Laurus Labs Limited (NSE: LAURUSLABS) Q3 2026 Earnings Call dated Jan. 23, 2026
Corporate Participants:
Satyanarayana Chava — Chief Executive Officer, Executive Director
Soumya Chava — ED Generics and Commercial
Ravi Kumar — Executive Director
Analysts:
Nitin Agarwal — Analyst
Tushar Manudhane — Analyst
Rehan Syed — Analyst
Sajal Kapoor — Analyst
Mehul Panjwani — Analyst
Chirag Shah — Analyst
Jevan Patwa — Analyst
Bharat Sheth — Analyst
Vivek Agrawal — Analyst
Ramesh Jain — Analyst
Manav Mehta — Analyst
Vishal Daga — Analyst
Abhijit K — Analyst
Dheeraj Kumar Reddy — Analyst
Bansal — Analyst
Presentation:
operator
Sa. It. Sa. Ladies and gentlemen, good day and welcome to the Laurus Labs 3 QFY26 earnings conference call hosted by DAM Capital Advisors Ltd. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on the Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from Dam Capital Advisors Ltd. Thank you. And over to you, Mr.
Nitin.
Nitin Agarwal — Analyst
Thank you so much. Good afternoon everyone and a very warm welcome to Laurus Labs Q3F26 earnings call hosted by Dan Capital Advisors Limited on the call today we have representing Laurus Labs Management, Dr. Satyrayan Chawa, Founder and CEO Mr. V. Ravikumar, Executive Director, Mr. Krishna Chaitanya Chawa ED CDMO Mrs. Soumya Chawa Edwards ED Generics and Commercial and Mr. Vivek Kumar, AVP Investor Relations. Before we proceed, I would like to remind you that some of the statements made during the call today could be forward looking in nature and a safe harbor statement to this effect has been included in the press release that has been shared on the company’s website.
I hand over the call now to Dr. Chawa to make the opening comments and then we’ll open the floor for questions. Please go ahead sir.
Satyanarayana Chava — Chief Executive Officer, Executive Director
Thank you. Good afternoon everyone. We continue to execute our strategy. The advancement of important clinical and commercial programs with global partners, successful ramp up of new launches and strengthening our leadership in ARV segment. Our large scale development and manufacturing capabilities across small molecules as well as large molecule offerings continue to gain traction with multiple partners. We are seeing healthy level of interest across technologies and scale from our long term existing partnerships. We are confident that we are investing in interesting technology platforms, many of those already underway. Successful execution on these projects will continue to transform our business portfolio and drive future growth.
Some of the notable progress I wish to highlight. We made significant investments in Capex so far in peptide development and manufacturing infrastructure to meet our current and future capacity requirements. In addition, we operationalized our antibody drug conjugate and gene therapy process development labs in Hyderabad this quarter and the construction of GMP manufacturing facility is well on track. Last month we also announced increase in giant investments in Kaka Pharma which is in line with our plan to support ongoing FDF facility construction in Hyderabad. Phase one is expected to be completed by mid-2027. Moving on to financial results, we delivered another quarter of strong operational and financial Performance revenues for the third quarter stood at 1778 crores.
Gross margins has expanded further from the previous quarters and maintained around 60%. And EBITDA margins expanded to little over 27%. To achieve these numbers, through strong performance across our generic business and also significant commercial surplus of CDMO programs to our markets, our product mix, recent business division and operating leverage have continued to do well in supporting our healthy margins overall. As we look forward, we remain well on track to deliver healthy operational growth for the entire financial year. Now I would like to request Ms. Chandina to share key updates on our CMO business. Thank you. Yeah. On the CDMO side we continue to see strong interest in our integrated service offerings across various complex technology platforms. Our cumulative nine month performance has been very healthy clocking more than 50% growth. This has been supported by strong recurring business from our existing long term customer relationships across various different scales. Now in the small molecule space, our Q3 sales have been at 408 crores. I would say this performance is in line with our expectation Due to phasing of deliveries in the coming quarters involving very long and complex synthetic processes. Pipeline momentum has remained very healthy with well balanced mix of big Pharma clientele and also mid and small size biotechs.
