JB Chemicals & Pharmaceuticals Limited (NSE: JBCHEPHARM) Q3 2025 Earnings Call dated Feb. 05, 2025
Corporate Participants:
Jason D’souza — Executive Vice-President
Nikhil Chopra — Chief Executive Officer and Whole Time Director
Narayan Saraf — Chief Financial Officer
Kunal Khanna — President, Operations
Analysts:
Rashmmi Shetty — Analyst
Tauseef — Analyst
Abdulkader Puranwala — Analyst
Girish Bakhru — Analyst
Sumit Gupta — Analyst
Umesh Laddha — Analyst
Amir Tarke — Analyst
Rahul Jeewani — Analyst
Alankar Garude — Analyst
Harith Ahamed — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to JB Pharma’s Q3 FY ’25 Earnings Conference Call as on the 5th of February 2025.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you tqo ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this call is being recorded.
I now hand the conference over to Mr. Jason D’souza, Executive Vice-President at JB Pharma. Thank you, and over to you.
Jason D’souza — Executive Vice-President
Thank you, moderator. Welcome to the earnings call of JB Pharma. We have with us today Nikhil Chopra, CEO and Whole-Time Director; Kunal Khanna, President Operation; and Narayan Saraf, the CFO at JB Chemicals and Pharmaceuticals Limited.
Before we begin, I would like to state that some of the statements in today’s discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in the Q3 FY ’25 results presentation that has been sent to you earlier.
I would like to hand the floor to Mr. Nikhil Chopra to begin the proceedings of the call and for his opening remarks.
Nikhil Chopra — Chief Executive Officer and Whole Time Director
Thank you, Jason, and a very warm welcome to all of you. Thank you all for being with us today. I will commence with my thoughts on our quarter three performance.
I would like to start by saying that JB continues to deliver strong profitable growth. The quarter three FY ’25 performance is a reflection of this statement. While top-line has grown by 14% to revenue of INR963 crores, operating EBITDA has grown at 15% to INR270 crores and net profit has surged to INR162 crores, growing at 22%. This performance has been enabled by our mix of businesses and markets, specifically our focus on India branded formulations, CDMO and some selected international markets.
We have maintained the run-rate of quarterly performance with revenue of INR963 crores. This was due to strong momentum in domestic business and improved traction for our CDMO businesses. Whereas we held on our gross margin at 67% in the quarter, our operating EBITDA saw improvement in margins to 28.1%. Over the past couple of years, we have expanded the basket of our key brands.
We are consistently enhancing share of our chronic within the mix and rank far ahead of IPM in category growth for our chronic at 24% versus 11% of IPM as per MAT CAGR December 2020 to December 2024. I will share some perspectives and thoughts on our domestic business. Our domestic business grew by 22% to INR566 crores year-on-year. The business accounted for majority revenue during nine months at 60% versus 55% in nine months for FY ’24. So today, domestic business contributes 60% to the overall revenue for JB.
We are one of the fastest-growing companies in the market and have delivered year-on-year 12% growth versus IPM growth of 8%. Each of our major brands, namely, Silaka D, Nicardia, have gained ranks as per IQA December 2024. Excluding ophthalmology portfolio, the domestic business grew at 12% for quarter three FY ’25. Excluding ophthalmology portfolio, the volume growth for domestic business was 7% for quarter three ’25 and 6% for Nine-Month FY ’25. The ophthalmology portfolio sales is progressingly well depicting consistent growth every quarter.
We now have a dedicated field force of 120 people deployed to promote the brands that we have in-licensed. It is interesting to note that 65% of our overall domestic business is now a part of progressive portfolio, which is growing faster than IPM. Around four years back, the progressive portfolio was only 35% to the overall domestic business. So 35% has become 65%, which is progressive portfolio that we are placed in, which is growing better than the Indian partner market. This is — this is a marked change and will enable the domestic business to grow consistently over the next few years.
In December 2020, we had only six brands greater than INR25 crores in the revenue. I’m glad to share that in December ’24, we have 25 brands, which have a revenue more than INR25 crores, out of which fire in the top 150 in the country.
Moving on to our international operations now. During quarter three, we recruited 4% in improvement in growth to INR397 crores with our CMO business leading the segment with 33% growth to INR of INR118 crores. The underlying growth momentum remains strong and is backed-up by strong order position. International formulations were impacted due to revenues decline in US, Russia, whereas South Africa and generic business showed growth. In terms of the outlook, although we have emphasis on growth, there is a strong focus on profitable growth. JV is now well-positioned to deliver continued growth.
The strategy and the levers are well-defined and we have a strong team that will execute the plan that we have put in-place. Our India business continues to drive market-beating growth led by chronic business and progressive portfolio within the acute segment. Our export business continues to — continues to be steady with sequential improvement witnessed in our CDMO businesses. Advancement of various new projects in our CDMO business will — will flow-through into both numbers in near-to-medium term. And we have a good pipeline of future product commercialization opportunities in international business, which will deliver sustainable value-creation for the company.
I would like — I would now like to conclude my remarks and request our CFO, Mr. Narayan to share his views. And over to you, Naryaan.
Narayan Saraf — Chief Financial Officer
Thank you, Nikhil, and very good afternoon to everyone. Welcome to our earnings call. Let me walk you through the key financial highlights for quarter three FY ’25.
