. So on the anti diabetes portfolio, when will we start seeing order pickup from the DPP4 of the SGL2 inhibitors? Because that also we were seeding in the last two three quarters and I think so we were still had to come under karma glyphosine side.
Manoj Mehrotra
So these citaglyptin karnaglyphlosin markets we have started phasing the upper glyphos and Emperor glyphosate so those have started picking up. But as they go off patent in various markets FY28 onwards we’ll get more traction. The other one which you mentioned, SGL2 that we are not yet started development.
Henil Shah
Okay. We have not even developed any of the products. Okay sir, any plans to get into the NOAC side since we also there in the anticoagulant space. Oral anticoagulants. NOAC is also a close adjacency to cancer. I mean on the thrombosis side.
Manoj Mehrotra
Not immediately, not immediately. As of now our pipeline is quite full for the next two, three years. Hypoten into anti diabetic. Some I mentioned is anti ulcerative some new generation molecules. Our hands are quite full at this time.
Henil Shah
Okay, so I’ve got a few more questions. I’ll fall back into the queue. Thank you for answering the questions.
Manoj Mehrotra
Thank you.
operator
Thank you. The next question is from the Niner Ankit. Please proceed.
Ankit
Yeah, hi, I’m audible.
operator
Yes sir.
Ankit
Yeah, Hi. Question to note 5 on your results. So I mean this is with regard to the 80 crores rollback which happened reversal which happened last quarter and then again there is a fact finding review which is being mentioned and could you please help us with exactly what is the status? So has that 80 crores been adjusted in Q3 and if not should we expect it further? And also does this not mean that further adjustments could come through?
Manoj Mehrotra
Well the 80 crores has already been adjusted in Q3 so no I know for the adjustments are expected.
Ankit
When you said adjusted you mean that’s included? In the sales for Q3 already?
Manoj Mehrotra
That’s right.
Ankit
Okay, and what, what is the pending, what is this review? Could you help us with further details on what this further review is? That’s kind of ongoing.
Manoj Mehrotra
Yeah, it’s just about some checking and strengthening of some systems and processes which is an ongoing exercise. And that’s the review being happening and it’s been checked on ongoing basis. That’s about it.
Ankit
So do you then anticipate further reversals coming in from this review?
Manoj Mehrotra
No, we do not. The systems and process control, it’s nothing to do with the numbers.
Ankit
Okay, thank you so much.
operator
Thank you. The next question is from the line of Aman Bora from Premier Capital. Please proceed.
Aman Bora
Yeah, hi, thanks for the opportunity. I just wanted to recheck on your earlier guidance which remained double digit growth for Pharma business for F26 and flat for crop protection. So broadly do we, do we think we can make up that guidance as guided earlier?
Vimal Kulshrestha
So could you just repeat that? I couldn’t hear you very clearly. Can you just repeat that question?
Aman Bora
Yeah, yeah, yeah. So your guidance at the start of F26 and in one Q was that for full year F26 we would grow the pharma business at close to double digits while the crop protection business would remain flat year on year for F26. Broadly, are we in line to achieve that kind of a guidance?
Vimal Kulshrestha
The pharma has got delayed by a quarter or so because of the US FDA impact. What we anticipated to happen towards the end of H1 only started in Q3 and so we are aware of the about a quarter we will have some growth but we don’t expect the double digit growth in pharma. It’ll start from next year. It’s got delayed to next year, early part of next year. And crop, crop is flattish compared to last year. That guidance has changed it. Unchanged. Yeah,
Aman Bora
got it. And just as you mentioned, next year like last three years have been quite tepid for us in terms of growth. We faced different kinds of challenges. Regulatory topped up with the FDA issue. Now, as I can understand from his commentary, it seems the worst is truly behind. So F27 going into F27, any outlook guidance or how we as investors who’ve been there for seven, eight years, what we can think about F27, anything, any color you can share.
