JB Chemicals & Pharmaceuticals Limited (NSE: JBCHEPHARM) Q4 2025 Earnings Call dated May. 15, 2025
Corporate Participants:
Unidentified Speaker
Jason D’souza — Executive Vice President
Nikhil Chopra — CEO
Narayan Saraf — Chief Financial Officer
Kunal Khanna — President – Operations
Analysts:
Unidentified Participant
Tausif Shaikh — Analyst
Alankar Garude — Analyst
Gaurav Kedia — Analyst
Naman Bagrecha — Analyst
Mohammad Patel — Analyst
Meghna Agarwal — Analyst
Sumit Gupta — Analyst
Rahul Jeewani — Analyst
Naman Bagrecha — Analyst
Mohammed Patel — Analyst
Meghna Agarwal — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to the JB Pharma’s Q4FY25 earnings conference call as on 15th of May 2025. As a reminder, all participant lines will remain 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 the operator by pressing Star then zero on your touchstone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jason D’ Souza, Executive Vice President of JB Pharma. Please go ahead sir.
Jason D’souza — Executive Vice President
Thank you Ryan. Welcome to the Q4 earnings call of JB Pharma. We have with us today Mr. Nikhil Chopra, CEO and Whole Time Director, Mr. Kunal Khanna, President Operations and Mr. Narayan Saraf, the CFO at JB Chemicals and Pharmaceuticals Limited. Before we begin, I would like to state that some of the statement 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 Q4 FY25 results presentation that has been sent to you earlier. I would like to hand over the floor to Mr.
Nikhil Chopra to begin the proceedings of the call and and for his opening remarks.
Nikhil Chopra — CEO
Thank you Jason and a very warm welcome to all of you and thank you all for being with us today. I will commence with the perspective on our quarter four performance. FY24 is yet another year when JB has maintained strong operating momentum. JB continued being one of the fastest growing domestic businesses in India as per IPM. As per Indian pharma market during quarter four revenue saw a rise of 10% to INR 949 crores while operating EBITDA expanded by 15% to INR 240 crores underscoring efficiency and execution strength. Net profit notably improved by 15% to INR 146 crores reflecting improved margins and disciplined cost management.
This performance has been underlined by the growth in India branded formulations, our CDMO platform and carefully chosen international markets that align with our strengths. Our Gross margin eminent 66.1% during quarter four marking an improvement over the previous year. Our operating EBITDA margin stood at 25.3% representing an increase of 90bps. I will share some views on our domestic business. The domestic business reported a growth of 11% year on year to INR519 crore in quarter four. FY25 as per IQA we have delivered 13% year on year growth in the quarter as compared to 7% growth for the industry as per IQA.
Our chronic portfolio showed 16% yny improvement in quarter four FY25 whereas acute portfolio increased by 10% and our opthal business recorded a growth of 22% to INR56 crores in quarter four FY25. These are all IMS figures. Clearly we believe that we have one of the best, one of the most progressive domestic formulation business which has been demonstrated by our business consistently outpacing industry growth for the last five years now. We have also done well on the prescription front with our prescriptions growing at 17% CAGR over last four years. We now cover around 3.5 lakh doctors across specialties.
Interestingly, majority of our portfolio is in fast growing segments leading to growth prospects. Around 75% of our business is generated from the segments that are progressive and growing faster than the IPM as we have been sharing in the earlier commentary. Also our chronic mix continues to improve and our chronic business is growing significantly faster at a growth rate of 18% as compared to IPM chronic growth which is at 10% as per IQM ED Mast 25 data. In the cardiac segment we have moved five ranks and now are ranked number eight in this therapy. Also we have three brands among the top 20 brands in cardiovascular therapy.
Through emphasis on building and scaling brands we have consistently placed ahead within the IPM on the growth. We have now six brands among the top 300 brands in the country with Sporolac being the new entry in the top 300 brands in the IPM. Around four years back we had eight brands whose revenue was more than 20 crore. Currently we have 25 brands whose revenue is more than 20 crores annually and six brands where the revenue is more than 100 crores annually. We have shown a sustained improvement in the field force productivity which now stands at 8 lakh PCPM as compared to 4.6 lakh in FY21.
All our five acquisitions have integrated well and helped strengthen our position in the industry. The Sporolac franchisee has risen from 69 crore to 134 crore as per IQR net 25 lada in last three years. Asmara that is sacroutral valsatan is now INR 70 crore and sacubital valsatan market is expected to grow at around 15 to 20% over next 10 years 10 to 15 years. The result franchisee now is 99 crore in two years which was 67 crore two years ago. Moving to our international operations quarter four saw a high single digit growth that is 9% to 430 crores for our international operations.