For the quarter, we reported revenue of INR963 crores, reflecting a year-over-year increase of 14%. The revenue mix between domestic and international markets was 60% and 40% respectively. Our domestic business contributed INR566 crores, showing a growth of 22% year-on-year. Excluding the ophthalmology portfolio, domestic revenue grew by 12% compared to the same-period last year. According to IQVIA, December ’24 data within the IPM, the company posted a growth of 12%, surpassing the overall IPM growth rate of 8%.
Meanwhile, our international business delivered modest — modest growth of 4% year-on-year with revenues reaching INR397 crores. The gross profit margin for Q3 stood at 67.1 percentage as compared to 67.6 percentage in Q3 FY ’24. Excluding the ophthalmology portfolio, the gross margins improved in Q3 by 160 basis-points as well as at YTD level. This was driven by our cost optimization initiatives, a favorable product mix and pricing growth.
Operating EBITDA, excluding ESOP expenses was INR270 crores, marking a 15% year-on-year increase. The operating margin for quarter three FY ’25 improved to 28.1 percentage.
On the expense front, other expenditure as a percentage to sales improved to 22.7 percentage versus 23.2 percentage in Q3 FY ’24. We continue to be agile in driving efficiency in our processes and spends, resulting in better management of costs. MTM ForEx impact of INR4 crores was recorded in-quarter three, primarily due to depreciation in rural currency. Finance costs saw a significant reduction from INR12 crores in-quarter three FY ’24 to INR3 crores, primarily due to the reduction in the gross debt. Depreciation remained the same as the previous quarter at INR42 crores.
As of 30th December ’24, our gross debt stood at INR54 crores and net cash was at INR516 crores. We aim to deliver operating margins between 26% and 28% despite inflationary pressures and external market uncertainty. We remain confident about the positive outlook for the business and our ability to deliver value to our stakeholders.
With that, I conclude my opening remarks. I would now like to request the moderator to open the floor for the question-and-answer session. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press the RN1 on the telephone. If you wish to remove yourself from the question queue, you may press R&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 you.
We’ll take our first question from the line of Rashmmi Shetty from Dolat Capital. Please go-ahead.
Rashmmi Shetty
Yeah, thanks for the opportunity. Just on the ESOP side, we have already done around INR4142 crores in nine months. How much are we guiding for quarter-four or the entire FY ’25? And what will be this number in FY ’26 and FY ’27?
Narayan Saraf
Yeah. Thank you,. So in-quarter four, we expect another ESOP cost of INR16 crores. So at the full-year level, we are looking at around INR56 crores kind of ESOP cost for FY ’25. In FY ’26, we are looking at around INR40 crores and in FY ’27, it would be around INR24 crores. INR24 crores.
Rashmmi Shetty
Okay. Just on the export side, you know, earlier we had given that exports — international formulation will be able to do double-digit growth because second-half would be better. But I understand that you faced some challenges in Russia because of the currency volatility. What was the Russia constant-currency growth and what challenges have you faced in the US business.
Narayan Saraf
So yeah, so Russia, we saw challenges in the growth on two sides. One is currency and the second would be a muted season in the month of November and December. And if I look at the constant growth, it is around minus 5% versus minus 8%.
Rashmmi Shetty
Okay. And the muted season, you mean to say the flu season, right?
Narayan Saraf
Yeah.
Kunal Khanna
So basically Russia for us cough and coal season is, you know, spans out somewhere around November to Jan, Feb. November, December were slightly muted. Having said that, the first-six months of Russia, we have done phenomenally well, both in terms of revenue and profitability. So it’s just a minor seasonal impact and some impact of currency volatility, nothing — nothing apart from that structurally changes for us.
Rashmmi Shetty
Okay. And related to the US business?
Kunal Khanna
US, you know, we are inching back. If we look at the current order book situation also, we remain fairly confident of closing the year-on a high. And right now, that’s what we can comment on. The first-six months were slightly soft, but otherwise things will be back on-track.
Rashmmi Shetty
Okay. And so any guidance change for the export business or you still think that we would be able to do double-digit assuming quarter-four to be strong?
Kunal Khanna
Surely quarter-four is going to be strong and we will witness a double-digit growth in-quarter four.We are extremely confident of that. And from a mid and long-term perspective also, we’ll be closer to-high single-digit and double-digit growth as we said.
Rashmmi Shetty
Understood. And just one last question on the domestic piece. Excluding the ophthal portfolio, we are growing in the range of 12%. Now the inorganic portfolio has also becoming a sizable portion and your progressive portfolio has also, you know has increased, which is doing pretty well. So organic, we are doing around 11% to 12% sort of growth, but with this portfolio adding up for next two years, do we think that we would come back to around 13% 14% sort of growth in the entire domestic blended portfolio?
Nikhil Chopra
Yeah. So Rashmi, Nikhil Chopra here. So what I shared earlier also in my commentary, our organic growth is 12%, backed-up by volume growth of 6% to 7%. So you should see us growing at mid-teens in India business, backed-up by strong volume growth.
Rashmmi Shetty
Okay. You are talking about the entire blended portfolio?
Nikhil Chopra
Because quarter-four on quarter-four onwards, the base of ophthalmology will also come in.