Anish Swadi
Well, our budgets are currently being finalized as we speak this month. So it’s not appropriate for me to give any forward guidance. But I think the statement that we made over the last three years there have been Some challenges for various reasons and I think the worst is definitely behind us. I can confidently say that. And we’ve used this time in the last three years to really strengthen operations, organization and use this time to double down on our customer acquisition as well as create new molecules and diversify into different business segments. And I’ll talk about that Being one is the animal segment which started three years, four years ago which as you have seen has started to add meaningful amount of business in this year and will add even more in the next two, three years.
We’re also entering the personal care segment which is another diversification of the specchem business. So yes, it’s from a revenue and a margin perspective the last three years have been challenging to say the least. But we expect things now to only get better going forward. And we really use this time to really strengthen the organization and focus on diversification of products, customers and business lines to ensure that we have a very diversified, risk mitigated approach going forward to withstand any small shocks if they come in the future. The impact of the business will be far less than what it was in the last three years.
Aman Bora
Got it. Heartening to hear. And just you mentioned about the animal health business. We put in significant capex there and significant efforts and Anish has been driving that. Just I wanted to understand in like say three years time from now, can this be like a 500 crore business and what kind of margins can we see here? And also anything you can share for F27 specifically on the animal health business?
Anish Swadi
Yeah, I mean so you rightly said. Yes, a lot of efforts have gone in and some capex has also been invested. So we do have a, and we’ve talked about this in the past that we have a master plan to build this into a 500 crore plus business in the next four to five years. Right. Certainly validation and some of the molecules take time depending on the market. So it’s a little challenging to say or difficult to say right now whether 300 years. In three years we can have 300 crores. But again, our guidance in terms of building a business to 500 crores plus has not changed.
Right. So we’re on track to do that for FY27. Whatever we have is looking positive as we said in our opening commentary, that we have a growing existing portfolio in addition to which we also have new molecules or new, I would say a very strong RFP base. So that’s looking quite positive. So the pipeline both on the development side as well as on the commercial side are looking positive. And we continue to execute. So we’re quite buoyant and bullish about this, this business.
Aman Bora
Right. And anything on the EBITDA margins for this business? Anish?
Anish Swadi
Yeah, so we don’t really go granular into EBITDA margins but I would say that look, the gross margins are in line with that of the company, anywhere between 45 and 50% in certain and obviously in the new portfolio that when you’re looking at nce they’re higher and then obviously when they hit the commercial space they kind of come down but then the volume makes up for it. So I would like to keep on terms of that guidance on the gross margin side is anywhere between 45 and 50%.
Aman Bora
Right, got it, got it. And just lastly, anything on the outlook for capex for F26 full year and F27, anything that you can share as of now?
Sameer Hiremath
Yeah. So Capex this year has been. In. The beginning of the year we said we will do a capex of about 200 crores. But I think we’ve been very conservative this year and we’ve cut it down to 150 crores overall. Capex compared to 200 crores is what we had guided at the beginning of the year. So this year we’ll end the year at about 150. We already spent 100 crores in the first nine months. Another 40 to 50 crores will be spent in the quarter four to end the year within 150 crores for this year.
Aman Bora
Right, Got that. Sameer, thank you so much. Hopefully we were truly onwards to better growth and margins and performance ahead. As a company. We wish the best to you and look forward to better years ahead.
Sameer Hiremath
No, definitely. Thank you so much for your.
operator
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Ravi Shah from VRs Capital. Please proceed.
Ravi Shah
Hi sir. Am I audible?
Sameer Hiremath
Yes, yes sir.
Ravi Shah
Just had three questions. So how is the volume ramp up going on in the recently commercialized product?
Sameer Hiremath
Which type of product are you asking about? Which segment? Especially.
Ravi Shah
So for the pharma if I’m not wrong.
Sameer Hiremath
Pharma.
Ravi Shah
Yeah,
Sameer Hiremath
volumes for pharma. If you look at it for this quarter, Pharma has grown by. Volumes have grown by about 4%. They’ve been a volume degrowth this year for the nine months because of the impact of the first six months. But we expect double digit volume growth to return in this business.
Ravi Shah
Understood sir. Could you also give an update on the animal Health business or volumes.