Majority of the pipeline programs under execution utilize several advanced technology platforms and in line with that we continue investment for large scale capacity expansion in our Vizag sites and expanding our capabilities including peptides flow, high energy chemistries, purifications etc. Now on the bio division side of things, Q3 sales have been reported at 43 crores. The performance has been a bit muted but we are seeing better and longer visibility on demand projections and executing longer campaigns. On the CDMO side. Additionally, our AOF business is clocking healthy operational progress with continuing customer interest for dedicated lives. Construction work for the commercial scale fermentation facility at Vizag is progressing in line with the plan and we expect a phase one capacity of a little over 400 kiloliters to be operational towards the end of 2026.
Thank you Krishna. I will request Samuel Chawad to share key updates on our generic business.
Soumya Chava — ED Generics and Commercial
Thank you. The revenues from the generic division have continued to perform well Reporting growth of 37%. 2,327 crores. For quarter three and for the nine month period we achieved sales of 3,510 crores reflecting growth of 26%. The growth has been supported by higher ARV volumes and more specifically by strong offtake in recently launched products. In the developed market, we continue to see stability from the established product portfolio and expect the benefits to continue at least in the near term. The broad API market portfolio and production capacity in the ARV business continue to be fully optimized, ensuring that we are well positioned to support additional orders as and when they arrive.
This positions us well to meet customer requirements. The order solid facility expansion is progressing well. A significant part of the plant capacity became operational during the quarter and is currently undergoing ramp up activities in line with the plan. Cumulatively, 92 DMFs have been filed to date in developed markets. Four formulation dose years have been filed and five approvals received during the nine month period. Overall 91 products have been filed cumulatively today. Thank you. Thanks Krishna Sonya for the. On the. R and D front, overall R and D spending was at 4.1% of our sales for the nine months. FY26 increased by 8% year over year including our spend on the synergies and space. This R and D spend is in line with our full year target and we continue to invest in portfolio focusing on product complexity, scale and sustainable and new technology platforms. Let me share a brief on the quality side the nine months the company underwent close to 110 quality audits by multiple drug related drug regulator agencies and several customers. Company has successfully launched audit inspections without any critical findings and ESG brand one of the leading agency SNP Global has published its 2024 ESG store in which Lars reported an impressive 10% marks in this the score achieving 81 out of 100 points.
This reflects our continued commitment to sustainable development and exceptional performance ESG practices. As we move along Now I request Ms. Ravi Kumar to share overall financial highlights.
Ravi Kumar — Executive Director
Yeah thank you Dr. Sathya and very warm welcome to everyone for this quarter 3 and 9 months FY26 earning call total income from operations for the 9 months came at around 5001 crore. We just crossed 5000 in 9 months time registered a growth of 30%. We have continued to deliver strong growth mainly due to sustained year business momentum, strong CDMO and growth in other generic business. For the quarter three total income from operations was at 1778 crore with a 26% growth. Gross margin maintained healthy way for nine months at 60.1% and for quarter three it is at 60.9% mainly due to better product and division mix and continued process improvement efforts.
EBITDA for nine months stand at 1300 and 3 crore with a margin of 26.1% is well within our earlier guided range. For quarter three EBITDA reported at 485 crore with a margin of 27% due to strong operational leverage. Profit after tax at nine months 610 crores. It’s a growth of 388% and for quarter three 252 crores ROCE has improved to 18.5%. If you look at last three quarters it is progressively improving. On the capex front we invested about 246 crores for the quarter and cumulatively for nine months it is 735 crores. Our net debt stood at 2092 crore which is similar range of quarter ended September and debt to EBITDA has further decreased to around 1.2.
On the capital allocation front our strategy remains unchanged and we will continue to prioritize investments into high value business segments to drive near and long term growth and return for our shareholder over a period of time. To conclude as we will finish the year, we are confident in delivering growth and ongoing focus on execution. We remain well positioned to drive long term growth. You can refer our IR presentation for more details. With this I would request the moderator to open the lines for Q and A. 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 star and one on the Touchstone telephone. If you wish to remove yourself from the question queue you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tushar Maridhane from Motilal Oswal Financial Services. Please go ahead.
Tushar Manudhane
Thanks for the opportunity and congrats on a good set of numbers. Just first to start from keeping question in terms of you could break down ARV sales into formulations and API.
Satyanarayana Chava
The nine months.
Tushar Manudhane
Hello.