Rashmmi Shetty
Will also come in. Okay. Thank you so much.
Operator
Thank you. Before we take the next question, we’d like to remind participants to press R&1 to ask a question. Next question is from the line of Tauseef [Phonetic] from BNP Paribas Exane Research. Please go-ahead.
Tauseef
Thanks for the opportunity and congrats on a good set of numbers. My first question on your portfolio. While you’ve already shared the revenue run-rate for this business, can you share some more insight like what has been the volume growth and what are the strategies you have implemented post-integration?
Kunal Khanna
Yeah. If you really look at our optal portfolio and a reflection of quarter three also, the market has grown at close to 9%, whereas our business and portfolio is showing a strong growth of 28% plus. It’s largely being driven by our focus on creating more demand for the set of products we have. During the integration process also, we maintained our focus was on expanding the coverage of ophthalmologis as a result of which we had added more reps on-the-ground also, close to 65 to 70 members, that ramp-up happened. We had close to 105 to 110 field members working on-the-ground.
The ophthalmologists coverage increased from 7,000 to currently what we are training at 14,000 to 15,000, plus what we saw over the last two months was addition of a new product as well, which over the next six to eight months, you will see that every quarter we’ll be adding one or two SKUs. So our focus on creating some secondary demand-generation where we have seen almost a 15% to 20% increase uptake in terms of prescription and the units sold-in the secondary market and this being a very, very strong platform for new launches also happening is giving us good results. And we remain extremely confident about how this business is going to shape up for us in the mid and long-term.
Tauseef
So I guess it’s fair to assume large part of growth has been volume-driven.
Kunal Khanna
Oh yeah. It’s a reflection of not only our optal, but even our overall India business and even optal is absolutely volume-driven. See, because beyond a certain point, there is no real opportunity for us to take price growth beyond 7% to 8%, right? So it’s volume-driven.
Tauseef
Okay. My second question is, sir, can you share the revenue contribution from your top flagship products, excluding the line extension launch we have done in recent years compared to FY ’20?
Kunal Khanna
Could you repeat that, sorry?
Tauseef
Can you share the revenue contribution from top four to five flagship products currently?
Kunal Khanna
From four to five flagship products?
Tauseef
In the domestic market?
Kunal Khanna
In the domestic markets, our five flagship products are currently contributing close to 60% 65% of our overall India business.
Tauseef
Okay, compared to FY ’20, it would be lower?
Kunal Khanna
Yeah, absolutely. In FY ’20, the top-five to six products were contributing more than 75% and this is exactly the result of new launches, some of the acquisitions which we have made. And the fact that Nikhil mentioned that in his commentary as well that in FY ’20, there were only close to six brands, which were more than INR25 crores, but now we have a sizable basket and a good progressive portfolio, which is more than INR25 crores and over the next two to three years, there’ll be set of 10 to 12 brands, which will be inching closer towards INR50 crores run-rate.
Tauseef
And just last question on CMO business. Do we expect this current quarter run-rate to continue for the 4th-quarter?
Nikhil Chopra
So this is what I think if you recollect what we have been commenting on CDMO business, first-half of the year was not great. Some orders we had to — we had to shift in-quarter three. So 32% growth is not the growth that we have been — we have been — we have been projecting, but quarter-four also will be good as we have a strong order book and you should see this business growing at mid-teens short-to-medium term.
Tauseef
Thanks.
Nikhil Chopra
Yeah.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press on your phone. The next question is from the line of Abdulkader Puranwala from ICICI Securities. Please go-ahead.
Abdulkader Puranwala
Yeah, hi, sir. Thank you for the opportunity. So first on the CDMO business. So last quarter, we talked about some kind of a spillover to happen in Q3. So is that completely happened or Q4 also you will see some benefit of that.
Nikhil Chopra
So Q3 just completely happened and Q4 will be on its own. But we earlier also had commented that you will see good traction in Q3 and Q4. So Q4, we have a good order book. And just to also share with you on the world of CDMO. If you see next horizon of 18 to 24 months, there is a good visibility of four to five big global projects which are kicking-in. And all the development work is on for all these projects, maybe newer formulations, newer geographies that we have been speaking. And at the right time, we’ll be able to share more light on them. So we are very bullish on this entire world of CDMO, which we have been talking in our commentary in the past.
Abdulkader Puranwala
Understood. And sir, secondly on the India business, so I don’t know if you have to classify your India portfolio into three buckets. One is your legacy portfolio. And second, whatever you’ve acquired between ’22 and ’24 excluding the brands and last is, which is you’ve given a segregation of that. But within your legacy set of brands and the ones which you’ve acquired,, if you could provide some color on how the growth has been in the first-nine months would be very helpful. Thank you.
Nikhil Chopra
So what I — what I give the commentary, today, 65% of the portfolio is growing better than IPM, is progressive in nature. So whether it is within the cardiology space, whether it is hypertension, heart failure, lipids, our pediatric portfolio, probiotic portfolio, has shown a good growth. This year, fortunately, we had a very good season. So that portfolio continues to grow at around close to 12% plus, which is much 400 bps higher than the Indian pharma market growth. And out of that portfolio, what was shared earlier that there are — there are around 25 brands which are more than INR25 crores.