Anish Swadi
Yeah. So volumes to start off with are not tremendously large as compared to the pharma business in animal health. Because as you know, we have a portfolio of products that we have completed validation on and started supplying commercial volumes. So volume wise, over last year I would say we’ve had a growth, certain growth. But again, it’ll take I think another six, two quarters for the, for the real commercial volumes to start trickling in and then ramping up.
Ravi Shah
Understood, sir, thank you for the detailed answer. So my next question also pertains to animal health only. So could you shed more light on the new chemical entities that we have been working on and what is the overall market size or potential we could see in this business?
Anish Swadi
Yeah, so you know, when we start working on chemical entities, a number one, there’s a lot of uncertainty around whether a these products will actually make it to the market because post us providing them a viable solution for that product, they have to go through market approval. And in a lot of cases, these market approvals don’t go through for several reasons. Right. That it doesn’t applicably treat the disease that it’s actually meant for. So there’s a lot of uncertainty and risk around that. Right. But the fact, I think that we are getting new chemical entities and final APIs in this business is a very positive sign that our customers trust us.
Our customers believe in our ability and capability to both develop, execute and commercially supply them. So I think that’s a very big positive in terms of the market size. Very difficult to sell because it’s like a brand new fresh product on the market where the customers themselves have to invest a significant amount of money, time, effort to get the product out to consumers globally. Right.
And each country has different regulations because these are not products that have ever been sold before. They’re either taking care of, I would say, niche diseases or they’re taking care of diseases already prevalent but giving a better cure for. So you know, there’s a lot of variables to that where we are not obviously involved. But again, I would reiterate to the fact that it’s a big positive for the company to get an opportunity to develop these commercially supply them to the customer because it truly, you know, the belief of the company’s capabilities are reinforced.
Ravi Shah
Understood, sir, thank you. And so last question again would be on the overall animal health business only. So is it fair to assume in FY27 we would reach an optimum utilization of the facility or should we look at FY28 to be the right.
Anish Swadi
Year. Yes. So in FY27 the utilization will certainly increase. I wouldn’t say substantially increase, but it would increase again as we put in our opening comments that you know, we are still waiting for some global approvals from our customers perspective. So once those come through. But the facilities are not being just kept idle, we are utilizing them to take a spillover. Some of the other products that we have where we’re manufacturing early stage, you know, steps in these, in this asset. So focus overall is to obviously grow the animal health business but also to keep the utilization levels as high as possible. Right?
Ravi Shah
Understood sir. Thank you sir. And all the best.
operator
Thank you. The next question is from the line of Gautam Gupta and investor. Please proceed.
Gautam Gupta
Hello. Am I audible?
Sameer Hiremath
Yes.
Gautam Gupta
Thank you for the opportunity. I wanted to ask since when are we into NCE business and have we ever commercialized any nce?
Sameer Hiremath
Yeah, we’ve been in the NCE business for a few years now. It’s been quite recent. We have a couple of products which are already commercialized on the NCE space but the bigger ones are in the final stages in phase three and close to launch in the next one or two years. So we’ve got a couple already on commercial but the big ones are coming in the next two to three years which are in phase three and moving into launch soon.
Gautam Gupta
Okay, so when we say that we have commercialized, do we mean that we have been helping them as a development partner from pre clinical trials or clinical trials or just the CMO part tech transfer type?
Sameer Hiremath
No, we get involved in typically in early phase 2 during clinical trials and besides supplying clinical trial quantities and then phase two A, phase two B then phase three and then launch. So we have been involved from phase two onwards.
Gautam Gupta
Okay, and a few quarters back in a con call you mentioned about Newland Labs and praised about their capabilities in peptides. So a few other companies have been doing specialization few therapies like cell and gene therapy for Laurus. So where is the niche for Hycl?
Sameer Hiremath
Well we’re looking at the one definitive segment that we’re looking at is niche is animal health. Second segment is looking at the Onco products and niche molecules that we are getting into. And I think we have a diversified strategy. I would say we have five different sites. So between each site and that 35 year history we have three, four niche areas and then moving into new generation products like ADCs which Manoj mentioned about and from food ingredient products which are also being launched. So these are the three, four niches that we’re looking at ramping up in the next three to four years. The CNS segment is where we’re very strong. In the gastrointestinal segment is where we’re getting ramped up. The diabetes segment, we have several molecules which we’re launching. So there are three, four areas where we’re getting into these segments
Gautam Gupta
and most. Of these are into NCE or already commercial products.
