Jagsonpal Pharmaceuticals Ltd (NSE: JAGSNPHARM) Q4 2025 Earnings Call dated May. 07, 2025
Corporate Participants:
Unidentified Speaker
Manish Gupta — Managing Director
Sachin Jain — Chief Financial Officer
Analysts:
Unidentified Participant
Soumya — Analyst
Ankur Bhadekar — Analyst
Aditya Chheda — Analyst
Subrata Sarkar — Analyst
Majid Ahamed — Analyst
Hardik Upadhyay — Analyst
Amayra Shah — Analyst
Jatin — Analyst
Majid Ahamed — Analyst
Praval Shah — Analyst
Presentation:
operator
It. Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Jacksonpal Pharmaceuticals Limited hosted by GoIndia Advisors. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing a star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Soumya from Go India Advisors. Thank you. And over to you ma’am.
Soumya — Analyst
Good evening everyone and welcome to the Q4 and FY25 earnings call of Jacksonpal Pharmaceutical Limited. We have on call with us representing Jacksonpal Mr. Manish Gupta, Managing Director and Mr. Sachin Jain, CFO. We must remind you that discussion on today’s call may include certain forward looking statements and must be therefore viewed in conjunction with the risks pertaining to the business. May I now request the management to take us through the financial and business outlook subsequent to which we will open the floor to Q and A. Thank you. And over to you sir.
Manish Gupta — Managing Director
Thank you Soumya and good evening to all. Thank you for joining us in this earnings call of Jetson Pearl Pharmaceuticals Limited. We are pleased to welcome you all as we share company’s progress and discuss our growth strategy. I must also apologize to keep you waiting for a couple of minutes. That was simply because of the technical time it took to log you all in into the system. Systems have been running a bit slow unfortunately. We appreciate your interest in JPL or Jepsenpal and your continued support as we navigate through this pivotal phase in our growth journey.
We continue to be a science. We continue to be on a science based approach with disciplined execution backed by opportunistic inorganic strategies to create a stronger domestic pharma business. At the outset I’m pleased to introduce Mr. Sachin Zain, our new CFO who has joined us in February 2025. Sachin is a Chartered Accountant and an MBA in Finance and he brings in over 23 years of experience across multiple sectors. His financial achievement is already contributing meaningfully to Jackson Pal’s growth and efficiency. I’m sure you would have all gone through the press release, the financials and the investor presentation issued by us Yesterday on our Q4 and FY25 results.
Our various strategic initiatives undertaken in the last few years are already reflecting positively in the financial performance as also improving capital efficiency. As you May be aware, JacksonPal saw a new strategic direction in June 2022 with Infinity holdings acquiring a significant 43.3% stay and joining a promoter group of the company. I joined JacksonPal sometime in July 2022 and it has been a phenomenal journey for me and the organization since then. I take this opportunity to summarize this three year journey of an ongoing transformation of nearly a 40 year old family business to now a nimbler, aggressive and more disciplined execution business under the oversight of a strong and independent port as well as a strong framework of governance.
The transformation had multiple significant positive outcomes as also its share of challenges. Looking back, Jackson park business in FY22 was a low growth low margin business which with significant working capital requirements at almost 60 days of sales. On a positive side, the company had a good franchise of brands especially amongst Guyanese and Orthos and was a debt free company with about 76 crores of free cash and investment at that point of time. We have started off writing on the success of our Tightrogestron franchise which held great promise of growth at that time. In fact it became our largest product in no tech.
The initial focus was also on improving the business characteristics I.e. the quality of business in terms of hygiene and profitability. Overall I believe there has been one area where we have fallen short of our objectives which is organic growth. We certainly did not anticipate the emerging competitive intensity in Dydrogestron franchise which hit us hard in FY24. Coupled with the counterfeit product availability in Indo business in the same year it pulled down our performance for that year. I believe these learnings have made us a stronger and a more resilient organization which is also reflective in our strong recovery in FY25.