So that shows overall the momentum that we have built-up over last four years in terms of whether you talk about four, five big brands or what we have acquired or what was shared — what was shared also about the ophthalmology portfolio backed by solid volume growth, which we have seen over last six months because fundamentally we have worked in terms of improving our coverage, whether it is in the world of probiotics, whether it is in the world of ophthalmology, whether what we are doing with the cardiologist and physician for our Brazil and brands, these are all acquired and equally for our organic big brand is. So 65% of portfolio is growing better than the Indian pharma market, which overall tells about the strength, which we have built over a period of time.
Abdulkader Puranwala
Got it, sir. That’s helpful. Just a final one on a bookkeeping question. Sir, for this quarter because of currency headwinds in Russia, have you booked any kind of ForEx loss or forex claim if at all-in other geographies?
Narayan Saraf
So like I mentioned, the majority of the MTM loss of INR4 crores that we hit in this quarter came because of the depreciation of the ruble.
Abdulkader Puranwala
Okay, INR4 crore and that would be in the other expenses?
Narayan Saraf
Yes. And it’s a non-cash charge. So it will also — then to that extent our EBITDA would have been better by INR4 crores and cash would have been better by INR4 crores.
Abdulkader Puranwala
Got it, sir. Thank you.
Operator
Thank you. We’ll take our next question from the line of Girish Bakhru from OrbiMed. Please go-ahead.
Girish Bakhru
Yeah, hi. Thanks for taking my question. Nikhil, sir, just kind of a couple of questions on. I mean, growth has been very impressive. And if I look at-the-market, I mean plain is still growing much faster if you compare with the other molecules like amnrodepine and we know this is partly because you keep saying it has a very strong green and protective effect. And where do you see this market growth slowing down for you in and combinations as well?
Nikhil Chopra
Where do I see market growth slowing down?
Girish Bakhru
It’s reaching a maturation growth number for this franchise.
Nikhil Chopra
So we see — we see huge opportunities in the world of what we are trying to do with the work-in the world of hypertension, be it, be it Nicardia. Basically, what we are trying to do is not only target to talk about in doctor’s clinic for the world of hypertension, but also we are trying to talk — trying to look at what we can do more in the world of hypertension with comorbidities that is helping us in terms of the enrichment of the discussion that our medical are having with the medical fraternity and we have got a full portfolio, which is — which is what we spoke earlier also in your question that being a renal protective drug playing, combination of gives us protection from angina. Combination of with gives us protection from heart failure. Combination of with result gives us protection from — from high lipid levels. Combination of with gives us protection from metabolic.
So we have a whole range of portfolio and equally for uncontrolled hypotential, resistant hypotential, we have Nicardia, XL. So whole gamut of portfolio we have bought and this is not only that we are going and talking in the clinic and generating value, but overall, the objective is how to reduce a burden of disease for the patients who are suffering from hypertension and core morbidities. So that is a task that we have taken. That is why you see the entire differential that we as a company bring on the table as compared to other companies.
Girish Bakhru
That’s helpful. So if I elaborate on this, because say plain is better than amylodypine. So in all the combinations, combinations should ideally surpass combinations. Is that the right inference to draw? Like if I look at the started market, that’s probably about INR1,000 crore market. Should TE become INR1,000 crore product?
Kunal Khanna
Girish, that is certainly the endeavor. Just to give you some numbers in terms of when you look at it from an anti-hypertensive lens or when you look at it from a diabetic hypertensive lens, right? In anti-hypertension of 200 million-plus patients, one out of three is suffering from some kind of renal complication. And that is the responsibility we have taken in terms of how do we ensure the prescribing community is ensuring efficacy for renal complications when they are prescribing anti-hypertensive drug. Even if when you look at it from a lens of diabetic hypertension, one out of two diabetic patients are already suffering from severe hypertension, which means they need a combination of a plus another ARB, which would be required.
So for us, the market is big. We are not kind of only looking at amlodipin as the market to be substituted. We are looking at how we can manage the entire anti-hypertensive plus diabetic you know patients in the country. But that is the endeavor. We — we see a huge, huge opportunity in the foreseeable future of substituting combinations is just one part of the overall journey.
Girish Bakhru
So that — so in a complicated hypertension, let’s say, 50% of those cases, which you’re saying is T first-line of treatment now?
Kunal Khanna
In complicated hypertension, if that is diabetic hypertension as per RSSDI guidelines, is the first-line of treatment. Yeah, it’s CCB plus ARB and within CCB, it’s clearly mentioned is the paper molecule.
Girish Bakhru
That’s very helpful. And if I can just related question ask you our last, I think you said 600 MRs were behind. How many there are now? And how does that number look vis-a-vis Telma and other brands?
Kunal Khanna
We would not want to compare or comment on how does that number look with the competition. What we mentioned in terms of during the last call-in terms of reps detailing Silicar and combination that number hasn’t changed.
Girish Bakhru
Okay, okay. And just last one, I mean, you clearly have a good pipeline, 25 brands over INR25 crores sales, but just from the list, which are the real probable ones which can surpass INR100 crores besides these top six brands?