With CDMO business driving the entire growth. CDMO grew at 18% at a revenue of 129 crore for the for the quarter. Our position as one of the top five global CBMO player in Los Angeles reflects the strength of our capabilities and deep relationships with our market clients. We saw 6% improvement in our international formulations that is branded generic business to 282 crore backed up by double ED growth in Russia and branded generic exports. Going forward I see our international business gaining further momentum through new product launches, geographical expansion and a more focused CDMO strategy. Our ability to co create with our global partners supported by world class infrastructure and R and D capabilities positions us well to drive sustained high quality growth in this segment.
As we look ahead, I remain confident in our ability to sustain growth across our core businesses. In India. Our focus will be on scaling our larger brands, deepening our prescription share in recently acquired portfolio and further strengthening our presence in chronic therapy. We expect India and CDMO businesses to contribute 75 to 80% to overall revenues in the medium term. The India and the CDMO businesses are high roce and high operating margins which will further enhance profitability of the organization. At the same time we remain committed of delivering profitability and we are raising our operating margin guidance for the third year in row.
EBITDA margins will be in the range of 27 to 29%. Once again I will repeat we are raising our operating EBITDA guidance for the third year in row and our EBITDA margin guidance is now 27 to 29%. Underpinning all of this is our continued emphasis on the growth through planned execution. That brings me to the close of my opening script. I would not like to hand over to our Mr. Narayan to share his views. Over to you Narayan. Thank you.
Narayan Saraf — Chief Financial Officer
Thank you Nikhil. A very good afternoon to everyone joining us on our earnings call. Let me take you through the key financial highlights for Q4 and FY25. For the quarter we reported revenue of INR 949 crores reflecting a year on year growth of 10%. The revenue mix stood at 55% domestic and 45% international. Our domestic business contributed INR 519 crore registering a year on year growth of 11%. In Q4 the international business delivered year on year growth of 9% with with revenues at INR 430 crores. Our gross profit margin stood at 66.1% with a 90 basis points expansion which is despite the unlicensed ophthalmology portfolio operating EBITDA excluding ESOP expenses came in at INR 240 crores marking a year on year increase of 15%.
The operating EBITDA margin expanded by 90 basis points to 25.3% in Q4FY25. Now on the cost front, AADA expenditure as a percentage of sales reduced to 23.7% by 80 basis points. We continue to maintain agility in enhancing operational efficiencies and managing expenses effectively. Finance costs saw a significant decline coming down from 9 corrodes in in Q4FY24 to 1 crore in Q4FY25 mainly due to reduction in the gross debt. Net profit increased by 15% to INR 146 crores. Now on the financial year 2025 revenue grew 12% to INR 3918 crores with domestic to international business mix at 58% is to 42%.
The domestic business witnessed 20% growth and as per IQVMT March 2025 data JV grew 12% versus IPM growth of 8%. On the international business it saw 4% growth to INR 16. 49 crores. In international formulations, Russia and branded generics export business witnessed double digit growth. CDMO saw 3% growth however saw strong recovery in the second half of the year. Gross profit for the full year stood at 66.4% expanding by 30 basis points. Excluding ophthalmology portfolio margins increased by 130 basis points. Margins improved mainly due to a favorable product and business mix supported by ongoing cost optimization efforts on costs.
Non cash ESOPs were at INR 55 crores versus 42 crores. Depreciation increased from 138 crore in FY24 to 171 crore in FY25 due to amortization of acquired and in licensed brands. Therefore net profit increased by 19% to 660 crores. JB Pharma’s operating cash flows in FY25 were reported at 903 crore versus INR 801 crore in previous year. In the pharma industry we have reported one of the highest metrics on operating cash flow to operating EBITDA at 83%. Now coming on the balance sheet, ROCE was at 32% versus 27% in FY24 while ROE improved to some extent at 19.2% in FY25.
As of 31 March 2025 net cash was at 689 crores versus 107 crores in the previous year. For the fiscal year, the Board recommended a final dividend of INR per share, resulting into total dividend of 15.50, including of the interim dividend of 8.50 share per rupees, 8.50 per share. We remain optimistic about the business outlook and we are confident in our ability to continue delivering value to all our stakeholders. With that, I conclude my opening remarks and I now request the moderator to open the forum for the Q and A session. Thank you very much.
Questions and Answers:
operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Tossif from BNP Pariba. Please go ahead.
Tausif Shaikh
Good afternoon and thanks for the opportunity in Congress and a good set of numbers. My first question India Business can you provide the breakup of India Business X of Pelvic in terms of price, volume and new product launch for the year?
Kunal Khanna
So excluding ophthalmology, our domestic business overall growth has been close to 12% and the volume growth is 6%. Outside that there is price and close to 1% of NI growth. And if you compare this with the market, the market volume growth as reflected externally has been sub 2% with respect to volume.
