Hikal Limited (NSE: HIKAL) Q4 2025 Earnings Call dated May. 14, 2025
Corporate Participants:
Unidentified Speaker
SAMEER HIREMATH — Managing Director
ANISH SWADI — Senior President – Animal Health & Business Transformation
VIMAL KULSHRESTHA — President – Crop Protection
KULDEEP JAIN — CFO
MANOJ MEHROTRA — PRESIDENT, PHARMA BUSINESS
Analysts:
Unidentified Participant
Dhaval Shah — Analyst
Rohit Sinha — Analyst
Ranjan Shah — Analyst
Rohit Nagraj — Analyst
Pranay Dhelia — Analyst
Dhaval Shah — Analyst
Prolin Nandu — Analyst
Vinay — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Hykill Limited. This conference call may contain forward looking statements about the company which are based on the 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 zero on your touch tone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr. Sameer Heeremat, Managing Director of Hill Limited. Thank you and over to you sir.
SAMEER HIREMATH — Managing Director
Thank you very much Ladies and gentlemen, Good afternoon and a very warm welcome to all of you. We extend our gratitude to all of you for participating in our Q4 and FY 2025 results conference call. We are pleased to provide you with an update on the progress made by our company. We trust that you have had the opportunity to review our earnings release, investor presentation and the financial statements for the quarter and financial year ended 31 March 2025. These documents can be accessed on both HEICL’s website and the stock exchanges websites. I am Sameer Hiremad, Managing Director of Heikil Limited And I’ll be leading the discussion and presenting the financial results and the outcome on the business.
Joining me on this call I have Anish Swadi, Senior President, Business Transformation and Animal Health Kuldeep Jain, Chief Financial Officer Manoj Malhotra, President Pharma Business Bimal Kulchester, President of our Crop Protection Business and Strategic Growth Advisors Our Investor Relations Advisors talking about our Q4 and FY25 performance. The year has been a year of strategic recalibration and focused execution for our company. Amidst global headwinds and uncertainties, we took decisive steps to strengthen our core businesses, optimize and streamline our operations and prepare your company for long term accelerated sustainable growth. The backdrop remains complex. Marked by geopolitical uncertainty, supply chain recalibration and persistent cost pressures.
The global pharmaceutical industry is positioned for renewed momentum and growth building on the steady Recovery seen throughout FI2025 in the crop protection sector. While competitive pricing, especially from China, remains a significant headwind, this sector is undergoing a major strategic shift led by the Innovator customer companies which are expected to stabilize by next financial year, that is in FY26 27. In Q4 FY25 our revenue amounted to 552 crores with an EBITDA of 123 crores reflecting an EBITDA growth of 71% on a sequential basis. On a YOY basis, EBITDA increased by 31% and EBITDA margins improved by 410 basis points to 22.4% in Q4.
Sorry. For the full year FY25 revenue stood at 1860 crores, EBITDA stood at 328 crores which is a margin of 17.7%, an increase of 270 basis points compared to the previous year. In the board meeting concluded this morning, the Board of Directors has recommended a final dividend of 0.8 per share that is 40% along with an interim dividend of 30% declared in February 2024. The total dividend for FY25 stands at rupees 1.40 per share which is 70% of face value. In Q4FY25 we have successfully improved our margin profile due to operating leverage and focused cost improvement initiatives.
Our API business growth is driven by uptick in volume as well as increased offtake of new molecules. We are actively strengthening our product portfolios as we see a positive trend in new registration and coming through in advanced geographies and different customer base. In the CDMO business we have several projects progressing towards development and validation stages while maintaining an increased RFP inflow. Moreover, in the Animal Health division, our project under the long term agreement with the Innovator is advancing as per plan with a validation of eight products completed successfully. Additionally, we are engaging with multiple innovative customers and are observing a significant positive momentum which contributes to a very healthy pipeline going forward.
The pharma business is showing growth momentum and our expectation for FY26 is a revenue growth of about 15% and a corresponding increase in EBIT margins. The crop protection sector consumption has started to exhibit signs of stabilization. Strategic transitions across innovator companies and our customers are driving the industry transition by focusing on the rebalancing of portfolios, product innovation and deepening relationship with key stakeholders. We are seeing traction on new chemical entities and new inquiries from our existing and new CDMO customers. As most of you are aware, the crop protection business globally has faced multiple headwinds over the last 12 to 18 months.