Kunal Khanna
See, for us, the progressive portfolio, we are taking a big bet on all the brands which are upwards of INR25 crores. The real growth progress story, we are very, very confident of our Metroagel ER, Randraft, BISPR XT, as another pro biotic. So we have a set of eight to 10 products, which over the next 2.5 years to three years will be closer to 50 and clearly from a mid and long-term perspective, we’ll inch towards INR100 crores as well. So some of these names, which we mentioned in terms of ER, Randraft, Laxolite, these are clearly, you know, progressive above which we are extremely bullish.
Girish Bakhru
Okay. Thank you. Thank you very much. Very helpful.
Operator
Thank you. Before we take the next question, we’d like to remind participants to press RN1 to ask a question. Next question is from the line of Sumit Gupta from Centrum. Please go-ahead.
Sumit Gupta
Hi, thanks for the opportunity. I’m audible?
Operator
Sumit, can you use your handset mode, please?
Sumit Gupta
Hello.
Operator
Yes, please go-ahead.
Sumit Gupta
Am I audible?
Operator
Yes, please go-ahead.
Sumit Gupta
Yes, sir. Thank you for the opportunity. Sir, first question is on the gross margin. So how do you see the gross margin trajectory going-forward over the next — in Q4 and over the next two to three years.
Narayan Saraf
So our gross margins continue to be in the range of 66% to 67 percentage at a yearly level and the — and we see some — we see some challenges on EPI and ForEx impact, which we — right now, we don’t see any impact in the near-future. But as we move on, we will continuously monitor them. And in the short and in the medium and long-term, we’ll find actions to mitigate those challenges. But however, we continue to hold that it will be in the range of 66% to 67% in near-future. Kunal, do you want to add…
Kunal Khanna
Yeah so we are very confident of the range which we are holding right now as things stand despite the dollar-rupee situation, we are adequately covered with respect to the stock. So for sure, in Q4, we should be pretty much close to the margins which you currently see. On the long-term situation, despite the volatility, I think over the last three years also, you have seen that we have always worked around efficiency measures to improve our gross margin profile. Those efforts will continue to drive from a mid and long-term perspective and we’ll be watchful of the situation.
Sumit Gupta
Okay. So just want to hypothetically, if you — like if you plan to expand the gross margins like 58% or more than that. So what will be the idle scenario in that case?
Kunal Khanna
Could you repeat the question, please?
Sumit Gupta
Like if the gross margin is, let’s say, move to 68%, 69% kind of level. So what would be the like idle scenario in terms of pricing or volume or it’s the competition. So I just want to understand on that as such.
Kunal Khanna
See, our endeavor has always been if you really look at how we have shaped up the business, the more profitable parts of our business, which is India and CDMO have always taken priority, which helps us in driving better product mix apart from the efficiencies which we continue to drive and which has been a major part of how you have seen gross margins improve over the last two to three years. Currently, India and CDMO business is already inching up towards closer to 70%. We have put an aspiration of over the next two to three years how both these segments will contribute 75% to 80%. If you know, we are very confident that these segments will continue to drive growth. And if the — in the external market in terms of supplies and API prices remain in the steady-state and there is no volatile situation. We would see closer to 125 bps to 150 bps being added on our margin profile with these two segments always improving. So that’s — that’s what we can comment at this stage.
Sumit Gupta
Understood, sir. And second question, sir, on the. So what are the sales for 3rd-quarter and overall nine months?
Kunal Khanna
So overall, we are already trending at close to 130,000 units per month, which almost five to six months back was close to 95,000 to 100,000 units. So as we mentioned last-time also, every quarter-on-quarter sequentially, we should be adding close to 15,000 to 20,000 units per month and the visibility which we have and the trends which we see are very, very positive. The competition of low-cost generics has almost phased-out and now it’s become a game of the top four to five players only. We have consolidated our position over the last six to eight months as well. We continue to be very confident about this segment in which we have invested. The volume growth will be closer to double-digit and we will progress similarly. So right now, even on the — what you see on IQVIA, our trending is closer to INR70 crores and we will — we expect this particular brand to drive almost mid-teens growth for us going-forward.
Sumit Gupta
Okay. So for this quarter, it was around INR70 crores, sales.
Kunal Khanna
That is YTD MAT figure is what we are saying. Yeah.
Sumit Gupta
Understood, sir. And sir, lastly on the ESOP like apologies if I just repeat. So what was the ESOP excharge expected for FY ’25 and for the next two to three years.
Narayan Saraf
So let me just repeat it. So FY ’25, we are expecting ESOP charge of INR56 crores. In FY ’26, it could be around INR40. FY ’27, it would be around INR24 crores.
Sumit Gupta
Okay, sir. Thank you.
Operator
Thank you. We’ll take our next question from the line of Umesh Ladda from Nirmal Bang. Please go-ahead.
Umesh Laddha
Hello, am I audible?
Operator
Please go-ahead.
Umesh Laddha
Yeah. Thank you for the opportunity. Sir, first thing, I wanted to reconfirm that we are having no plans to launch sematide and if we are not having any plans to launch, then the launch of will affect our diabetics portfolio?
Nikhil Chopra
Right now very, very, very early to say that whether we’ll get into market or not, but our presence in diabetic portfolio is almost not there. So what it does not in fact, it doesn’t impact us.
Umesh Laddha
Okay, sir. Thank you so much. And also one more thing is that are we planning for some inorganic growth in FY ’26.