Tausif Shaikh
Also if you can share some qualitative insight on the chronic portfolio, I think that is significantly outperformed versus the IPM we have grown by 18% versus the IPM growth of 10%. Can you highlight which are the segments which have outperformed for jv?
Narayan Saraf
So our key brands like Nikhil mentioned, our flagship brands continue to outpace the market and by a significant margin. Our mainstay chronic brands like Silakar, Silaka Tea, Nicardia and Razil have consistently been outperforming the market. If you look at the MAT numbers as externally reflected as well, Silica Plain for us has grown at 19% while the market is 16%. This despite the fact that we continue to inch our market share performance within the Silica franchise and are slowly graduating towards 60% market share. In this particular plane brand Silica T we have grown at 37% compared to market at 25.
Razel for us even the plain Rosova Tartan has grown at 24% versus market 14 and Nicardia, including Nicardia Plain as well as Excel has consistently delivered more than 20% growth over the last 12 months. So these have been the mainstays for us and clearly reflected in our outperformance of our chronic portfolio. In addition to that, even if you really look at the Asmada figures and if you really look at the quarterly Updates for the Q4 in Asmada we have clocked 30% growth whereas the market is growing at 20%. And we believe as Nikhil mentioned in his commentary also that this particular category will continue to hit mid teens volume growth in the future.
Tausif Shaikh
Thanks. My second question is on your brand Rantech. I think there has been a newsletter to expect panel as recommended to suspend. Randy, where do you stand currently? Has the government has deferred the case to investigate further or is the final decision there will be no ban on the product.
Narayan Saraf
So there is no ban on the product. Rantac continues to be made available to the patients. You know, given its very strong clinical efficacy and safety profile, the government has given some instructions in maintaining in manufacturers kind of closely monitoring the quality. This is something which we have been doing for years and we’ll continue to deliver on that.
Tausif Shaikh
Thanks. We’ll get back into Q.
operator
Thank you ladies and gentlemen. If you wish to ask a question, please press star and 1. The next question comes from the line of Rashmi from Dollars Capital. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Just on the export formulation side especially in Russia, South Africa and your other branded generic export market, you know what kind of new therapies or the products in different category are we adding, are we doing the same what we have, you know nwhat what we have added in our India. I mean all those products are also getting exported to this branded generic market. So what is the strategy which you are playing in this market and how should we see the growth for the export formulation business? X your PDMnO and API business.
Nikhil Chopra
So our international business is contributing around 45% which includes US, Russia, South Africa, branded generics and CDMO. Our branded generic business is in four clusters that is in Sub Saharan Africa, Latin America, Southeast Asia and Middle East. And in that part of the world 50% of that business comes from participation in tenders. What we have been doing for last three years is filing progressive portfolio which we have in India which is a mix of Liptins closings product for heart failure, eye drops and those all products will start commercializing early FY27. That is where we stand and you should see growth for this and the business when this new product start commercializing.
This quarter the growth was 10% for that BGX business and probably FY27 onwards with the new progressive portfolio you should see couple of points more coming. In terms of growth we should go around 12% plus.
Unidentified Participant
Okay, so you’re saying that 10% for FY26 and then going ahead once it ramps up it should be more than it should be in double digit in FY27. Okay. And the CDMO segment in the presentation you said that you know the order book remains strong in the coming few quarters. Also it is more related to the seasonality factor or you know we have added new products or you know added new geographies over there. And what, what is the guidance you give it on this part of the business?
Nikhil Chopra
If you look at the growth for CDMO for the quarter was 18%. That is what we said. But that is not the right growth for the year. Our average business that we do in the world of CDMO is around 110 crores. That is 100 that we have been following and we continue to do business with our all big clients across the globe. What we have been, what we have shared in our report is going ahead. The company has been working progressively for last year on some big market projects which more details we can talk about in the coming time.
But what details I can give you is these projects are some new lozenges which you will see in the world of Europe and us. You will see some pan India project that we are running with one of our partner in the world of ors. You will see some developments happening in the world of throat spray for cough and cold in many markets across the globe. And also you should see iodine based formulations maybe in the form of syrup and ointment which will see the daylight. So these are four or five big projects which will be able to commercialize by end of the year and starting next financial year.
Our run rate that we assume with all these businesses seeing the daylight, which today is ranging, which today is around 110 crores every quarter. Should be around 150 crores every quarter.
Unidentified Participant
Okay. And you mentioned that you know you’ll be targeting US Europe market. So this will be through partnership with the retail chain models or you know you will have a partnership with the companies or distributors. So what will be the strategy over. There
Kunal Khanna
in CDMO business? We are quite clear that we work with our principal partners and our principal partners are large consumer companies with global presence. So you know earlier we had voiced the kind of clientele Profile which we have for our CDMO business. So we directly deal with them. And of course they have an extensive network of distribution channel partners in respective geographies. So we will continue to build on on the same model.