Satyanarayana Chava
Yeah, in the 9 months. APIs is 8 6. The formulation is 865 crores ARV in the API C is the 1259 crores.
Tushar Manudhane
Sorry, how much, how much is API?
Satyanarayana Chava
This numbers can be it is there in the IR or I can give it to you. You can ask any qualitative question please. Totally, totally add revenues mark 744 crores for the quarter three.
Tushar Manudhane
So secondly on the CapEx side like this nine months CapEx is largely more than what we would have done in FY25 and then we have certain contracts may be on peptide side or now in adc. So firstly how much? You know one can think about investment into peptides as an asset for let’s say next 12 to 24 months and ADCs as well if you could, you know. And then thirdly on the overall capex for 27.
Satyanarayana Chava
The ADC is still at the nascent stage right now. We have allocated $25 million to the GMP facility which is under construction right now. We don’t expect any meaningful revenues coming from ADCs the next two years. When it comes to CDMO investment in fractile commercial manufacturing facilities, we expect qualification during this calendar year and we will give you more details as and when we are in person to give feedback to you.
Tushar Manudhane
And sir, overall capex
Satyanarayana Chava
overall capex this. Year will be about 1000 crores in FY26. FY26 based on the current estimate we do feel it will be over 1000 crores next year also.
Tushar Manudhane
And this would be largely done with keeping debts net debt at similar number.
Satyanarayana Chava
Debt may be increased slightly it’s needed but your debt by EBITDA will be the in a better way.
Tushar Manudhane
And just one last from my side if you could at least just share in terms of pecking order the gross margin for different segments like API synthesis, fbf.
Ravi Kumar
We are not giving that segment wise. That much details but it is everybody’s guess. Yeah.
Tushar Manudhane
Qualitatively while not a specific number but directionally you have to think about is FBX synthesis at a similar gross margin API at a lower gross margin. Is that the way to think about.
Satyanarayana Chava
The order remains same CDMO formulation API yeah this is an order API on. The lower side, formulation on the higher side and CDMO is on the top.
Tushar Manudhane
Because sequentially if we see quarter quarter there has been improvement in gross margin while the share of formulation has increased considerably in this quarter compared to previous quarter. Which is why I was trying to understand and in fact synthesis share has reduced and even API says API share has increased which is why I was just trying to understand if there was anything in to look into as far as gross margin for the quarter is concerned.
Satyanarayana Chava
I think the order is remain same. I think see there is a product mix some segments within the same segment some products where higher margins were there. So there is see if you look at last quarter also we had the similar gross margin this quarter also gross margin and we expect to to maintain gross margins of 60% around 60% for the coming quarter and also next financial year.
Tushar Manudhane
Okay sir, that’s it for myself. Thank you and all the best.
operator
Thank you. Next question is from the line of Rehan Syed from Trinetra Asset Management. Please go ahead.
Rehan Syed
We are Good evening to the team and congratulations for a good setup numbers and thank you for giving me the opportunity. So I have a couple of questions. First on the CDMO side like CDMO grew 88% in 88% in H1F26. Management has repeatedly warned that this business is lumpy. So Your your consolidated quarter three revenue grew only 7.5% sequentially over quarter two. So my question here is your CDMO growth is H1 was phenomenal due to LACE phase NC deliveries. However looking at the sequential revenue growth in quarter three so it seems the lumpiness might be entering at a plateau.
Is the revenue we see in quarter three the new sustainable quarterly base for cdmo or did these quarters include a significant portion of registration basis and or launch quantities that might not repeat in quarter four or quarter one left by 27. This is my first question.
Satyanarayana Chava
See CDMO revenues. If you look at the overall year nine months we have grown significantly and we are also confident that the growth will continue likely. Although the Q3 was little softer because of timing of deliveries to our partners. But we expect if you look at Q4FY25 versus Q4FY26 we expect to grow. Okay, request you to take annual revenue then a quarter on quarter for the cdmo.
Rehan Syed
Okay, fair enough. And so my second question is around the OPEX one on specialized module modalities. So with the impressive PAD growth this quarter the one from specialized modalities like CGT and ADC is less visible. So however as an analyst I want to understand the core efficiency. Could you quantify the specific quarterly EBITDA drag from this non driving generating activities? And furthermore since you now recruited new leadership for ADC so is the INR250 crore budget still sufficient or should we expect an upward revision in OPEX as you move towards bioconsultion and field finish capabilities.