Sameer Hiremath
There are a combination of already commercial and some lc. We do a CDM offering as well and we are sector, actually we are therapeutic agnostic. It doesn’t matter. We look at the chemistry angle when it comes to a CDMO play. It’s only when we choose our own product development do we focus on a few therapeutic areas like CNS Gastro Onco products is where we get involved. But otherwise there are sector therapeutic agnostic. It doesn’t matter as long as the chemistry makes sense, the technology and the margin makes sense.
Gautam Gupta
Okay, thank you so much.
Sameer Hiremath
Okay.
operator
Thank you. The next question is from the line of Henin from Equicore. Please proceed.
Henil Shah
Thank you for the opportunity again, sir. So I had a few questions on the animal health side. So in the animal health, if you look at two products which are very complex and getting towards closing, it is very close to patent expiry. One is Afaxil nerve and one is Fluranar. So do you see very big opportunity in these two products because Fluranar, if I think so, the patent expiry, the primary patent expiry is 2026 which. And the secondary one is in 2013. So do you see any major opportunities from these two products?
Sameer Hiremath
Yeah. So I mean, you know, you mentioned two of the, I think blockbuster products in the Lana categories that have done exceptionally well. Look like every product, animal health is no different from human health. When we’re talking about on patent products that go off patent, there’s a significant amount of competition. There’s a significant amount of, I would say price erosion post patent expiration. And of course patent expiration has to be looked at in terms of territories as well, which one goes off first. So I would say that, you know, personally we’ve been hearing about this for the last, I would say eight or nine years and we’ve seen prices come down to quite deplorable levels.
Again, our strategy for animal health is really to focus on the CDMO side while we are developing a niche product portfolio of our own. In terms of looking at what therapeutic categories we can really differentiate ourselves in, the focus is more on the CDMO side. So if a customer comes to us and asks us to develop process or to take transfer a process for any one of the molecules that we feel that we can add value to, then that’s what we look at.
Henil Shah
Okay. Because if you see there was a tie up that actually happened between Boringer and one of our Indian competitors and there are just two or three companies in India which can actually get into these complex, very complex products. It is Hykel and the other two big competitors that we have. So do you see some kind of exclusive manufacturing that we can do? Because one of our peers has manufacturing as well as marketing boots on ground. So anything we can do on the manufacturing side for one of the large customers?
Sameer Hiremath
Yeah, I mean, you know we already have tie ups with some of the large customers of the global multinationals for a number one, a portfolio of products, B, number two, you know, individual products. So it’s, you know, that’s our core business. You know, when we start off very early in terms of R and D, we look at route scouting and then we go into utilizing technology for improved process development and further output to limit the amount of steps and make it more sustainable the process is and then supply a overall solution to the customer both from a quality perspective as well as from a commercial perspective. And that’s why they choose us. So that’s our core model. Right. So we already have tie ups to answer your question specifically. And of course we’re looking at additional tie ups in the, in the, you know, in the near future.
Henil Shah
Okay. So coming back to the pharma side. So I think in the last call we had alluded that we are there on the SGLT SGL2 inhibitor side because that was actually going to be used in the market as a combi drug. With. Another diabetic drug which is due for expiry. So I mean, and right now I think so we said we are not on the SGL2 inhibitor side.
Sameer Hiremath
Manoj.
Manoj Mehrotra
Sorry, what is the question?
Henil Shah
So in the last call we actually alluded that we actually there on the SGL2 inhibitor side which is actually going to be used as a combi drug for a weight loss along with the weight loss drug. But I think so in this call sir said that we are not actually there on the SGL2 inhibitor side.
Manoj Mehrotra
So you know, I’ll just take that since so basically look, we are looking at the entire GLP1 segment, right? And again focus is on looking at it from a perspective of what customers are in the need of and what customers are asking us for. So we have had several Dialogues with customers who are looking for some of the intermediates on the GLP side, as you know. And we’ve indicated that we have built these capabilities over a period of time. These are long synthesis steps. So what we were focusing on is the linkers that actually go into making some of the intermediates.