Unidentified Participant
Okay. Okay sir. And one last question. On Your EBITDA margin, 27 to 29 is the X ESOP EBITDA margin guidance, right?
Narayan Saraf
Yes. Yes.
Unidentified Participant
And what will be the esop number in FY26 and FY27 annual number if you can give.
Narayan Saraf
Yeah. So the esop number in FY26 should be in the range of around 41 to 46 crores. And FY27 would be 26 crores in totality. Now the ESOP cost that we are left with is around 75 crores which would be charged over next two to two and half years.
Unidentified Participant
Okay, thank you so much.
operator
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and 1. The next question comes from the line of Sumit Gupta from Centrum Broking. Please go ahead.
Sumit Gupta
Hi, good afternoon. Am I audible?
Narayan Saraf
Yes, yes.
Sumit Gupta
Hi. Thanks for taking my session. So first is about the domestic population segment. So sir, on the Ismada, how much of how much sales was for the quarter and how what is the run rate of units per month and how do you see this volume going forward?
Narayan Saraf
So as we mentioned last time we were targeting a run rate of close to 125,000 to 133 units per month. We are pleased to inform that we have been able to maintain that run rate by the end of H1. So in the next quarter we should be targeting a run rate of close to 140,000 units plus. And we’ll continue to build on that.
Sumit Gupta
Okay, so sales was for this quarter was around 70 crores or 75.
Narayan Saraf
For Asmada. For the quarter?
Sumit Gupta
Yes sir, for Asmada.
Narayan Saraf
So when we talk about 70 crore, that’s the annualized run rate for Asmada.
Sumit Gupta
Right. So how are you going forward next? Two to three years at least. How do you see the 70 crores coming up?
Narayan Saraf
As we have mentioned
Sumit Gupta
price hike also
Narayan Saraf
of course we are taking price hike also for this particular brand. And the market is growing at mid teens volume growth. So we clearly see that what is reflected in the market as a 70 crore franchise over the next two to three years we should be targeting 100 crore franchise for our Asmada brand. As mentioned, we are looking at close to mid teens volume growth. And over and above whatever price growth we can accommodate, we’ll be able to build on that.
Sumit Gupta
Okay, great. And sir, what’s the contribution from the top five products in India business?
Narayan Saraf
So currently the top seven to eight brands account for close to 64 to 65% of our overall India revenues. Four to five years back the top five brands accounted almost 84%. So that goes back to the point that currently we have a large set of progressive portfolio and platforms which are contributing to our growth and will continue to do so in the future as well.
Sumit Gupta
So can we expect over the next. Two to three years at least this. Percentage to come down at around 50, 55%?
Narayan Saraf
We can do a broad math basically when we say that other products will grow, even our top seven, eight franchisees will continue to grow. Right? So we don’t have the exact number right now to kind of estimate that. But the endeavor is to continue to build on the big brands as well as drive significant growth in our other progressive portfolio.
Sumit Gupta
Understood broadly on the sector level. So I just want to understand how the overall IPM market is growing. So previously like one and a half year down the line like before it was going at around 10, 11, 12%. However the growth is at around 6 to 7% now. So how do you see this spanning up? Do you see, are you seeing competition from alternate channels? How do you see that shaping up?
Narayan Saraf
So essentially some of the volatility in the market tends to depend a lot on the seasonality and last one year with respect to season acute has been slightly subdued as a result of which we have seen the IPM market also being significantly subdued and volume growth has been a major factor. The market has still grown at close to 8% with the volume growth being close to 1.82%. What we believe is that when the season is good the volume growth can come back to 4 4.5% numbers which means that the IPM should potentially be pegged at 9 to 10%.
So we are fairly confident that this is a market which will continue to be range bound in the region of 8 to 10% going forward.
Sumit Gupta
Okay. And sir, for the gross margin, understood your highlights increase the guidance for operating EBITDA margin. However from the gross margin perspective, how do you see that? So shall we see improvement in product may see improvement in margin, gross margin or or will it be on the cost operating percent?
Nikhil Chopra
So we’ll continue to see in this FY26 as well around 30 to 50 basis points improvement in gross margin supported by certain cost initiatives that we keep on taking every year on year. And obviously MIPS will also play a very significant role where the India business and in India business the chronic growing significantly ahead than the other businesses. So we clearly see both mix and cost initiatives will play a role in supporting around 30 to 50 basis points improvement in cross function.
Sumit Gupta
Okay. And so lastly on the depreciation part. So there was a. Sequentially we have seen around 10 to 11% growth in depreciation. So basically what is revenue and how shall we see this depreciation rate going forward?