Nikhil Chopra
We continue to evaluate assets, that is that a part of our part of our plan. As a team, we have a team of people who continue to evaluate assets. So as and when anything which comes across which is suitable, synergistic, in-line with the category where we would like to acquire, good payback period, quality asset, we’ll be more than happy to acquire.
Umesh Laddha
Okay, sir, that’s it from my side. Thank you.
Operator
Thank you. We’ll take our next question from the line of Amir Tarke [Phonetic] from JM Financial. Please go-ahead.
Amir Tarke
Yeah. Thank you for taking my question. Most of my questions are answered. Just one more. To set something on the M&A as well. But if we see, we have added three new therapies for pediatric, optal and pediatric over the last two to three years. Going ahead, your focus would be on deepening our presence in these three therapies or you would like to add few more therapies. Would we be opportunistic in adding new therapies?
Nikhil Chopra
Given a choice, we would like to deepen our presence in the existing therapies. Not that — not that we will ignore anything new which is coming in coming in from newer space. We’ll be more than happy to get. All will depend upon the quality of asset. We want to acquire something which is long-lasting, may not be growing as-is, but in a growing market, if tomorrow we have the capability to grow it better than the market like what we have done in the world of ophthalmology or pediatrics or co-biotics, that is what you have seen, that is our endeavor.
Amir Tarke
Sure. And the second question I have is related to this only. Like we have a very good presence in cardiology now. We are almost present across hypertension to heart related issues, everything cardiac. So this therapy, you can leverage your presence very well while entering into diabetologics as well, because many of these cardiologists also prescribe lot of diabetes prescription as well. So why are we not thinking of going into or launching organically by the diabetes-related brands?
Nikhil Chopra
We tried. We tried — we attended launching,,, not easy, by the way, that the competition is intense. And what we have learned over a period of time, right now DAPAG frozen, we are doing around, INR15 crore INR15 crores annually. What we have learned over a period of time, let us stick to our domain more in the area of cardiology and within cardiology, we have segments like hypertension, heart failure, lipids, we may get into the world of, blood thinners. I think that suits us much better as compared to better getting into the world of metabolics because not easy, not easy the way we have seen. That is where we are.
Amir Tarke
So is it possible like a GLP one could be an opportunity to enter because initially the competition would be low which could give you an headway to create a branch?
Kunal Khanna
It’s not fair to assume that competition will be low in GLP one. Whenever products go LOE, we have seen in the Indian market that even if there are few manufacturers, the market is open for all to source and market the products. Yes, over a period of time, the competition kind of eases out. Given that we are not a dominant leader in this space, we don’t currently as of now have any plans to make any serious impact on the GLP one-side. But anything which is closely related to our main strengths like on cardiology, what Nikhil mentioned, we are happy to evaluate other opportunities within cardiology. We are still operating at 70% 75% of covered market opportunity in cardiology. So there will always be adjacencies which we can evaluate. And on metabolic, the organic strategy did not pay us good dividend. But if there are some other opportunities, which we can evaluate from an inorganic perspective, we’ll be happy to evaluate them.
Amir Tarke
Sure, sure. Thank you so much. I will join back. Thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question, please press RN1 on your phone now.
Jason D’souza
We have a question that is there on the — just come on to the question wall. The question is for Narayan. And so the net cash position has been fairly strong. How do we see the net cash position panning out for this financial year?
Narayan Saraf
So thanks, Jason. So very clearly, we see that currently we are sitting at a net cash-flow of around INR5 odd crores and we clearly see after paying out the dividend which we have announced yesterday and making ourselves debt-free, we would be ending the year with around INR650 crores of cash-positive. So we would be paying-off all the — all the loans and with dividend payout of almost around INR130 crores plus. In-spite of that, we see our cash-flow — net cash would be around INR655 odd crores.
Jason D’souza
And the second question is how do you see the Q4 performance panning out for the organization?
Nikhil Chopra
So Q4 what I think what we shared earlier in the commentary, first of all, we are bullish in terms of will deliver double-digit growth in our international business. And equally, overall, the trend will be — will be strong as we have good order book for our CDMO business. India may be soft because of the March month, that is why the inventory goes down. But overall the traction will be maintained and you will see a good trajectory to be continued in Q4 and we’ll end the year-on a high note.
Jason D’souza
Thank you. Over to the queue now.
Operator
Thank you. Before we take the next question, we’d like to remind participants to press RN1 to ask a question. Next question is from the line of Rahul Jeewani from IIFL Securities. Please go-ahead.
Rahul Jeewani
Yeah. Hi, sir. Thanks for taking my question. Sir, within the domestic business, can you also talk about how has the traction been for the probatics portfolio in?
Kunal Khanna
Already, Rahul, is more than INR120 crores reflection even from an internal perspective, we are just about inching towards the INR100 crores mark. The category has grown this year for us also the brand and its variants like GG have done fairly well. Even in external market reflections, we are pretty much on par with the market growth. So our strategy remains that we do better life-cycle management of this brand and we continue to grow this franchise.
Rahul Jeewani
Sure, sir. And within growth mix, we are also targeting some other liquid…
Operator
You are sounding muffled.
Rahul Jeewani
Just a minute. Hello, is it clear now?
Nikhil Chopra
Yeah.