Satyanarayana Chava
Philosophy we will inform him all about.
Rehan Syed
None of them are not clearly audible.
Satyanarayana Chava
None of these pre operative expenditure or any of the initiatives is capitalized so. Everything go every every new modality expenditure is expensed. So in the ADC space we are investing significantly both in Apex and capex. But that is going through the balance sheet. We are not capitalizing it. Okay. And coming to your question of the team, actually we have a separate team identified guy who is relocated from US to India to take care of the ADC and then no gene therapy. Okay? Okay. And my last question is on the ROC and ROE guidance that you have given last quarter that management has highlighted that the company’s current size can absorb the thousand crore annual CAPEX better than in the past. So however with the groundbreaking of $5,600 million complex and the current turnover of 0.9. So aren’t we risking another multi year period of operating deleverage? Specifically if you if your Bangalore bio capacity is sold out until end 2026 and new B capacities are also a year away. So from this passive division will be incremental turnover came to bridge the cap to over PR 1.1 asset turn and 25% ROC target in 12 next 12 months.
I think in case of bio our revenues will stagnate until we operationalize our new capacity which will be by end of this calendar year. And we are not committing that we will achieve a ROCE of 25% in the next 12 months. But we are confident that the ROCE percentage will go up from the current 18%.
Rehan Syed
Sir, you have said 18% right?
Satyanarayana Chava
Right now it’s 1819 is 18.5%. Proceed. We expect to go up but we are not committing. It will go to 25 with a time bound program. Yeah.
Rehan Syed
Okay. So I’m not putting any number here.
Satyanarayana Chava
Yes.
Rehan Syed
Okay. Okay. Fair enough. Thank you. That’s it for my.
operator
Thank you. The next question is from the line of Sajal Kapoor from Anti Fragile thinking. Please go ahead.
Sajal Kapoor
Yeah. Hi. Thank you for taking my question and good afternoon team. It’s heartening to see a very strong jump in the operating cash flow. I’m looking at the nine month number, it’s about 600% increase. But there is an interesting trend here. Raviji, if you can elaborate and help us better understand this wider picture. So if I look at the 10 year data, so I’m looking at 2016 to 2025 cumulative, we clogged EBITDA of 8500 crores. And against that EBITDA of 8500 croces, we did an operating cash flow of about 5400 crores. So that’s about 63% conversion.
Whereas in the nine month the conversion is 113%. So 63% going to 70, 75, even 80% is understandable. There is a definite change in the net working capital strategy as far as I can understand. If you could just help us double click and understand a more longer term and more sustainable conversion of EBITDA into operating cash flow.
Ravi Kumar
Thank you Arjun. Thanks for your very interesting question. So this kind of help happened because of some of the customer advances which helped this year, number one. But of course if you look at the absolute number of the NWCs close to the similar number for the March and December. But the revenue has increased. That’s really helped. But you are right. From 63 to 80, 90%. But beyond that actually it some part is helped through its customer advances. Thank you for the your in detail understanding.
Sajal Kapoor
Sure, Raviji. Just. Just to. Just to harp on that one. So given that the business characteristic is definitely changing in the favor of CDMO and this customer advances will be an ongoing thing. We cannot compare quarter over quarter for advances. Because in one year the advance may be higher than the other year. But on a broader five year basis for the going forward five year, I think the conversion should be a lot better than what we have delivered in the last 10 years. Is that a fair assumption?
Ravi Kumar
Yeah, that’s a fair assumption.
Sajal Kapoor
Okay. Thank you. Thank you. And my second question is for you Dr. Satya. Where not to go or what not to do is also equally important. Because business have got finite cash flows and capabilities. What is in so in that context, what is that one area where Laurus has chosen not to grow despite opportunity Looking very interesting in the near term.
Satyanarayana Chava
Very thought provoking question you asked, Sajan. See right now we decide not to enter into large scale map manufacturing. We don’t want to do that. That’s the area we decided not to get it. And the other area we decided not to enter right now is also sterile manufacturing. These two areas we decide not to enter. Although opportunities look good but we also need to understand our management bandwidth to handle many things. So we know right now we are busy with what we are handling. We have visibility about our growth plans in the next two, three, four, five years.