Nikhil Chopra
So depreciation is mainly because of the amortization of intangible assets which we have acquired over the years and particularly the ophthalm business also acquisition happened last year.
Sumit Gupta
Okay. So going forward, so how should we see this? The rate overall 4 to 5% or.
Nikhil Chopra
More it would be in the range of 4 to 5% because we continue to invest in our capex. So we see the depreciation to be increasing only 4 to 5% supported by capex and intangible asset depreciation.
Sumit Gupta
Okay, so the follow up on that, what’s the cater guidance for the next two years?
Nikhil Chopra
Around 100 crores. Over next two years each year we continue to.
Narayan Saraf
Yeah, we. We maintain a consistent 100 crore run rate. Maintenance close to 6570. Another 2025-30 for growth capex.
Sumit Gupta
Understood. Thank you.
Narayan Saraf
Thank you.
operator
Thank you Ladies and gentlemen. If you wish to ask a question please press star and 1. The next question comes from the line of Alankar Garud from Kotak Institutional Equities. Please go ahead.
Alankar Garude
Hi, good afternoon everyone. If I look at our international formulation sales for the last three years we have been in that range of 10 to 11 billion rupees. I understand we had the South Africa restructuring and then also the issues in the CMO business in the first half of FY25. But directionally how should we look at this segment over the next couple of years?
Nikhil Chopra
Good question Ivankar. In terms of what analysis you have done, see CDMO we had a big spike in FY23 because there the demand had gone up, drastically up. But now our partners have been also normalizing the inventory and the inventory has normalized. So you will see CDMO business growing between 12 to 14% in the coming time. And I earlier shared the commentary in terms of what we are trying to do in the world of CDMO business with our existing partners and the new projects that we are trying to run. Second around 120 crore cut that we took in South Africa business.
That cut is. That is done because that was more related to the tender business which we did not want to participate. In hindsight it has Given us a good bump up in our profitability in our South Africa business which is more now private business. 65 to 70% business is now private which was earlier 40%. So that is on South Africa. BGX has not been a good story for us and that is the way the business was modeled. 50% of this business was more tender participation in government tendering where we have been facing issues in terms of competitive pricing.
But FY27 onwards you will see around. In last three years we have filed every year we have been filing around 8 to 10 progressive products in these geographies. These are 40 countries across in Sub Saharan Africa, Latin America, Southeast Asia and Middle East. So once that comes in we’ll be able to generate better demand, we’ll be able to demand better pricing and then I think the business will be more on a pathway where we want that business to go around healthy, around 10 to 12%. That is what you should see in the BGX business. Russia has been a very good story for us last year in terms of top line and profit margins.
So South Africa things are arrested. Russia on a good wicket. CDMO 12 to 14% growth. FY27 onwards you will start seeing BGX business growing at 10 to. Basically it can be 12% mid teens growth but 10% growth you should see short to medium term, medium to long term 12% plus growth.
Alankar Garude
Understood sir, that’s really very helpful. The other question was on trade generics. What is the scale of our trade generics business today and do we intend to focus a bit more on this segment going forward?
Narayan Saraf
We have always maintained that trade generics is not going to be our focus area. Some of the categories where we are present is by virtue of the fact that these categories are well served by distribution channels which go beyond tier 2 and tier 3 markets. It’s negligible contribution to our overall India business business and will continue to be so. So we are not focusing heavily on this particular segment.
Alankar Garude
Understood? Yeah. That’s it. From my side. Thank you.
operator
Thank you. Thank you ladies and gentlemen. If you wish to ask a question, please press star and 1. The next question comes from the line of Gaurav from Antique Stockbroking. Please go ahead.
Gaurav Kedia
Yeah. Hi. Good afternoon sir. You know India business has sequentially come down this quarter quite a bit. Any insight on that?
Narayan Saraf
The sequential numbers are largely because of the March phenomena which has always been the case as part of the industry phenomena where the trade also rationalizes the inventory levels. So it’s got nothing to do with the demand of our products, prescriptions in the market? Nothing like that. March generally tends to be soft for the industry.
Gaurav Kedia
So any guidance, you know, in terms of we’ve grown significantly faster than the market in India over the last few years. You did allude the India market growth where it’s going to settle. You know.
Narayan Saraf
We have always maintained that we will maintain a 3 to 4 percentage points higher than market growth. We have been able to deliver that over the last four to five years and our portfolio is well poised to continue to build on that.
Gaurav Kedia
And have we made new launches in the diabetes space and you know, Q4 of this year?
Narayan Saraf
No, we haven’t made any new launch in the diabetes space in Q4.
Gaurav Kedia
And going forward, do we have some pipeline there that we want to launch in the next two years or three years?
Narayan Saraf
We always continue to evaluate opportunities, but beyond that we wouldn’t want to divulge any information.