We’re not looking at the final product as of now, but yes, the focus is on that. And again, our technology toolbox that we have and the products that we ultimately come up with is a result of what our customers ask us for. Right. And we work very closely with them. So when it comes to say small molecules, that’s what we’re very good at. Right. And we’ve learned along the ways we built our relationships with our customers based on delivery of some of these small molecules. And some of the niche products that we’ve done the same will apply for the GLP as well. But we’re not looking at the front end right now, we’re just looking at the early to mid stages.
Henil Shah
Okay, thanks a lot for the clarifications. And lastly, we’ve actually we had appointed consultants in Europe and us to look at medium sized pharma players and very small niche players also. So any commercial runs that we have seen there where you’ve seen inquiries convert to orders? Because out there I think so the inquiry to order cycle will be pretty fast compared to big pharma companies.
Manoj Mehrotra
Yeah. So we’ve already started seeing the benefits. For example, we have some products we have, we have won in the last six months contracts and the deliveries happening in between now and the next three to four months. So there are several products which are in development and under delivery for our global biotech companies, the small world, small mall, emerging pharma as they call them in Europe and in us.
Henil Shah
Okay, thanks a lot for the opportunity, sir and visiting. All the very best.
Manoj Mehrotra
Thanks.
operator
Thank you. The next question is from the line of Manoj from Equicorp. Please proceed.
Manoj
Hi, thanks for the opportunity. If I go to Q2 where we lost about 80 crore turnover and it was shifted to Q3 and if I take a gross margin, EBITDA impact 2530 crores, then Q3 there is a degrowth in revenue and also margin seems to be under pressure. So all broadly is the scenario still very, very competitive in terms of the business despite your comment that they are coming out of it and we are looking for significant growth now going forward?
Sameer Hiremath
I think it’s very competitive on the crop business. If you look at ebitda, the crop business has been depressed for the last few quarters. So that is dragging down the total EBIT of the company. Right now pharma business is seeing a recovery and the pharma business is showing a rebound in the ebit margins. The crop business continues to be under tremendous margin pressure. So it’s. We believe that you know going forward crop will be stabilized but pharma will grow. That’s our objective and that will help grow the business.
Manoj
So this 80 crore what was from Q2 to Q3 that is mainly for the pharma actually. Or it was.
Sameer Hiremath
It was largely in the pharma business. Yeah,
Manoj
largely in the pharma. So hopefully things should be looking better from Q4 onwards.
Sameer Hiremath
From Q3. So Q4 will be better than Q3.
Manoj
So we should not be seeing the degrowth. Right. I mean hopefully going forward even my oi.
Sameer Hiremath
Yes. I think somebody has some. One of the speakers asked me earlier is the worst behind us over the last two, three years over the challenge? I think that’s already now we see all the things being sorted out and moving ahead into FY27 with a very positive outlook and with a lot of confidence in the business.
Manoj
One of the issues we had was about repurposing the plant of that every plant or the crop. So that you said that hopefully it should be done in this year. Right. I mean by the time we it.
Sameer Hiremath
Was built as a very large multi purpose asset which was part occupied in the past and we are part was empty. So the part occupied section, the phase one will be implemented in the next six months and then phase two will be implemented in the next 12 months after that. So the next 12 months, six to 18 months, we will repurpose the entire plant. We will start in a phase manner. We’re being very careful on the capex that we’re doing based on the customer orders and we’re ramping it up and we can ramp this up in six to nine months. It doesn’t take long to repurpose these plants.
Manoj
So basically then the payback period would be four or five years from there on. Right. And once the repurpos completed.
Sameer Hiremath
Yeah, and these are being, these are being all being done based on customer contracts and businesses that we are winning. So the infrastructure and the bare bones as they said the skeleton and the is all there. You know utilities are there, quality control is there. All the facilities out there. You have to just add the reactors and maybe change some pipelines and do a few changes.
Manoj
New business that we are winning across. Except probably it’s a crop is it coming at a better margins now, be it CDMO or go on products, because newer generation products would be also there. So overall are you seeing significantly better margins going forward because of that?