As we have anticipated these challenges. As I mentioned in the earlier calls, we have taken several steps to mitigate the risk and drive future growth in our crop protection business. Number one, we have established a specialty chemicals portfolio in which we have developed several products which we will begin launching by the second half of this financial year. The benefit of this is that we will use the existing crop protection assets to improve the capacity utilization and building operational leverage. Number two, we are actively engaged with several of our innovator CDMO customers in several projects that are in advanced stages of process development, scale up and commercialization.
These are expected to get launched from the next financial year that is FY27 onwards based on the above strategic initiatives. Although we expect muted growth in FY 2026, we expect growth to resume in FY 2027. As we look ahead, I am confident in the resilience of both our businesses added on to our animal health business and our specialty chemicals portfolio that we have. This will drive long term sustainable growth for our company. We are very well positioned to capture the global opportunities across various markets and deliver long term sustainable value to all our stakeholders. With that I would like to hand over to Manoj who will provide an overview of the pharmaceutical division’s performance.
Over to you, Manoj.
MANOJ MEHROTRA — PRESIDENT, PHARMA BUSINESS
Thank you Sameer and good afternoon ladies and gentlemen. I’ll start with the financials of the Pharma business. For quarter four, FY25, our pharmaceutical business reported revenue of rupees 351 crores and EBIT of rupees 55 crores. For the full year, FY25 revenue stood at rupees 11.68crores and EBIT of rupees 137 crore. EBIT grew of 47% on yoy basis. This is a significant increase of 327 basic points on yoy basis on the back of operating leverage. This momentum reflects our continued efforts in operational excellence, expanded customer base and improved capacity utilization. The CDMO segment continues to be a key strategic driver for us.
We have a healthy pipeline of development programs from global pharmac innovators and specialty chemical companies. On the API side, our API business continues to demonstrate quarter over growth reflecting both market demand and the effectiveness of our commercial strategies. In parallel, we are enhancing our value proposition through an active product development agenda. Our current pipeline comprises eight to nine differentiated products with plans to commercialize two to three launches each year. This steady cadence ensures we remain competitive in a fast evolving pharmaceutical landscape where innovation, speed to market and regulatory alignment are critical. We are focused on strengthening our position in high growth therapeutic areas and niche complex API segments to create differentiation and long term customer relationships in global markets.
Our marketing footprint is expanding in markets like Japan, Latin America, Korea, Middle east and Southeast Asia. In the CDMO vertical in Quarter 4 FY25 we witnessed improved offtake from key innovator clients and momentum building in our CDMO business. Inquiries are rising particularly for early stage molecules. As innovators increasingly seek reliable high quality development partners with backward integrated supply chains, several promising discussions are advancing towards development and validation. Our key starting material projects for two new chemical entities are progressing well in phase three trials with their respective partners. These programs are expected to transition to commercial scale in 2026-27 supporting long term growth.
We are working on 12 to 15 additional new opportunities. Meanwhile, our food ingredient project remains on track and and is expected to reach peak revenue within next two to three years. Overall, the pharmaceutical business is on a growth trajectory as it adapts to changing market dynamics, regulatory environment and consumer demands. We are prioritizing technical innovation, cost efficiency, operational excellence, sustainability and to enhance profitability and revenue, setting the stage for prosperous 2026 and beyond. Now I would hand over to Vimal who will provide an overview of the Crop Protection Division’s performance.
VIMAL KULSHRESTHA — President – Crop Protection
Thank you Manoj. Good afternoon all the participants of this earning call. In Q4FY25, the revenue for our crop production business stood at 201 crore with an EBIT of 36 crore and EBIT margin of 18%. For the full year, revenue of crop production business stood at 692 crore with EBIT of 79 crore and EBIT margin of 11.4%. We are actively engaging on CDMO opportunities with existing innovative companies as well as new customers and advancing promising discussions on new prospects. Momentum continues to build across our CDMO portfolio spanning both development and contract manufacturing. We continue to work on manufacturing excellence initiative to improve our margins in current competitive environment and of course Chinese competition regarding our business vertical own product vertical, we are actively expanding our product pipeline to drive growth.