Other than that I believe we have made great progress in all our other objectives. Today JPL has amongst the best operating metrics amongst peers of its size with operating margins in excess of 21%, working capital at 13 days or 3.5% of sales and cash balance in excess of 145 crores. This is after concluding an investment of close to 93 crores in an acquisition in an acquisition and also higher dividend payouts in last two. Further, we now have a demonstratable strength of integration and value creation through acquisitions. We also have a more refined business model which is balancing execution discipline with a growing pipeline of high potential products.
Overall, the three year transformation is visible in all our operating metrics. Sales have grown at 23% in the period. However, the operating EBITDA has risen by 131% with a margin expansion of 1000 basis points. Our PAT has nearly doubled with PAT margins expansion by 550 basis points. Cash and cash equivalent has served 91% underlying a robust financial foundation. Overall we have generated over 161 crores of free cash in last three years which is more than our operating EBITDA combined for this period as almost 24 crores came out of working capital redemption. FY25 marks the company’s boldest year yet.
On May 16th, 2024, Jaganpal signed its Business Transfer agreement to acquire the Indian Bhutan business of Yeshwarma. This acquisition expanded our therapeutic coverage providing us access to emerging segments of Dharma and PDF. It also strengthened our reach in the western and eastern part of the country has also expanded the doctor reach 50%. Further, we divested our Saritabad facility in Q3 for 41 crores thereby enhancing growth, capital and operational flexibility. In December, Jetson PAL also achieved a key milestone as indocap became our first 50 crore grant. As we speak we just strengthened our franchise with the launch of Indocap B, a potent fixed dose combination of indomethacin 25mg with paracetamol 325mg offering enhanced analgesia with reduced side effects.
Operationally we had our best year with revenue growth of 29% and a 59% increase in our operating EBITDA. Sachin Shell of course delve deeper and provide deeper insight into our financial performance for the year. Amongst other updates, I wish to inform that we had to terminate our agreement with Resilience to acquire their business. This decision was taken due to inability of sellers to include certain critical cps for the transaction. This decision has no material impact on the company. We also welcome Pratham Rawal, an experienced professional with around six years of experience in corporate, secretarial and compliance functions.
I wish him all the very best and a companionship that will together help the company grow and strengthen values. Looking ahead, we remain focused on our three pronged strategy driving growth through new product launches, optimized pricing and volume expansion complemented by inorganic opportunities in key therapies and our wider geographic reach amid evolving marketing, market dynamics and global sense. We expect to achieve 15% plus revenue growth in the current year with a higher growth in our operating profits with improved margins beyond FY26. We continue to maintain our earlier guidance of revenue growth of 12 to 14% with a potential 100 to 150bps margin improvement year on year.
I now request our CFO Sachin Jain to take over the conversation and provide a more comprehensive introduction as also financial updates.
Manish Gupta — Managing Director
Thank you Manish and good evening everyone. It’s a privilege to address you all. As I begin my journey with Jackson Pal. The company is continuously demonstrating strong financial momentum and strategic clarity, giving a very brief discussion about myself. I started my profession nearly 23 years back after completing my CA and started with a manufacturing company and my last assignment was with the Color one Air backed by Uflex, a pioneer in the aging industry at a global level. As Manish has told I joined this company four months back in February 2025 and coming to the financial results we. Closed the quarter with a revenue of. 586 million against last year’s quarter of 425 million, a growth of 34.7% and. In astronomy it is 151 million. Talking about the operational EBITDA is 97 million against last year of 49 million a growth of 97%. In terms of margin it is 15.6% against last year of 11.3% our growth was 530 basis points. Talking about the fact we closed the quarter with a price of 66 million against 35 million last year which is a growth of 88.5%. And in terms of margin margin it’s 11.2% against last year of 8.2%. Talking about the full year financial result we closed the year with a revenue of 2.687 billion against last year of 2087 which is a growth of 28.8% and the operational EBITDA was 579 billion against last year of 364 million an increase of 59%.