Gaurav Kedia
Okay, okay, understood. In terms of in licensing portfolio for us, you know, in terms of percentage of sales, how large would that be for the India business?
Narayan Saraf
So currently if you really look at our in licensing, it’s largely for the Optile portfolio. But that is also an interim arrangement because the main rationale for us to acquire the Optile portfolio was the fact that perpetual license will trigger in December 2026 which will significantly push up our gross margin profile. Outside that, you know, we really have nothing much. There is one product, a very specialized, you know, product which is a lipid lowering agent. But apart from that there’s no other in licensed portfolio.
Gaurav Kedia
So the in licensed portfolio will be contributed to ebitda, right. Today too, while lower gross margins. But it would be EBITDA positive, right?
Narayan Saraf
It is EBITDA positive, the Optile portfolio. That’s correct. And as we have mentioned earlier as well that post perpetual license triggering it will be significantly ebitd.
Gaurav Kedia
So how so if you can explain this a little further, you know what happens post CY26, do we get ownership of these brand names?
Narayan Saraf
That is correct. So we have already discussed the details about this arrangement which we have on the OPFAL portfolio. In December 2026 a perpetual license gets triggered and we are full fledged custodians of these trademark.
Gaurav Kedia
And in terms of your appetite for more inorganic kind of opportunities in India, be it, you know, on the licensing side or you know, acquisitions, what would be, you know, appetite and you know, can we see some, you know, plays in the next two to three years?
Nikhil Chopra
So let me answer this. I think this perhaps is your last question because there are other people also in the queue we look at opportunity in the therapeutic areas which are more aligned to the strength which we have in execution. So we earlier also in our commentary have shared that can go up to one and a half, 1.5 times of our EBITDA in terms of buying out any company, buying out brands. But we look at asset which is more quality based in a growth market and progressive. And the payback period in place when we commit for any acquisition is seven to eight years.
Thank you.
Gaurav Kedia
Thank you.
Jason D’souza
Thank you operator. We have a few questions that have come on the question wall. I’ll just answer that and then you can open the floor for questions. I think one question is on the Optal business. You know what has been the current run rate and how do we expect what do we expect in terms of the current run rate for Octal in the next two or three years?
Kunal Khanna
Yeah. So the Opthal business is on a positive track. Like we had mentioned earlier, during the time of acquisition as well, when we acquired the portfolio the quarterly run rate was close to 40 crore. Our first milestone was that over the next nine to 12 months how do we inch this towards a 45 crore quarterly run rate mark? And we have been able to achieve that. As we move ahead, we look at the market growth opportunities. We are clearly seeing that from a quarterly run rate perspective this is already inched towards 48 crore run rate mark and we’ll continue to build on that.
Our strategy in terms of prescriber expansion has started yielding us good results. Even if you look at the last 12 months performance for the Optile market, our growth has been close to 11% where the market has been very subdued at 4.5%. So we’ll continue to build on our strategy. New launches have also started progressing and contributing and over the next one year we will see more contribution coming in from these new launches.
Jason D’souza
And how do we see the Opthal business playing out in terms of top line growth for the domestic business over the next two, three years and its impact on profitability?
Kunal Khanna
So when we look at the Opthal portfolio, we see that this is a portfolio we’ll be closer. We’ll be which will be closer towards mid teen. We clearly see us being closer to that mid teen growth run rate for this business. Part of that will also be attributed to some contribution coming in from new launches. With respect to the overall profitability this year we believe that from an annualized run rate perspective this portfolio will be close to 200 crores per plus. And given the fact that for the next in FY27 also we’ll be targeting close to mid teens.
We are looking at close to 230 crore annualized run rate franchisee. When the perpetual license triggers in and when the perpetual license triggers, the gross margin profile changes significantly from the current conventional margin profile of closer to 20%. It will be much closer to our domestic gross margin profile. One can do the math. And that’s the significant upside we see kicking in our overall profitability.
Jason D’souza
Great. Second question that we have on the wall is that considering that the net cash position is increasing, how do you see other income over the next year and the next one or two years?
Nikhil Chopra
So we clearly see that we have a significant cash surplus, net cash surplus in this year end. And based on that and with the future cash flows that will be generating, we clearly see that other income should be in the range of 65 to 70 crores next year as a treasury income.
Narayan Saraf
65 to 75.
Nikhil Chopra
Yeah, 65 to.
Jason D’souza
And we talked about new partners or new which will commercialize on the CDMO business. Any color that we would want to give in terms of the CDMO partners.
Kunal Khanna
The important thing is what we are doing with current partners and selected new accounts. And as Nikhil clearly mentioned, the kind of new projects which are to be commercialized over the next 12 to 18 months, which includes lozenges, you know, with key marquee clients in newer geographies like Europe and North America. There’s also Latam Opportunity, Throat Sprays, ORS solution. So these are important projects. In addition to that, we have always maintained that our endeavor will be to add at least one or two more anchor clients every year. And we are working towards that.