Rahul Jeewani
Yeah, sir. And so within the probiotics segment, we were also targeting to launch liquid probiotic formulation. So where are we in terms of launches for some of these product segments within probiotics?
Kunal Khanna
That is poised for launching. And over the next couple of months, those variants are also going to get fully commercialized in the market. Those of those plans continue to be under implementation.
Nikhil Chopra
This month — the month of — for the month of February, you should see a new version of being there in the market that is DG, that is for dental health, then you will see the liquid formulation, then we are launching once again more formulation for women health. So we’ll continue to see the overall mother franchisee expanding with lot of — lot of SKUs for specific indication for the category.
Rahul Jeewani
Sure, sir. And within the overall India business, what are our rep expansion plans? So with, let’s say, some of these launches happening in the probiotics segment, do you think we will need to significantly expand our rep presence in India?
Nikhil Chopra
No, no, there is no — nothing significant, nothing like significant. We have been commenting on. And probably next 12 to 15 months, there is no plan to increase any medical rent.
Rahul Jeewani
Okay. So whatever growth we see would help us to drive productivity improvement.
Nikhil Chopra
We are — we are adequately placed in terms of the representation that we need in the clinic of doctors for our — for our portfolios that we have marketed in the country.
Rahul Jeewani
Yeah, sure. So sir, two more questions from my end. Now within the CDMO business, we have been trying to develop some of these newer product concepts as well as expand to newer clients. But till-date, we haven’t seen some of those initiatives playing out. So when do you expect, let’s say, an inflection point to play-out in the CDMO business, particularly with respect to some of these newer product segments or the newer clients which we have been targeting?
Nikhil Chopra
So last in last quarter — last quarter commented out, we had spoken that already the traction has started. If you look at, there are two new partners now in Europe. Europe market was not there. So quarter three, for quarter two, we started our presence in Europe with which company called KRKA in Czech Republic where our losing supply has already started. And also with our existing partner that is, which is a consumer among J&J where we do business in Russia in the world of CDMO, we have enhanced our presence in Europe with a brand called B, which is for immunity and wellness, which is in the home of, first time we have manufactured for them. They already have and syrup for. We have the company who are manufacturing for them. In this quarter, that is now in-quarter four, which we will give commentary in-quarter one, you will start seeing some new projects kicking-in, what we have been spoke — what we have been speaking in some new geographies other than Europe. Some new therapeutic dosage forms, which will — which will start supplying.
So all this will happen and you will see traction coming. That is why if you — if you see overall, we see this business going at mid-teens, probably from for next for next year. And quarter-four already we have a very good order book in-place. So you will see good outcome in Q4 also for the CDMO business. So we are very bullish. And earlier I had spoken there are at the right time, we’ll be also sharing with all of you that probably for next 15 to 18 months, there are four, five big projects which are kicking-in. And all this will require capex, which already has been put in-place. All this will require the entire facility that we have in our Daman plant and some of the work that we have started doing for our CDMO in our Panoli plant also, all capex have been placed, all developmental work which has been on. So at the right time, you’ll be hearing more-and-more positive commentary on this part of the business.
Rahul Jeewani
Sure, sir. And these four to five key projects which you are targeting, which might entail incremental capex, what could be the quantum of CapEx for the CDMO business then?
Kunal Khanna
Yeah. The quantum of capex is not much. We can easily absorb that as part of our regular expansion and maintenance capex. So that does not lead into any incremental capex levels beyond our current steady-state level.
Rahul Jeewani
Sure, sir. And last question from my end. So if you see this year, despite the dilutive impact of the acquisition, so acquisition diluted our gross margins by roughly 150 160 basis-points. And despite that, our operating EBITDA margins have improved almost 80 basis-points in nine months of FY ’25, which implies on the base business, we would have seen almost a, 200 250 basis-point kind of an EBITDA margin expansion. So what is your outlook in terms of margins going-forward, particularly with the fact that our India and CMO revenue-share continues to inch up?
Narayan Saraf
So yeah. So we clearly expect our margins to be in the range of 26% to 28%, which as we have been giving the EBITDA margin. So EBITDA margins, we would be in that same range. Obviously, we continue like I mentioned in my notes that we will continue to drive the efficiencies, both in terms of cost and drive the mix improvement to enable us to keep on driving on the EBITDA margin improvement.
Nikhil Chopra
The way how we see this business overall, if you understand, the focus is always-on India and CDMO, which are highly profitable and high gross margin business. Now with API prices going up, dollar touching INR87, INR88, obviously, some impact will come and this will be across industry. But right now, immediate because of the inventory buildup, we don’t see any impact, but we have been keeping fingers crossed. Probably if the gross margins improve, we’ll be able to mitigate that. You always will see Rahul us being what guidance we have been giving of 26% to 28% probably will be ending the year-on a higher note on the higher side of the guidance. That is what we have been projecting, whether it was 25% to 27% which was earlier guidance, we close at 27% plus. Right now, the guidance is 26% to 28%. We’ll, we’ll be closing close to 28% at the right time, we’ll be more than happy to revise our guidance.
Rahul Jeewani
Sure, sir. I was asking more from next two to three year perspective rather than this year.