And if I talk about the price we closed the year with a price of 554 million against the last year of 225 million and the margins are 20.6% and last year it was 10.8%, a growth of 320 basis points. Our focus remain on the growth and we close the year and the operating side after adjusting the exceptional item is 37.5 375 million and this exceptional items is toward the state of the Fraser bias facility and certain expenses incurred for the acquisition of VHBA. So the combined impact of the exceptional item was 197 billion as an income and we close the year with the cash balance of 145tr.
And now I open the floor for the questions.
Questions and Answers:
operator
Hello, we can. Can we open the floor to Q and A? Okay sir, 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 withdraw yourself from the question queue, you may press star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ankur Bhedekar from ULJK Financial Services. Please go ahead.
Ankur Bhadekar
Yeah, thanks for the opportunity and congratulations on the good set of numbers. So, a couple of questions from my side. My first question is that the Indo Cap brand has shown like strong growth but Divatron has declined by 26%. So could you provide an update on how the Diavatron market is currently shaping up and also when do you expect it to stabilize and return to a growth trajectory and when can we anticipate a recovery?
Manish Gupta
Can you complete all your questions before we dismount?
Ankur Bhadekar
Yeah. So my second question is that you mentioned that you will be launching four to six new products annually. So what would be the nature of these upcoming launches and will there be primarily extensions of existing brands or entirely new molecules? These were the two questions.
Manish Gupta
Yeah. Thank you Amcul. So let me first respond to your first question which was pertaining to Duvatron or Dydrogestron. Clearly that market has undergone significant transition in last three years. While the molecule has grown, so has the competitive intensity. And we had at one point of time close to 100 competitors in that market. The growth of that molecule thereby stopped. So of course it grew to about a thousand crore molecule as per iqvr. But given the competitive intensity, it became a push molecule rather than a pull molecule. At the doctor Level from our perspective, at one point of time this franchisee Dydrogestron franchise was the largest and close to 40 crores in terms of internal revenue.
Post the competitive intensity and wherein there was a lot of push and as I said there was very little pull element, we took a back seat as far as this molecule is concerned and it has dropped by almost 75% for us. Our business is now stable but at a much lower level and less than 10 crores or about a crore a month. We believe we’ll be back on growth track as far as this molecule is concerned from this year, but it will no longer be as relevant as it was in the past. That’s point number one.
As far as Divatron is concerned. You also your other question was on new products strategy. Clearly, while I cannot disclose too much about it, JPL strength is doing well in niche smaller molecules. Duvatron or Diclogesteron was one exception in that. So we will be sticking back to our basics which is picking up niche areas and taking a more meaningful share in those molecules. About half of our new launches would be brand extensions and half would be totally new product concepts at this point of time. That’s what I can reveal as far as our new product strategies concern.
So you would have noticed that in the last 12 months, more or less this strategy has played out. We became the first company to launch postmenopausal products in the country. We also launched Quizzy er which was er version for morning sickness. In fact, the product just got a patent for the CMO that supplies us that product. So these are really the strategies that we have used. And at the same time, the expansion strategy which I was just mentioning, our indocap P, which is a combination of indomethacil and Paracetamol is a brand expansion strategy that I just highlighted.
So that will continue to be broad strategy as far as company is concerned. Does that answer Ankur?
Ankur Bhadekar
Yes. Yes sir. And one more question about the therapeutic revenue mix between Gynec, Ortho, Derma and Pediatrics in your portfolio. Like what does the current mix look like for FY25 and how do you see it evolving with the addition of yes Pharma? So do you expect the contribution from Derma and Pediatrics to increase given that most of yes Pharma’s products are mass market, if I’m not mistaken?
Manish Gupta
That’s correct. So the production has already changed. Till last year our therapeutic Presence was almost 60% in gyne and about 30% in ortho. Rest was a bit of mixed product. So that was our product mix. As we speak now it is about 50%. We still continue to be a Gyne dominated company. So we are 50% in GYNE with the rest of the other three therapeutic segments contributing about 15% each.
Ankur Bhadekar
Okay. And lastly, historically if we check like Q4 has always been a weaker or always been weaker as compared to the other quarters. So is there a specific reason for this? Is it due to any seasonality in the nature of the business?