So we are cautious in the areas where we wanted to enter and deploy our resources. Both men, material and money.
Sajal Kapoor
And that’s understandable, Dr. Sathya. Because if you look at India, I’ve seen many large sterile and MAB monoclonal antibody players, one of the leaders in that space are struggling when it comes to their balance sheet and the. And the ROSI profile. So completely understand that strategy. And thank you for clarifying. Thank you. That’s all from my side. Thank you.
operator
Thank you. The next question is from the line of melody panjwani from 40 cents. Please go ahead.
Mehul Panjwani
Hello sir. Thank you so much for the opportunity and congratulations on a great set of numbers. Sir, if you can elaborate a little bit on that is my first question on the joint venture with AKA Sarma. Can you please a little bit. What are we doing? Because I’m not tracking, I’m recently tracking this company.
Satyanarayana Chava
The joint venture with Karta Pharma is to manufacture Formulations for European market where APIs will be supplied by us. And in the phase one we are creating 3 billion solid volume capacity and 100 million solid world capacity for photon molecules. In the phase two we will create another 5 billion tablet capacity in the solid world space. Phase one we expect to complete by mid of 2027. This unit will primarily will do formulations packaging for various European markets and also some markets in Asia Pacific as well.
Mehul Panjwani
Right sir. Thank you sir. And the second question is on cell and gene update gene therapy. If you can highlight or elaborate what kind of revenues will kick in and what are we trying to achieve? For a layman who understands little bit about pharma, it will be helpful. Thank you.
Satyanarayana Chava
In the cell therapy, our associate company Immunoact is already having commercial revenues. And when it comes to gene therapy, we are at very initial stage of investments in antibody drug conjugation gene therapy. Our process development labs were operationalized and the GMP facilities will come in the next 12 months. And we don’t expect any revenues from ADCs and gene therapy at least in the next 24 months.
Mehul Panjwani
Right sir. And what about the joint venture with KA Pharma?
Satyanarayana Chava
We will have revenues in the next financial. Not in this financial year.
Mehul Panjwani
Yeah. Okay. Thank you so much sir. Thank you the most.
operator
Thank you. Ladies and gentlemen, we request you to please use handsets while asking a question. The next question is from the line of Chirag Shah from White Pine Investment Management. Please go ahead. Mr. Chirak, please go ahead with your question. Your line is.
Chirag Shah
Hello, Am I audible?
operator
Yes, please go ahead.
Chirag Shah
Yeah, so first question is both for CDMO as well as for API and FDF Business Q on Q and yoy. If you can just highlight, is there anything with respect to volume and pricing especially in API and fds, have you benefited on pricing in API and fds?
Satyanarayana Chava
The API fdf, we predominantly benefited from the volume gain.
Chirag Shah
Okay. Okay. So pricing has not really changed much. Correct.
Satyanarayana Chava
Price pricing hasn’t played a significant role in this. The volume gain was significant was the main reason.
Chirag Shah
Okay. And so second follow up, just a clarification. Also on the CDMO side, if you look at sequentially, CDMO revenue would be up down by 13% yy. Up by 1%. Now in the last two calls we have been indicating supplies to late stage development as well as commercials. So despite that we are seeing a flattening out of revenue. So is there any call out you would like to make on that side? Ideally if commercials are playing out then the ramp up should be slightly Higher before we start flattening out and the new molecule pipeline starts replacing or compensating for that.
Satyanarayana Chava
Yeah. Even you know, while the late stage supplies and also commercial supplies are ongoing, even in such situations, you know, some of these supplies are once or twice per year in some cases. So there’s not necessarily a supply going out every month. It comes down to their internal manufacturing capacity and demand requirements. So even in the case of it going commercial, we continue to expect lumpiness in some of the programs. I won’t say that’s the case for all but some of the programs you will continue to see that lumpiness on a quarter to quarter basis.
Ravi Kumar
On the annual basis you have to look at. On the annual basis, number one. Number two, on annual basis we are still committing to our earlier projection for the CDM for the full year.
Chirag Shah
Yeah. And for. So I was more keen on 27 because some new molecule supply has to start for us to compensate for this lumpiness. Correct. Else we will. We will see a kind of a flattening out or maybe 5 to 10% kind of a growth in CDMO business. So if you can just talk a bit about that. How to look at 27 CDMO revenue growth.