This includes targeting high potential opportunities that strengthen our portfolio and align evolving market needs. Our specialty products are gaining traction driven by customer demand for innovation, high performance and sustainable solutions. Regarding CDMO business vertical, Our CDMO division is currently managing a robust pipeline of eight active projects with both existing customers as well as new strategic customers. These projects reflect increasing trust in our development and manufacturing capabilities particularly for complex and on patent molecules. By successful advancing these opportunities, we aim to reinforce our positioning as a preferred partner for global innovators and drive sustainable growth for our CDMO business over the medium to long term.
Additionally, we continue to invest in capacity, talent and technology to support, scale up readiness and enhance our competitive edge in rapidly evolving outsourcing landscape. So for overall crop protection division we continue to see growing interest from our innovator companies seeking reliable partners with expertise in complex chemistry, regulatory compliance and scalable manufacturing. This is particularly evident in crop production space where agrochemical players are under increasing pressure to accelerate innovation, reduce environmental impact and navigate tightening regulatory framework. Our strength in process optimization, backward integration, life cycle management and custom synthesis make us a preferred partner for companies looking to outsource high value intermediates and actives.
Through continued investment in R and D, adoption of precision and firm commitment to sustainability, we are well positioned to capture value in this evolving landscape. Now I would like to hand over to Anish who will provide an overview of our animal health business and business strategy.
ANISH SWADI — Senior President – Animal Health & Business Transformation
Thanks Vimal. First I’d like to take you through the animal health business. We are making steady progress on the development of multiple APIs for our leading customer who is an animal health innovator under our long term partnership. The validation for several of the products are on track and completion in the and are scheduled to be completed in the upcoming quarter which we will support product registration efforts and pave the way for commercial launches in the next several quarters across key global markets. In parallel, we are actively expanding our footprint in the animal health segment by engaging with new clients on process development and synthesis of complex molecules for NCES or new chemical entities.
Early stage outcomes have been encouraging, reinforcing our position as a reliable partner for high value differentiated chemistries. This segment continues to offer growth potential driven by rising global demand for veterinary therapeutics, Increasing regulatory oversight and the shift toward innovation led outsourcing in the animal health segment. Moving on to our strategy, our Transformation initiative Project Pinnacle is delivering tangible results driving sustained growth across our diversified operations. We’ve made meaningful strides in expanding our geographic footprint including our BD teams across the world which will drive our front end initiatives. We have also deepened our commitment to ESG embedding sustainability into all our core operations.
We consistently are allocating 4 to 5% of our revenue towards R and D as we continue to develop innovative products and services that address the evolving needs of our clients and end markets. These efforts, combined with a culture of continuous improvement position us to stay ahead of the market shifts, strengthen our competitive advantage and reinforce our leadership in the industry. As we enter our next phase of our strategic journey, we are sharpening our focus on the front end capabilities to capture several high value opportunities and further strengthen our business pipeline. This evolution places strong emphasis on talent development, cross functional collaboration and fostering a culture of innovation.
Innovation remains to be a central driver as we accelerate our efforts in sustainability, digitalization through AI and product differentiation. We continue to focus on key priorities including demand recovery, sustainable practices, technological breakthroughs and operational efficiency. Looking ahead As a company, we remain confident in our ability to navigate the certain market complexities driven by disciplined execution, a strong innovation engine and a commitment to continuous improvement. Now I would 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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Dhaval Shah from Garak Capital. Please go ahead.
Dhaval Shah
Hi, am I audible? Hello.
SAMEER HIREMATH
Yes. Yes. Hi David.
Dhaval Shah
Yeah, hi Sameer. Great set of results. So one question from my side. In your opening comments you mentioned about overall growth outlook being very strong for 27. But you mentioned a muted 26. So can you elaborate what you mean by that? Because in the previous calls the growth was looking even good for 26 as well. So has there been change in the customer contract or something? Can you help us understand?
SAMEER HIREMATH
Yeah, I think there’s no change. I spoke about two different segments. We expect healthy growth in the pharma business which is on track. In fact it may even be more accelerated than what we spoke earlier. The crop business is where we expect flattish numbers for next year and to resume in FY27 so far. Yeah, yeah.
Dhaval Shah
Okay. Okay. So yeah, crop. Anyways, your. Your guidance was that H2 of 26 is where you are expecting some sort of improvement.
SAMEER HIREMATH
That’s right.