Manish Gupta
Yes and no. There’s very little seasonality. But the stockist purchases come down in Q4. So Q4 is always weaker for us as also for others who are in domestic market. Now why it does not reflect so strongly in other companies is because they are both in India and outside India. And generally in businesses outside India the Q4 is the strongest. So therefore it gets balanced in other companies. JPL is purely domestic pharma focused company. Therefore our Q4 continues to be always weaker than rest of the three quarters. It’s bit of seasonality. But more importantly, I think the purchasing behaviors of stockists who do not tend to pick up much quantity in March.
Ankur Bhadekar
Right. That was helpful. Thank you. And all the best.
operator
Thank you. The next question is from the line of Aditya Chera from Incred Asset Management. Please go ahead.
Aditya Chheda
Yeah, can you break down the revenue in organic and inorganic and also for organic, can you break it down into volume price? And so that’s for FY25.
Manish Gupta
Let me respond to the extent I can. So clearly the first part of your question, breaking into organic and inorganic, I have a very clear answer. 8% of our growth is organic growth. And so while we have reflected a 28% growth during the year, 8% of that has come from organic. However, what is very important to note is this growth was 1% in H1 which has increased to 15% in H2. Clearly the change of strategy that we had adopted from second half of previous year in FY20 has started reflecting in faster growth. H1 was lower growth because that’s where we bore the brunt of Divatron or Dydrogestrone franchisees coming down to a new level of business.
So clearly going forward, that’s why we are guiding towards the 15% growth in the current year as well. Now coming to your second part of question. It is a very difficult question simply because the product mix keeps changing and it has changed dramatically. Especially because of Yashkarma acquisition. Largely a majority growth would have come from price increases and or new product introductions. Our volumes in last 12 months would have been flat. And that is because of the drop ingesterone I would say. So whatever volume increases would have occurred in other products would have been compensated by the loss in volume of diclogest.
Aditya Chheda
Got it. And the outlook that is shared for growth is all a function of organic output that you are looking forward to, right? That’s true.
Manish Gupta
That’s true. Excepting for a small because Yakkama business was there for 10 months last year versus 12 months which it will be for this year. Everything else is organic growth. We can never kind of estimate what will happen inorganically. So we do not build it in our forecast or guidance.
Aditya Chheda
Got it. And the Last question is on the slide on networking capital where it has come down to almost 3.5% of sales. Can you talk more about the initiatives that were taken forward and how do you see the outlook for the net working capital days or as a percentage of SIPs going forward? Thanks. These are the questions.
Manish Gupta
Very, very, very, very valuable question because this is something that we pride ourselves in how we manage our working capital very efficiently. So clearly it was a function of two things. We reduced our receivables in the market through tighter controls. We are now a very disciplined company. Every order is backed by check and we encash checks well on time. So our practices in the marketplace are aligned with the best in the industry and therefore our receivables in the marketplace are not more than 15 days of sale. That is one part of it. The second part of it came out of reduction in our inventories through better forecasting, planning and management.
That is again something which we have been able to bring down considerably in terms of days of sales. And so that’s. These are two areas wherein we could bring down our working capital significantly. However, on the other side, creditors have also come down. Okay, so earlier we never paid our creditors or vendors on time. But for last 18 months every vendor is paid on the due date which is a principle that we have adopted in our. And in spite of that our working capital has come down so great. I think hygiene, the way we conduct business internally as well as how we treat our vendors that has of course facilitated some of our cost reductions which is also reflected in improved gross margins in the business.
So and if you were to ask us going forward, I think most of the low hanging fruits around working capital are now there in place. Reducing it below 3% is going to be not really much different from where we are today. So that phase is over. In last three years we have extracted almost 24 crores from our working capital. I don’t foresee much extension going forward.
Aditya Chheda
Got it sir. Thank you.
operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question is on the line of Subrata Sarkal from Mount Intra Finance. Please go ahead.