Jason D’souza
Great. And then the last question will open to the queue. Any update on the logistic cost in terms of the Red Sea issue, especially on international trade?
Nikhil Chopra
No. Yeah. Sorry Konan, please go ahead.
Kunal Khanna
So pretty much you know, the trends are consistent. No significant deviation from what the position was earlier.
Jason D’souza
Great. We can open the floor for questions. You can take the next question. Moderator.
operator
Thank you. The next question comes from the line of Rahul Giovanni from IIFL Securities Ltd. Please go ahead.
Rahul Jeewani
Yeah. Hi sir. Thanks for taking my question. Sir, on the domestic business, our productivity has improved to 8. Sorry to 8 lakh rupees already. And given that the Novartis Octal portfolio would also move announced to us by FY in FY28, how do you see the productivity shaping up for the domestic business over the next three year period? And if you can also comment in terms of the profitability for the domestic India business with some of these moving parts.
Kunal Khanna
So now we don’t talk about profitability of individual business. Profitability is spoken about overall company which I think has been shared earlier. But let me answer your first question in terms of when we talk of 8 lakh productivity we are talking in totality which is inclusive or opthal business. And in the coming time you should see our productivity increasing by 12 to 14% over next two to three years.
Rahul Jeewani
Okay? Sure sir. And while we appreciate that gross margins on the Optile portfolio will increase, let’s say from a 20% kind of a number to a company average number in FY28 but do you expect the entire quantum of benefit to flow down to EBITDA as well and hence drive a significant improvement in ebitda margins in FY28?
Kunal Khanna
That is correct Rahul. A significant part of the gross margin will flow through in the ebitda. It’s not a function of productivity being impacted or more people being added. It’s basically sourcing, profile changing and gross margin flowing into ebitda. And while we mentioned that we don’t want to comment on know individual business profitability, we have mentioned earlier that on a standalone basis the optile profitability will be, you know, if nothing higher than our India business current profitability.
Rahul Jeewani
Sure sir. And sir, can you so, so can you also talk about given that there is this risk around land tag, so in the, let’s say in the worst case outcome of you being required to withdraw landtag from the market, what would be our risk mitigation strategy be?
Kunal Khanna
We would not want to comment on anything like that. You know for us, you know this is a product which has been pretty much been there in existence for so many years with a very strong safety profile. And you know we believe that the government and the key stakeholders understand that, you know very well and their request of manufacturers being much more vigilant towards quality is something which we respect and welcome. So that some of the other low cost generic players are pretty much cognizant of the quality parameters. As we speak. There are markets in which this molecule has been relaunched over the last six to eight months which again is a very positive sign.
And as manufacturers we are committed to maintaining the quality and you know, government standards.
Rahul Jeewani
And would it be possible to disclose the number of flips which you would have for Rantech?
Kunal Khanna
See it is part of our mass division and for that mass division it is, you know, not that Rand Tac is the only brand. There are a significant number of acute brands which we have, you know in that particular division. So it’s not that our division is dependent on Rantac. If nothing Rantac is not even a priority product.
Rahul Jeewani
Sure sir. That’s it. From my side. Thank you.
operator
Thank you ladies and gentlemen. If you wish to ask a question please press star and 1. The next question comes from the line of Naman Bhagrecha from IIFL Capital Services Ltd. Please go ahead.
Naman Bagrecha
Thanks. Thanks for the opportunity sir. Just wanted your views on the API business. While it’s a small business, you’ve seen over the last two years 24, 25 it has been declining. So how should we see this business going ahead? We expect further decline. And what were the challenges over the last few years?
Kunal Khanna
Actually when we look at our API business the third party sale has always been dependent on one key product which is and we had always witnessed that, you know over the last four years that the market for this particular category was in mature phase and in some geographies was declining. Therefore we had taken a call, cautious call how we can utilize the API business to maintain our own supply security as well as contribute more towards improving the margin profile of our US and US As a result of that we in source some products and that is contributing to the profitability of our US business.
So we’ll continue to do that. We don’t see a further decline even in terms of third party sales. From where things stand right now it will pretty much be range bound in what figures we are seeing over the last couple of years. But more importantly how we are leveraging our infrastructure towards contributing more towards the overall business profitability in terms of captive consumption. That has been our effort.
Naman Bagrecha
In the opening remarks we highlighted that a progressive portfolio is going much faster than the IPM growth. Can you enumerate what would be our progressive portfolio growth versus let’s say the market growth of that particular category.