Dhaval Shah
Okay. Pharma you are expecting what sort of growth in 26? We did 1170 crore this year.
SAMEER HIREMATH
I mentioned around approximately 12 to 15% growth for the year. Revenue.
Dhaval Shah
On the farmer side. Got it, got it. And in our PNL the other expenses is 133 crore. So any particular reason for such a large increase compared to the previous quarter? Like sequentially and year over year both.
SAMEER HIREMATH
How you. What are you looking at? Which number are you looking at?
Dhaval Shah
One minute.
KULDEEP JAIN
So. So largely our total other exponentials remain as it is compared to last year. But for the quarter it was increased a Bit because we have taken certain additional repair maintenance due to some various customer audits. There was a sales increase. We have done certain shipment by year. So therefore this is by 1012 crore.
Dhaval Shah
Yeah, yeah, yeah, exactly. That was a difference looking on a sequential basis here, so 100 crores.
SAMEER HIREMATH
Yeah. We have also made a provision for some character debts which is required as per the accounting standards.
Dhaval Shah
Okay, understood. And over the next couple of years, how do you plan to reduce the dependency, you know, on fourth quarter? Like fourth quarter is very heavy for us. How do you plan to, you know, normalize this seasonality? Is there a, any, any, you know, any plans on that?
SAMEER HIREMATH
No, no, definitely there are. We are moving towards that. But once the products all get launched and validated then they’ll be more streamlining. A lot of the customers in the Q3 don’t want to take inventory so they push Q3 into Q4. So that’s why there’s a big push in Q4 and you know, nobody, there’s a big focus on all organizations to reduce inventory and end of the dead financial year, which is December25. So then they say please ship it in January, you know, to us. So.
Dhaval Shah
Okay. And the last thing, how is the US customer planning his business with regards to the tariffs and what are, what sort of conversations are going on? Like before this tariff we had a big China plus one and now this tariff thing is there which could be happening from, on Indian companies as well. So it’s very complicated. So what are, how is your negotiations and conversations going on?
SAMEER HIREMATH
I’ll ask Anish, why don’t you take this?
ANISH SWADI
Yeah, I think you said it right. Double. It’s, it’s very complicated right now. I don’t think anyone really knows what the ultimate tariffs are going to be eventually because you know, the government or the US government has come up and said that there will be some tariffs. I mean they’ve specified on China but it’s all related to the specific HSN codes. So we’re continuously monitoring the situation to see which products are subject to tariff, which products are not subject. We’ve done a total portfolio evaluation to see where we have a competitive advantage versus where we have a potential disadvantage.
So we are ongoing monitoring the situation as we see it. But right now it’s, you know, we’re not receiving any indications from customers that, you know, tariffs or prices are going to come down or further go up vice versa.
Dhaval Shah
Okay. So the momentum in terms of RSQs which were there up till, you know, before this entire tariff talks, the RFQs the intensity. And you were seeing lot of inquiries RSP from the customer. That continues, right?
ANISH SWADI
Yeah, that continues. Because you know, right now that’s not really subject to tariff A, the volume, the values are not as high as when you talk about multi scale or multi product commercial scale products. So you know, those continue to happen because you know, the fact is that, you know, everybody is looking at outsourcing and everybody’s looking at, I think the world is moving more towards protecting their own countries or their own areas. So you’ll see A, you know, we’ve always talked about China plus one, there’s Europe plus one, there’s us plus one. Right. And that’s what, that’s what it’s shaping out to be. But again there’s a lot of uncertainty as we see it.
Dhaval Shah
Okay. Okay, good. Okay, great. Thank you. Good luck. I’ll join back in the queue.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. And now the next question is from the line of Rohit Sinha from, from Sunidi Securities. Please go ahead.
Rohit Sinha
Yeah, thank you for taking my question. So just want to clarify that as you have for. You can close for 26 I think here also a lot of our contracts are going to commission on FY26. So we’re anticipating a better growth in 2016 number. So is that for the crop protection business or. Overall we will be having a muted number and most of the numbers would be coming in FY27.
SAMEER HIREMATH
I think the muted numbers were for crop protection. Pharma will grow as I mentioned. I think the previous speaker also asked the same question and I mentioned that we will show growth in the pharma business while crop will be flattish compared to last year.
Rohit Sinha
Okay. Okay. And in salary, employee salary is slightly lower in this quarter. So is it because of some head change or just because of the AI implementation?