Subrata Sarkar
Hello. Hello. Yes. So I have one simple question sir. Like what is the like on field manpower that we have added in last one year and what is the productivity of this ema? Basically so if you can highlight like last prior to one year what was the average productivity and right now what is the average productivity and what, what is our intention or target or let’s say goal like in terms of average productivity, where we want to reach these are the market conditions. Industry average.
Manish Gupta
Yeah, thanks, that’s really a good question. So basically our current medical rep strength would be about 1,000 in the field force, give or take 10 or 20 odd numbers here and there. We have not really changed our field force strength excepting for the acquisition that we did. So obviously new field force came in with about 250 reps through Yash Pharma acquisition. Mr. Productivity as we speak is in the region of 2 to 2.1 lakh ECPM or per capita per month. And the 8% growth that we are talking of actually has come from increased Mr. Productivity.
Is there a scope of doing this? Answer is yes. So I don’t foresee us increasing our field force trend over the next two to three years. Clearly there is an ability to increase this field force productivity by at least 50% and that’s what we are aspiring or working on. So does that answer your question?
Subrata Sarkar
Yes sir, but do we have any like, like I know generally industry average is a little bit higher. So where we want to reach there as such, do we have any target on that, sir? Not, not maybe in specific numbers but at least some ballpark.
Manish Gupta
So see I must admit that our PCPM will always be a bit lower than the industry or big leaders average. The reason is A we are in subchronic segments and not in chronic segments and B most of our products are intervention products in gynecology. So they support pregnancy. They are not general offtake products as most or many companies have. So these are highly prescription driven products. So productivity is going to be little lower than where many good companies will be. But our explanation will be to take this which is currently about 2 to 2.1 lakh PCPM to between 3 to 3 and a half lakhs PCPM over next three to four years.
Subrata Sarkar
Okay, so now another two question one is can you like in your slide you have shared but even still if you can explain like why we called up the resilient acquisition.
Manish Gupta
Basically yeah. So there were certain conditions, precedent to the transaction. Largely these were related to certain challenges around the three key trademarks. Fundamentally when you buy a business in India, you’re buying trademarks and the field force. And the valuable thing is there in trademarks. A couple of trademarks had certain CP’s because they had to get them corrected. That was something they were unable to do within the timelines which we had forecasted. And that was the reason why both the companies mutually decided to terminate that contract.
Subrata Sarkar
Okay, last Question more of a. From a strategic point of view, since the last like around 50% of our business comes from a particular therapeutic segment. And like we, as you told, we don’t have much intention to increase our strength in next two years, isn’t it? And we have cash in our book. So isn’t it a better. Like, from a strategic point of view, isn’t it a better opportunity or option for us rather than acquiring a new company if. If we go for particular brand in our strength therapeutic area, if few brands are available in gynecology area and if you can add them like by one or two and then like add up to use our salesforce to ramp it up, isn’t it a better opportunity or utilization of our strength?
Manish Gupta
Absolutely right. You’re bang on. Clearly our first intent is to ideally acquire something which can. Which fits our strategy in the therapeutic areas that we are present. Having said that, the constraint there is A transactions are limited and B the asking prices are very tired. I’ve been. Recent brand acquisitions have been in the region of 8 to 10 times sales and sometimes it becomes very difficult to compete at those levels of valuation. So strategically you are absolutely right. Our preferred approach would be brand acquisitions over business acquisition, but at valuations which suits us.
operator
Thank you. Thank you. 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 Majit Ahmed from Tradewalk Research. Please go ahead.
Majid Ahamed
My first question, sir, is that the tablet has major tablets like indoor cap and divatron tablets that are there. But. But there are a lot of small players who are giving at a more affordable rate. How are we going to position our brand or how are we going to do any sort of strategy we are looking at? That’s my first question. Okay, and what is your next? If you can ask all your questions in one shot and then we can. Okay, okay, okay. So my second question is going forward, what type of capex are they looking to do with their cash? Like some sort of understanding that going forward, what is your capex plans going forward?
Manish Gupta
Thanks. So let me first take the first part of the question. See, India is a. Is a complex market and in a way there are price points, different price points for every product based on customer or consumers. So every product, be it indomythosin or dydrogesterone or any other molecule, there will be products available at higher price and there will be products available at lower price and there will be in fact products available at Virtually no price, which is generics. So it finally boils down to the quality of doctors and quality of patients you cater to.