Nikhil Chopra
So very difficult Naman to talk about. See we in totality are speaking and I think earlier Kunal had spoken that probably Silica market, Silnadipine combinations, Cardia, Metrogyl, Rizal, Asmara, all this category if I have to give you some glimpses we are meeting the market growth that is that is where we stand. More details can be shared offline and Optel market also what was shared that we are growing at 22% as compared to market growth of 1112%. So we have been beating for 75% of our progressive portfolio within India. Beating the market growth in a significant way.
That is what I can share. I think Jason can help you at some given time offline if you want more details, will be more than happy to share.
Naman Bagrecha
Sure, sure, sure. Thank you. And sir, just last one question on the dividend payout policy. So our dividend has increased. Could you. I mean is there any stated policy where you would want to maintain let’s say 40%, 50% or 60%, kind of a dividend payout.
Kunal Khanna
So our dividend payout, Eat Naman has been in the range of closer to 35% over last two, three years and we continue to be at 35% even for this year. So I don’t see any significant change in the strategy of our dividend policy.
Naman Bagrecha
All right, all right. Thanks. Thank you very much. All the best.
operator
Thank you. The next question comes from the line of Mohammad Patel from Edelweiss Public Alternate. Please go ahead.
Mohammed Patel
Yeah. Hi sir, I have one question. Can you talk a little bit about the non progressive portfolio and what are the management’s thought on this portfolio going ahead?
Nikhil Chopra
Non progressive? Non progressive will be. See the definition of non progressive is what I think was spoken about that there are some. Some brands within the Rentech franchisee, some SKUs within the Rentech franchisee, some SKUS within the Nicada franchisee. So there are those type of portfolio which we continue. How people continue to give brand reminder in the clinic of doctor. There is no other strategy.
Mohammed Patel
Okay. So that part of the portfolio grows at least with the market or below market.
Narayan Saraf
There’s no growth in here 50%. If you look at granitarine plane, there is hardly any growth. It is at par with the market. Nicadia, we are 90% of market. So we are only driving the market now we are driving the entire market growth for Nicardia franchisee with the help of Nicardia XL. Nikkada XL is growing at 20 by 30% whereas Nicardia plain which is 7 to 8 crores is stagnant. But more now your prescriptions, profitability, everything has been driven by Nicadia XL which is around 3, 4 crores a month. So that is how we manage the portfolio which is non progressive.
Mohammed Patel
Okay, got it. Thank you.
operator
Thank you. Ladies and gentlemen, we take the last question from the line of Meghna Agarwal from Mount Intra Finance. Please go ahead. Hello.
Meghna Agarwal
Thank you for the opportunity. I just wanted to understand about this that is happening. Any timeline for that?
Narayan Saraf
It’s here.
Meghna Agarwal
Hello.
Narayan Saraf
Hello.
Kunal Khanna
Yeah,
Narayan Saraf
I can. But you’re talking about which. You know which. What? What we are. We are into formulation.
Narayan Saraf
Sorry, we can’t hear you. Hello moderator, do you want to end?
Narayan Saraf
We are not able to hear you. Well please can you be a bit louder. We are not able to understand what you are asking and clear what you are asking here.
Meghna Agarwal
Hello, Am I audible now?
Nikhil Chopra
Yeah. Yes. Yes.
Meghna Agarwal
If I’m asking about the sales take of the promoter, what is the timeline about that.
Narayan Saraf
Stake of what sorry sale
Meghna Agarwal
promoter?
Nikhil Chopra
See very difficult for us to answer that question in this conference call. This conference call is more related to the performance for the business. So these all questions probably will be more than if it is promoters say in terms of what actions they want to do. We basically are a team of management and we more focus upon the business operations.
operator
Thank you ladies and gentlemen. With that we conclude the question and answer session. I now hand the conference over to the management for for their closing comments.
Nikhil Chopra
Thank you all for attending the conference call today. This is fifth year in a row in terms of the way JB team has been coming meeting you all and sharing the insights in terms of the way business is progressing in transparency and couple of things that more I would like to talk business Business. I think anything and everything that we do at JB is best in class compliance. And I think what was also shared that our plants also continue to get audited by the fda by US FDA by other regulatory authorities. And our people at the plants also have done a fantastic job in terms of facing those audits.
And not only no 483 no observations that is what we call we can boost in terms of what we have delivered as a company. So whatever drugs we manufacture are best in class compliance. That is what I wanted to share. And equally the focus continues to be on the business delivery in terms of driving better profitability. Focusing more on India which contributes today 60% of our business. CDMO contributing 12% to our business and also some parts of row market which are more aligned to our strength. We will see how we can commercialize the new products and drive better growth and better productivity in the coming days.
Thank you all.
Narayan Saraf
Thank you.
Kunal Khanna
Thank you.
operator
Thank you on behalf of JB Pharma. That concludes this conference. Thank you for joining us and you may now disconnect your lines. SA.