SAMEER HIREMATH
We’ve been able to optimize our personal cost. Obviously we’ve done a very detailed exercise over the last year to see which plants we can utilize and repurpose our people and you know, put them into which assets and which sites. So we’ve been able to. Yeah, we’ve been able to do that and we’ve looked at all our people and we’ve done a lot of digitalization initiatives. Also you rightly mentioned that we have done some work on that which is helping us improve our efficiencies and our productivity in our plants.
Rohit Sinha
Okay. Okay. So that Means, I mean some kind of cost optimization would be continued there. And secondly as you have highlighted for that other expenses increased because of some audit charges and related to the customer’s approval or contract. So since going forward also there are a lot of, I mean contracts or approvals are pending. So then can we expect similar kind of other expenses to incur or it will get normalized?
KULDEEP JAIN
Yeah, actually what I mentioned there was. Certain part which was required for the. Audit purposes which will be one off. As far as you know this provision. For doubtful debts are concerned. This is also one off because as per the accounting standard we have to keep changing the provision based on the. Timing of the, you know, delay in receivables. So these are not really some kind. Of a, you know, permanent kind of an expenditure. This will keep changing.
Rohit Sinha
Okay, one last question sir, just on the capex side for FY26 and 27 if you can highlight,
SAMEER HIREMATH
pardon
Rohit Sinha
the capex for FY26 and 27.
SAMEER HIREMATH
Yeah. Like you know we have mentioned earlier also we have a Plan for almost 200 crore kind of a business capex each year.
Rohit Sinha
Okay, that’s it from my side. Thank you.
SAMEER HIREMATH
Thank you.
operator
Thank you. We will take our next question from the line of Ranjan Shah from Shah Investment. Please go ahead.
Ranjan Shah
Thank you for this opportunity sir. Couple of questions from my end. To begin with sir, if you could share your thoughts regarding our pharma business or how do you envisage your FY26 performance?
SAMEER HIREMATH
I think everybody seems to be asking the same question. I’ve already given a guidance of growth of 12 to 15% revenue growth which we expect in FY26 and that is going to be with more CDMO business and inquiries coming in. Yeah.
Ranjan Shah
Sure. And so since we’ve already mentioned the revenue guidance any can you throw some light on the margin guidance as well?
SAMEER HIREMATH
Well margin guidance will proportionally increase. If you look at a historical EBIT margin for last year it will proportionately grow along with the growth in revenue because we also get some operational leverage benefits in the business.
Ranjan Shah
Sure noted sir. Thank you. Thank you very much. That’s it from my side. Thank you.
operator
Thank you. The next question is from the line of Rohit Nagraj from BNK Securities. Please go ahead.
Rohit Nagraj
Yeah, thanks for the opportunity. So first question is on the animal health business. So we’ve said that we have received validation for eight products. If I’m not wrong and you. We’ve also said that we are working with Innovator and we’re simultaneously working with other innovators as well, so is it that these eight products also can be supplied to other innovators or is it that for the other innovators we have to develop new set of products and it will again have its own set of timelines in terms of validation batches as well as the commercial validation batches, etc.
So if you can just throw some light on this. Thank you.
ANISH SWADI
Yeah. So the eight products that we’ve developed are for global supply. We are free to sell those products across the world to any customer that requires them. With regards to your question, whether they require validation, every customer needs to validate the product in their own formulation. So yes, they will require validation in their own formulation. So the stipulated timelines that will follow with our primary customer will apply to all secondary customers.
Rohit Nagraj
The second question, in terms of the crop protection segment this quarter we’ve had a very strong set of margins. You’ve also alluded that next year probably the business will be remaining flattish. But can we expect margin improvement on a year, on year basis for FY26 for the crop protection business? Given that, I think from the raw material side also there could be some advantages which probably will reap during the course of FY26. So just your views on this?
SAMEER HIREMATH
No, I don’t think. I think I’ve already mentioned this in my opening speech. We’ll be flattish in terms of revenue and margins for the crop protection business from FY27 onwards. The margins will start coming back to historical crop margins in 22 and 23.
Rohit Nagraj
That’s it from my side. Thanks a lot and all the best.
operator
Thank you. The next question is from the line of Prana Dhelia from Panchadantra Advisors llp. Please go ahead.