Okay, so every company has its own strategy on where they target themselves and that’s how pricing decisions are taken and you create your own niche in the doctor’s chamber. Jaisealpal is focused on specialist specialists and therefore we are comparatively mid to higher price brand in the doctor’s chamber and all our sales happen to prescriptions. So when a doctor prescribes our brand generally especially in the areas we are in, they are less likely to be substituted. So it’s a matter of strategy on where you want to price your product and generally you tend to have a consistent strategy.
So you can’t have one product high price and one product low price. Generally that doesn’t work. JPL or pricing will be generally on the higher bracket. The second question was around capex. If you notice we follow an asset light model. We are purely in India and therefore all our products for India are using CMOs which are plenty in this country. We do not have really any capex plan. Our only investment is in computer infrastructure, the laptops and all that we have in offices and in some field force locations. Investment or real use of cash is going to be only for acquisitions which could be for brand acquisition and or business acquisition if we do not find any good targets in the next couple of years.
Of course this cash belongs to the shareholder and we would be rather returning this cash in an appropriate form to the shareholders rather than doing anything not in line with our strategy. Really great about your capital allocation strategy. Thank you.
operator
Thank you. Participants who wish to ask a question may press star N1. The next question is from the line of Hardik up and Investor. Please go ahead.
Hardik Upadhyay
I have two questions. First is whether the company is planning to enter any regulatory market and other question is what is the current capacity utilization?
Sachin Jain
So clearly we are a pure domestic market focused organization. We do not have any strategic intent to enter into either regulated or unregulated markets outside India. So it doesn’t really matter. We have no intent to get into anything outside India. That is response to question one Coming to your second question which was pertaining to capacity utilization. Clearly again as we follow an asset like model, we do not have any own manufacturing. That is also one of the reason of staying focused in India. So capacity is not a matter of utilization for us. On the other hand, really our valuable resource is the medical rep.
And that’s where I would say we are currently operating at about 2/3 of the Potential of the medical rep. So our PCPM of a medical rep is about 2 lakhs. As I mentioned in one of the previous questions, we clearly see a headroom to grow by 50%.
Hardik Upadhyay
Okay, thank you.
Sachin Jain
Thank you.
operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question is from the line of Amranya Shah, an individual investor. Please go ahead.
Amayra Shah
Hello. Yes ma’am. Please go ahead. Yeah. So I had two questions. So first, in the present scenario, how is the company strategically positioning itself to. Maintain its market share? And second question is what? Like if is there any steps being taken by the company to mitigate the current pricing pressure?
Manish Gupta
I mean pricing pressure, Sir Amit Shakir, we don’t see any pricing challenges at all in India because that pricing pressure that you’re referring to or competitive intensity that you’re referring to is more outside India. Which are unbranded generic markets or generic generic markets. India is a branded generic market. When there are different price points, companies have their own strategy in terms of their presence in Dr. Chamber and they have the price point accordingly. So there are low priced companies, there are mid priced companies and they are high priced companies.
We fall somewhere in between the second and the third round in the sense between mid priced to high priced. Our prices generally tend to go up. We don’t reduce our prices. Having said that, our value proposition to the doctor is around science and that’s an area we keep working on. How do we keep adding to the science around both the molecule and also around the doctor practice. Because doctor needs to be updated on latest trends. That’s a knowledge thing that we keep providing to doctors and of course bringing in certain unique products which are useful for the patient and thereby the doctor practice.
So that’s fundamentally a business policy. That’s the way we conduct business. Pricing does not change for us.
Amayra Shah
Okay. Okay. Thank you.
Manish Gupta
Thank you, Amani.
operator
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. The next question is from the line of Jatin, an individual investor. Please go ahead.