Sameer Hiremath
Yeah, I think all the new products have better margins. So you know, two things are going to happen. One is that we already have a pretty substantial asset base that we’ve invested in the last year, four to five years. And as you see our capex investments year on year have kind of come down. Not that that’s not going to prevent us from growing. So we’ve already created a fixed base for growth and we will only have to add specific plant or production lines if required going forward. So even the margins from a gross margin perspective, the new products have a slightly better gross margin than the historical gross margin much of the company number one.
But that directly flows down to far better EBITDA because fixed cost absorption is already happening on the current base business. So you know you will see a far better EBITDA for those businesses. But even if you have a similar 45 to 50% gross margin, which is a competitive gross margin because the competitive ratio of the industry with the fixed cost already being being already in place for a very large extent, only some marginal fixed cost increases will be there. We will see a growth in EBITDA for the new business which will be far in excess of the current average EBITDA of the company And because.
Manoj
Of onwards. Right. I’m assuming FY27 is a normal year.
Sameer Hiremath
FY27, what is every thing comes back. You know, a lot of products are being launched next year. Second half of next year, our animal health business ramped up to FY28. Postal care business will get ramped up by FY27 second half and FY28. So this will all add to operating leverage and improve the margins. These are all being done in more or less in existing assets with some marginal balancing equipment. You know.
Manoj
Assuming that once we have a decent year FY27 and a big year in FF, the cash flow generation would be good and that would reduce debt significantly over next two years. According to total debt
Sameer Hiremath
already come down. By almost 50 crores in the nine months of December 25 versus March 25, already down by close to 50 crores from a total debt perspective despite having a very challenging first nine months which you’re aware of. So we’ve had a very strict toll on working capital and long term debt and our debt as the business grows and our cash flow becomes stronger, we’ll reinvest that into Capex and the repayments are happening and they will also start Tapering off post FY28.
Manoj
Level it will go down post 28. Right. I mean significant
Sameer Hiremath
from FY29 onwards we should start seeing reduction in which are already reducing compared to where we were. We are not doing any major new capex of anything is deep autumn making adding a production line here and there and these are all based on you know customer contracts and businesses which are you know very short term
Manoj
and one. Thing about the US tariffs it could have had some impact on our pharma owned products right? I mean what we sell in past.
Sameer Hiremath
Actually pharma was not impacted much by tariffs but you know it just it what it did it was deferred customer procurement decisions for new projects because of the uncertainty lot of customers were waiting and watching to take investment decisions. That was the uncertainty I don’t think it impacted but it does impact overall. Yes there’s been deferment of orders for new businesses, you know so now that is more or less out there. I think the business will start resuming and orders will start coming in more.
Manoj
Because I thought they had put some duty on the branded for us. I mean so if we had our own product like Weber engine or something we were impacted by duty I thought I’m not sure.
Sameer Hiremath
Marginal impact, not much. It was but not because of tariffs. I would say yeah
Manoj
and some of my last thing I requested HCA to meet you actually but somehow I mean if we can make. It’s been very very long time.
Sameer Hiremath
Anytime, anytime I’m around. Yeah.
Manoj
I’ll request again H.
Sameer Hiremath
Thanks.
Manoj
Thanks a lot Samir and all the best. Hopefully like somebody mentioned last three years of pain should convert into big gains for next two, three, four years. Hopefully for all of us it will.
Sameer Hiremath
Thank you for all your support and.
operator
Thank you Due to time constraint that was the last question I now hand the conference over to Mr. Sameer Hiremath for his closing comments. Over to you sir.
Sameer Hiremath
Thank you everyone for joining our Q3 and 9 months earnings calls today and for our continuous interest and the support to our company. We appreciate all the support you have provided to us as we navigate through the challenges of the current global business environment. As we conclude this call we want to assure you that we are here to address any further questions or concerns. Please feel free to reach out to our investor relations partners, strategic good advisors and once again thank you for your participation. Goodbye and have a very good evening. Take care and see you next quarter. Bye.
operator
Thank you on behalf of Heckel limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.