Pranay Dhelia
Thank you. For a good set of numbers as shareholders, two questions. One is on the ROE front and the ROCE front. We are at, you know, at 7.3% ROE for this financial year and even the ROC is at 9.9%. Do you see any improvement in FY26?
SAMEER HIREMATH
Well, as a pharma division, definitely there’ll be improvement. But the crop division, there’ll be a kind of a drag on that because depreciation charge will come in significantly. Recently capitalized a large asset in quarter three. You must have seen the CWIP impact. So there will be a drag for next year because the crop business. But it will be, it’ll actually, it’ll get depressed next year actually the reduction next year.
Pranay Dhelia
So next year you expect the ROE to go down further?
SAMEER HIREMATH
Slightly, yeah. Slightly or same.
Pranay Dhelia
That’s I Mean as low as probably the FD rate the government has to offer. And secondly you know we, we’ve done 91 crores in pad this financial year. Our peak was about 160 crores in PAT in 2022 and our revenue is about not more than 3,4% of you know, 2022 peak revenue. Do we see us getting to those numbers by next year or year after? Because as you said Pharma sees probably 15%, 12% to 15% upside crop stays flat. So do we look to beat that? Are we doing better margin business now or is still the same?
SAMEER HIREMATH
The pharma business will grow quite a bit next year and second year crop will still take one more year for growth to start coming back from FY27. So it will take some time to get back to.
Pranay Dhelia
So we are not looking to beat the peak profit anytime soon for the.
SAMEER HIREMATH
Next two years for sure. Two to three years we get there. But we’ll take at least two years. Yeah.
Pranay Dhelia
Okay fine, I’ll fall back in the queue. Thank you. If you can. If I can just squeeze one more question if you permit. Our interest cost has gone up a little bit but our debt has remained flat. So any reason for that?
KULDEEP JAIN
Yeah, basically we have the higher utilization working capital in the middle period. Therefore the interest cost in terms of absolute value it’s gone up although we have the reduction in interest cost to the extent of 2025 basis point.
Pranay Dhelia
Okay, thank you.
operator
Thank you. Participants who wish to ask Questions may press star and 1. The next question is from the line of Dhawal Shah from Garrick Capital. Please go ahead.
Dhaval Shah
Yeah, hi Sameer. Now compared to FY24 any new capabilities we have added as a company in our agrochemical pharma in terms of chemistry skills. Looking at the various opportunities which are coming up if you would like to highlight on anything.
SAMEER HIREMATH
Put high potency chemistry is what they are launching this year. Hypo.
Dhaval Shah
Okay so this. So in terms of. So once you’ve launched it then you. How long does it take for you to take it to the customer and you know and start. And you know from like the launching stage till the revenue stage generally how it’s been in the past.
SAMEER HIREMATH
Sorry, yeah.
Dhaval Shah
And what sort of revenue generally you get and what you look at for a new chemistry launch?
SAMEER HIREMATH
Well I mean if you look at the new NCEs that are coming out more than 50% of the new NCE’s are now high potent chemistry. So that is what we’ll be attracting now to start the development work in Our laboratories where we can do clinical stage materials. So that could start quite could start quite quickly. We will be commissioning that lab by the second half of this year and the work can be started by end of this financial year in our laboratories.
Dhaval Shah
Okay. Okay. So this will support your the invent the pipeline of NC molecules which you have in your CDMO to continue. This will support your growth.
SAMEER HIREMATH
No, in fact Dhaval, it will add on to the number of RFPs because today we are not catering to the high potency RFPs. Once we get these capabilities, even those RFPs, we could start to participate in and hopefully acquire those businesses as well. Yeah.
Dhaval Shah
Interesting. Got it. Okay. Thank you.
operator
Thank you. We will take our next question from the line of Prolin Nandu from Edelweiss Public Alternatives. Please go ahead.
Prolin Nandu
Yeah. Hi Sameer, a couple of questions from my end. You. In one of the past calls you had mentioned that you in terms of pipeline, when it comes to phase three molecules, two of them are very promising. Right. And they will probably materialize sometime in 26 or 27. Do you have any update to share on those molecules? How is the Innovator, you know, what is the sense that we are getting on Innovator? Are they on track to be the blockbusters that we expect them to be?
SAMEER HIREMATH
Sure. Manoj, why don’t you take that?