Nikhil Chopra
Once again, Rahul, if you see this entire aspect of ophthalmology will come in, which will give us 200 bps improvement in our overall EBITDA that our gross margins from 20% will go up to 70%. So all this calculation will play. But I’m talking in terms of short-term work volatility which is in-place probably after three months, we may be speaking a different language with rupee appreciating API prices being stable, product mix improving, probably our guidance will go up. So right now, we are a stock of quarter — this year 28%. At the right time, we’ll be more than happy to revise our guidance which should be on the upward trajectory only.
Rahul Jeewani
Sure, sir. Thank you. That’s it from my side. Thank you.
Operator
Thank you. We’ll take our next question from the line of Alankar Garude from Kotak Institutional Equities. Please go-ahead.
Alankar Garude
Hi, good afternoon, everyone. Sir, you spoke about healthy sales in nine months. Wanted to understand what has been driving growth in the market and how sustainable is this?
Nikhil Chopra
Not that I can comment that it is sustainable, but we were — we — it helped us in terms of season being better and GI infections being on the rise, that is why we could see healthy metrogen uptake for first-nine months of the year, probably quarter-four is not the right time. But as a company, what we have realized that I think we should more talk about the virtues of metro as a molecule, which we want to do, which we are trying to look at not only plain metrogen, but the newer versions of metrogyl topical applications of metrogyl. We put our all effort in terms of how we can make this brand reach newer peaks with half a dozen topical applications with metrogen extended-release with, in combination, all the portfolio what we have bought and with 70%, 80% market-share, if season supports, probably it should go at high-single-digit. Otherwise, I think 5%, 6% growth we should get for this portfolio.
Alankar Garude
Sir, given the high market-share, which we already have in solids and liquids, so would it be fair to assume, as you said, more focus on topicals or should that be the key growth driver contributing to this 5%, 6% growth which you mentioned?
Nikhil Chopra
So this year what has helped us is overall the peak in tablets and equally, the focus is more on the topicals in terms of the prescription that we generate. So topicals will happen. So out of six topicals, four topicals we sell 100,000 duals a month. So application — so more-and-more effort will be there to improve prescription trend for the topicals and if season supports high-single-digit, otherwise 5%, 6% growth will be more than happy.
Alankar Garude
Understood. The second question is, in our current ESOP plan, all the options are getting vested latest by August 2027. Now this could happen earlier in case of KKR’s exit. So to provide greater visibility on management retention, are we evaluating a second ESOP plan?
Nikhil Chopra
Not I don’t think. Let us continue to focus on the result part. Now that we have given any thought on this entire part of ESOP. I think first that this entire ESOP scheme get over and at the right time, we’ll be thinking in terms of what type of new incentive plan we want to put in-place for our team.
Alankar Garude
Fair enough, sir. That’s it from my side. Thank you. Thank you. We’ll take our next question from the line of Harith Ahamed from Avendus Spark. Please go-ahead.
Harith Ahamed
I hope I’m audible.
Nikhil Chopra
Yes.
Harith Ahamed
Thank you for the opportunity. Just one question. You talked about progressive therapy areas and how you targeted segments such as heart failure, ophthalmology, probiotics, et-cetera and how these segments account for a significant share of our revenues today. Are there any such areas outside of these that you’ve identified, which you plan to enter either organically or inorganically?
Nikhil Chopra
We would see when we — when we see that there are — there are brands which are growing better than the Indian pharma market and we see huge opportunity in creating market or capturing market-share. Given a choice, we’ll be more than happy to stick to where we are organically and you will see new launches in that space only. We would not like to launch anything from scratch in any newer category of category of products in India. That is what we earlier also we have commented. If we acquire anything outside the category where we are present, obviously, we’ll have new launches in that category — that category of business like what we are doing today in the world of ophthalmology. We have acquired 10 brands, a couple of brands we have launched in ophthalmology space. But if you see our new launches, more will be in the area where we are present because we think that the ability of the company, the DNA of the companies that how do you make the big mother franchisees contribute bigger to the business thank you.
Harith Ahamed
Okay. That’s all from my side. Thank you.
Operator
Thank you. Ladies and gentlemen, we’ll take that as the last question for today. I would now like to hand the conference over to management for closing comments. Over to you, sir.
Nikhil Chopra
Yeah. First of all, thank you all for participating in today’s conference call. We continue to focus as a company on profitable growth as what I spoke earlier in my commentary. And our major area of growth trajectory will continue to be — continue to be in India, which today, we are — we are rightly placed in the categories, which is 65% of our business growing better than the market. We are fortunately — fortunate enough to have that portfolio and also fortunate enough to have our teams on-the-ground who are — who are doing — who are doing their best-in execution. That is India part.
India business today is contributing 60% of the revenue, which four years four years ago was contributing 45% of the revenue. So today, 60% of revenue is coming from India. And equally what has been spoken is in the world of CDMO, which was contributing 5% of the revenue four years ago is contributing to 12% of the revenue. So India plus CDMO today continues to be — continues to contribute 72% of the revenue, which have high — which have got higher gross margins and the endeavor going ahead will be in short-to-medium term, how to take this 72% contribution to 80%, which will only help us to create — create overall value for our stakeholders and serve more-and-more number of patients in India in the world of CDMO. That is what we want to do overall as a company. Thank you all. Thank you all for patient hearing.
Operator
Thank you. On behalf of JB Pharma, that concludes this conference. Thank you for joining us and you may now disconnect your lines.