Jatin
Hi. Am I audible? Yes. Yeah. Good evening. Manish, a couple of questions. One you mentioned, Q4 is perhaps a leaner quarter due to stockist pharmacy stocking behavior. But other than that, in Q4, was it up to your expectations? I mean of course we had year on year growth. But by and large, I mean it would be good to hear your views on how Q4 was. And if you know there is some stocking issues in Q4 seasonality, does it translate into an increased sales in Q1 historically, that is question one. And second, in terms of inorganic acquisitions you mentioned reasonably priced acquisitions are a bit higher than this market.
So from that angle, how do you see this resilient thing being called off in terms of impacting the growth plans of Jacksonville? Thank you.
Manish Gupta
Yeah, thanks Japan. So coming to your first question. Yes, Q4 is slightly milder and Q1 is to that extent slightly better. So that is certainly the case. Q3 and Q2 and Q3 are best in terms of seasonality. So you’ll see typically Q1, Q2, Q3 are better for the domestic pharma industry versus Q4 Q1 on account of, I mean stock is not buying in March and they end up picking larger volumes in April and Q2 Q3 because of seasonality of some product because these, those are the periods when people tend to become unwell more than regularly.
U4 being the weakest. So that’s the trend and this is common for most companies. If you look at the historical Jackson Pal portfolio, given that we are more grimy and a bit of ortho guy, there is no seasonality. Ortho, there is some seasonality, especially for winters. Yash Pharma is of course a very the business that we acquired from Yash Pharma is of course a little different animal in that sense because Yashwarma is Dharma and PTR. PTR has stronger demand in Q3 and Q4 while Derma has stronger demand in Q1 and Q2. So Dharma is summer oriented because that’s when you have fungal infections and whatnot, when it is too hot and PDA is winter oriented because that’s when again cup hold and all the kids get sick anyway.
So now our business is a little more curious miss as compared to what it was prior to Yeshwa Martin sa It was a small transaction. It would have been useful certainly. But nothing that derails our strategy and or business.
Jatin
Okay, understood Manish. Thank you. And all the best for FY26.
Manish Gupta
Thank you Jetta.
operator
Thank you. A reminder to all participants that you press star N1 to ask a question. The next question is from the line of Majid Ahmed from Trade Walk Research. Please go ahead.
Majid Ahamed
Hello from Audible, Sir. Yes, Matip. Yes sir. My last question that is for doing modeling or understanding business even better like what type of KPIs can we track going for the company?
Manish Gupta
Ours is a very simple business because we don’t have too many moving parts in our business. So it’s all about pleasing growth. And I think There was one question I think. I think Jatin, you had asked and I missed out in that and that will partly answer your question also. So Jatin, you had asked whether we are satisfied with the growth objectives that we delivered in Q4 or even maybe full year. So as I mentioned in my opening remarks, that is there’s only one area where I feel a bit disappointed in my last year’s journey which is organic growth.
If you take our last three years of growth, it is only about 7 to 8% year on year. Even this year the organic growth was 8%. That is something certainly below our expectation. Are we growing? Answer is yes. Are we growing as much as we would like to? The answer is no. And it’s not for want of time. But if something or other keeps happening and that has kind of reduced our growth rate, we hope to be back on faster growth from this year onwards. So Majid, now partly responding to your question in that for us, for you to model us out, it’s all about growth, okay.
Because rest is a flow through. We are very confident a difference in our P and L would be whether we are able to grow 8%, 12% or 15%. That will dramatically or reasonably alter our profitability profile. Because most of our costs are fixed costs rather than cost. We are about a 65% margin gross margin business. But between gross margin to EBITDA I would say 95% of our costs are fixed costs. So if we grow at 15%, if you are able to demonstrate that growth rate, certainly that’s our expirational target. Internally gross margins will improve by 100bps every year.
And with operating cost not going in line with that, our operating margins will keep expanding. So therefore the easiest way to track a fundamental KPI that you should track is growth moment. We are in double digit, I think or little more than double digit 15%. Our operational profit will grow 25%. Curse. Without. Without any doubt.
Majid Ahamed
The thing you’re saying is that there is more fixed cost and whatever additional revenue coming in that will directly flow into the bottom.