MANOJ MEHROTRA
Yeah. So we have two molecules in phase three. So one of them is definitely moving faster and we may get some revenues in FY26 in the coming year. But by and large it will be launched in 2027. So you will see a good launch ramp up in 2017. The second one is still not crossed a clinical hurdle. It’s still in phase three and we have to really wait and watch. But overall if you see there are a number of other programs also which are in phase one, phase two, so overall we have a healthy pipeline of the CDMO kind of launch molecule.
Ksm.
Prolin Nandu
Sure. So just taking this a bit forward, is it fair to say that the growth numbers that you have mentioned for pharma, for FY26 because of this promising pipeline 27 should be much better than what we expect in 26?
MANOJ MEHROTRA
Yeah, it will be in the same range, I’ll say at this point of time 12 to 15% because the base business also grows and some molecules which we have got more from life cycle management perspective, they will also ramp up in the coming years. So I think it’s a good number to have 12 to 15% growth consistently year on year and the profitability also will change as the new launches come, objective is to move our portfolio more towards CDMO business which has higher margins.
Prolin Nandu
Sure. Thank you for that. Sameer, one question for you, right. Again I’m quoting something that you mentioned in the past call, right. That when a client comes to India and probably he visits some of the these companies, we are in that top five, top six kind of list, right. When it comes to CDMO or maybe within CDMO also the specific niche that that client is particularly looking out for. Now if I think about your revenue, right of let’s say if I combine the pharma and chemical CDMO revenue we are close to 950 odd crores, right.
So my question Sameer is that you know in terms of revenue we might not be in top five, right. In some sense. So in last four, five years what have been our learnings or how have we improved our success rate or funneling or whatever you want to call it in getting more and more NCEs, right. So that in next five years we are just not in that top five list of when the client come but also in terms of revenue are able to reach there what has been our learning, right. Which will help us for the next five years.
SAMEER HIREMATH
Two things. One is that we’ve got getting closer to our customers. We’ve set up global offices now in North America, Japan and in Europe. That was not the case in the past. So that has been done last year in the last six months. One. Six months, One year. Secondly, we’ve also increased our offerings in our R and D center in Pune and our scale up capabilities and we’ve invested significantly in that in the last 12 months and we continue to invest in that with our new high potency laboratory and new technology capabilities. I think this is all being well planned out in the last couple of years and this is attracting a number of RFPs and I think that growth will accelerate significantly.
You know if you looked at our animal health business, just to give you an example three years ago there was very few inquiries when we got these big customers. After that we got several new inquiries. You just hit a couple of early wins and then it’s a force multiplier effect. I know. And people give you a lot of other businesses all these customers, they kind of talk to each other and they see who are the good companies out there. So you do one or two good projects and you can really ramp up your RFPs and your number of projects and it’s much easier to win new business.
The first ones are the hardest to win. I think we’re overcoming that hurdle and now the next ones will be much easier and ramp up quite rapidly. As I mentioned we’ve got 12 to 15 products in advanced stages of development, commercialization and pharma. In the past it was 6 to 8, 8 to 9 we were talking about. We’ve already gone up more than 50% in the last one year and this will increase and intensify as you go forward.
Prolin Nandu
Yeah, yeah. Sameer, thank you so much. Can I push couple of more question if that’s fine.
SAMEER HIREMATH
Maybe one more. Yeah, thanks.
Prolin Nandu
Sure, sure. Okay. Yeah. So my question would be on this, this you. You mentioned about the new laboratory that you’re putting up, right? In some sense. So is it. Can you just slightly elaborate more for a, you know, in a. More in a generic term to help us understand as to why. I mean you know is it like 50. We are currently participating only in 50% of RFQs and now that once we have this capability up and running sometime by end of the year the participation in RFQs will be like double. Is it like is that a fair thing and what is this more.
Can you just double click a little bit to help us understand what is this new lab that you are talking about?
SAMEER HIREMATH
I don’t think it’ll be double but it will be quite a bit more. Whether it’s going to be 30% more, 40% more that only time will tell. But it’s definitely. This is more niche high potent chemistry which is anti cancer drugs. If you look at that which we were not participating in the past and you asked a question what somebody asked a question about what are the learnings? I think this is a technology toolbox offering and the customer now also feel more confident outsourcing high potent chemistry to India which was not the case a couple of years ago.
They should typically go to European CMO companies With a lot of the new generation chemistry now being looked at India, not only high potency, even peptides, Indian companies who have built a good credibility and track record are being considered as serious players and projects are being awarded to them. So this is a laboratory. A laboratory high potency is almost like a mini manufacturing plant because you need very small quantities, quantities compared to a regular cardiovascular drug or a regular, you know, pain medication drug. This is very low dosage so the batch sizes are much smaller and we could do early clinical trial material could be supported from this.
It’s like a mini pilot plant. I would say laboratory come. Mini pilot plant, yeah. It will be done from this laboratory which will be commercialized by Q3 of operational by Q3 of this year.
Prolin Nandu
Great. Sameer, I’ll come back in the queue. Thank you so much for giving me the opportunity. Thank you.
operator
Thank you. Before we take the next question, we would like to remind participants that you may press Star one to ask a question. The next question is from the line of Rohit Nagraj from BNK Securities. Please go ahead.
Rohit Nagraj
Yeah, thanks for the follow up. So in terms of the addressable market for pharma and agrochem molecules that we are working on, if you can just give us a broader understanding of that. So maybe molecules usually has an addressable size of maybe 20, $25 million just to get an understanding how much potentially maximum revenues that we can generate once the molecule is commercialized both in pharma as well as agrochemical separately. Thank you.
SAMEER HIREMATH
What was your question regarding particular projects or the total addressable market size? Can you just elaborate?
Rohit Nagraj
So generally when we are funneling our products, we must be looking at a particular market size. If that is too low, probably we may not be looking at that opportunity. So what is that? We look usually for both pharma and, you know, agrochemicals from a molecule perspective to work on.
SAMEER HIREMATH
Yeah. So I’ll typically say I think we look at typical minimum size of at least $5 million a project. I mean ideally we want to look at even 10 million and some of the products that we have in our portfolio have potential to get to even $20 million and beyond 25 million. So I think 50 crores, if you look at rupee terms, at least 50 crores per molecule is what we look at at peak and going some will go to 100 and some will even go to 200 ramp beyond per product.
Rohit Nagraj
Right, that’s helpful. And second question again pertaining to that, in terms of the success rate of a molecule from CDMO to commercialization, how has been it in the past both if you have separate data for pharma and angiochemicals.
SAMEER HIREMATH
Agrochemicals we’ve been. It’s not as intense as the pharma business. As the pharma falls off as quite a bit from phase one to phase two to phase three. Right. So agrochemical, more often than not, if you get a product under development, chances of it going to launch is very, very high. I mean the chances of failure are very low. I would say chances of launch are more than 75% in the agrochemical space because registration on the stock studies are already done. A lot of work is already done by the companies in pharma, we are doing more of the phase two and phase three work.
They are not that much in the phase one and lead work. So again, the probability of going to launch is more than 50% I would say in that. Yeah.
Rohit Nagraj
That’S helpful. Thanks a lot. And all the rest.
operator
Thank you. The next question is from the line of Vinay, who is an investor. Please go ahead.
Vinay
Hello. Hi. Good evening, sir. Good evening, sir. What is the status of USFD observations which we got in February.
SAMEER HIREMATH
Spending? We’ve responded to the FD observations and all the observations have been responded by us. We’re just awaiting the response.
Vinay
Are they preserving nature or something? We need to be looked at seriously?
SAMEER HIREMATH
Well, there is. There was no data integrity issue at all in any of the observations. So we have given our responses and we wait to hear back from the fda. As of now, I cannot make any comments regarding. Regarding that here.
Vinay
Okay. Thank you, sir. That’s it.
operator
My thank you. Ladies and gentlemen. Due to time constraint, we will take this as our last question. I would now hand the conference over to the management for closing comments.
SAMEER HIREMATH
Thank you everyone for joining our quarterly earnings call and our annual financial call for the year ended March 31, 2025. And thank you for your continued interest in our company. We appreciate your support as we navigate through the challenges of the global business environment. As we conclude this call, we want to assure you we’re here to address any further questions or concerns. Feel free to reach out to us or our investor relations partner, Strategic Growth Advisors. Once again, thank you for your participation. Goodbye.
operator
Thank you. Thank you on behalf of ICL limited That concludes this conference. Thank you for joining us. And you may now disconnect your lines.