Manish Gupta
Because other than incentives really none of our fixed cost increase.
Majid Ahamed
Thank you.
Manish Gupta
Thank you Madhya.
operator
Thank you. Participant who wish to ask a question may press star and one. The next question. Can we now take last two questions before we conclude? Yes sir. There are only two questions remaining. Okay. Yeah. The next question is in the line of Provencia. Please go ahead.
Praval Shah
Hello. Am I audible? Yes, please. Great set of results. Also wonderful insights onto the working capital management. But an observation on that. So since we have more cash and that Cash doesn’t find its way in building more plants and machinery. Just a question if you can help us understand that. Will we be amping up our R and D investments in order to go after truly differentiated maybe first profile products and build that muscle slowly and maybe in therapies of our choice in gynecology or maybe even in dermatology now? Or are we steadfast in terms of acquiring other companies the inorganic way and distributing the remainder back to the shareholders? So if you could just give a qualitative understanding of allocation of capital.
Manish Gupta
Basically in India there’s nothing called first to file or anything fundamentally. So India is a either a patent or a patent market, right? So the moment the patent expires, then There will be 10 and 100 companies on day one and you’ll soon see it happening when the reserves or the GLP1 inhibitors come in. So very little to differentiate or constrain supplies in India because moment patent is off, there is no other protection excepting building your own brands. So. And also investing too much in R D in India because unless you develop absolutely new patentable products otherwise this is not a not something any been able to do for India or otherwise.
So there’s not really much you can spend on R and D as far as India business is concerned. You do spend on R&D’s in developing concepts, you do spend in terms of establishing efficacies and whatnot. But it is not really a new molecule development that you spend for India. So having said that, therefore, come what may, a real capex, if any for us can be only in acquisitions. For us, acquisition is a matter of both opportunity and strategy. But disciplined execution is very, very critical. Because going wrong on price is the easiest you can do.
Especially when you are sitting on surplus cash. So to that extent I must admit that our board is extremely disciplined and focused. So even if I try, there is no way my board will allow me to splurge money in stupid acquisitions or overpriced acquisition. We are also very clear that if we do not find right targets, this money eventually belongs to shareholders. So unless we can find something which adds value to our shareholders, it is better to return it rather than doing any acquisition for credit. Thank you.
Praval Shah
Thank you for that. Thank you. Thank you so much.
Manish Gupta
Thanks.
operator
Thank you. We’ll take our last question. It’s from the line of Aditya Chera from Incred Asset Management. Please go ahead.
Aditya Chheda
Hi, thank you for the follow up. The question was on gross margin improvement that we saw this year. Can you attribute the factors behind that was it just product mix? No.
Manish Gupta
So it’s always a mix of many things. One is product mix. We of course also rationalize, keep reducing, I mean better procurement. As I mentioned, we pay on time and therefore we are able to extract better value from our vendors. We of course do take price increases wherever we can. So it’s a mix of all total fixed, some cost reduction and some pricing.
Aditya Chheda
Got it. And final clarification on the outlook side where we are referring to operating margins, that refers to the post ESOP number or pre ESOP number on the slide.
Manish Gupta
Actually that refers to pre SOP numbers automatically will improve because ESOP cost is continuously going down. And that’s the way that insurance model, Black Scholes model work. So you take the largest in year one and thereafter it keeps going down. So that’s why all our guidance is always on pre sock.
Aditya Chheda
Thank you sir. All the best.
Manish Gupta
Thank you.
operator
Thank you ladies and gentlemen. That was the last question for today’s conference call. I now hand the conference over to the management for closing comments.
Manish Gupta
Yes. Thank you all the participants for your valuable questions as well as engagement today. We appreciate your interest in Jackson Park. Should you have any further questions or inquiries or additional information you may require, please do not hesitate to contact our investor relations team at Goindia Advisors. We remain committed to engaging with all of you, fostering transparent communication and we also continue advancing our objectives of creating value for all our stakeholders. Thank you once again and wishing you a great day ahead. Thank you.
operator
Thank you on behalf of Go India Advisors. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.