Ravi Kumar
While we are not giving any concrete numbers for 27, we still expect a healthy growth over whatever we expect to report in 26.
Satyanarayana Chava
If you look at FY26 in the nine months our growth is close to 50. Yeah. And we expect Q4. As I mentioned in just now with another question about Q4FY 2461 we indicated that our Q4FY 26 will be better than. So we have visibility now how FY27 look like. But we are not giving any quantitative guidance.
Chirag Shah
It’s more about qualitative. It’s more about are there any large molecules coming up for supplies for you in 27 based on the pipeline that you have created over the last two, three years. Is that the way to think that will drive the growth?
Satyanarayana Chava
Majority of FY27 revenues in our CDMO division will be commercial supplies. I think that much I can make a statement. Yeah. Nigeria Commercial supply.
Chirag Shah
Okay. And sir, one last this because. And this is more with the gross margin improvement that we have seen. Has currency played any role in your gross margin improvement? Because sequentially we would have benefited reasonably on the USD INR movement and USD Euro.
Satyanarayana Chava
Answer is yes, but not very significant.
Chirag Shah
Could it be, could it contribute 20, 30 bits or even 40, 50 bits of gross margin improvement sequentially given the adverse. So this is in context of adverse mix in the broader segment like CDM share is down. EPI side is significantly up. That’s why I was asking.
Satyanarayana Chava
We will get definitely we’ll get a benefit because we are a net exporter. But I’m saying that it is not a very significant impact or positive impact.
Chirag Shah
Okay, thank you and all the best.
operator
Thank you. The next question is from the line of Jeevan from Sahasrara Capital. Please go ahead.
Jevan Patwa
It’s very heartening to hear the guidance of 60% gross margin going forward. I think it’s very very positive coming to the CDMO side. Sir, I just want to understand your so FY27 so one is the animal health. So I don’t think animal health has still scaled up in 25 much. So animal health, how do you see the scale up in FY27 agrochemical also I don’t think FY26 we have done much of a delivery there. So how do you see agrochemical growing in FY27 and apart from that is there any large contract that we are talking or are in the pipeline with the big Pharma? If you can speak on that.
Ravi Kumar
On the animal health, you know there’s ongoing commercial supplies for a few compounds continue to do validations and filings for our partners in other programs. So there is some meaningful revenue for this year as well and that we expect to continue that or in fact grow on that in the crop science space. We’ve commercialized one particular supplies for our partner and we expect that to continue shipments in the coming years as well. And but we look forward to adding more partners in the crop science space. But meaningful revenues for the crop science probably will start maybe two years or one to two years down the road.
Jevan Patwa
Okay.
Satyanarayana Chava
Yeah. On your the second question on the large commercial contracts, I mean unfortunately I can’t necessarily comment on that but we continue to have good discussions with several partners in several phases of the programs.
Jevan Patwa
Yeah. So are you basically seeing any cases where the innovator large pharma is looking to move late stage molecules from other clients to us?
Satyanarayana Chava
The opportunities exist but unfortunately without divulging like confidential information I can’t really fully comment on that. So yes.
Jevan Patwa
Thanks a lot. And next question is about Immuno act. So are I think we have done recently tie with Cipla for South Africa region. So any, any, any comment on that? How do you see that market or how do you see that opportunity?
Satyanarayana Chava
That opportunity will be meaningful only a year from now because of the regulatory approval needed in South Africa. So clinical Times will start soon in South Africa so it will be FS1800. But there are some milestones you would have already received from.
Jevan Patwa
Okay, great sir, great. Thanks a lot. Thank you.
operator
Thank you. The next question is from the line of Bharat Sri Parupu from your quest for value capital. Please go ahead.
Bharat Sheth
Yeah, congrats for good set of numbers. Dr. Chawa, regarding this new greenfield CAPEX of 500 acres in Ashtapuram, may I know when can we expect this new Greenfield CAPEX start coming online? Can we expect first phase of it to come somewhere in FY28?
Satyanarayana Chava
See we are expecting land allotment and handover will happen in the Q4 this year, financial year and Capex will start from the second part of FY27 and we expect to quantification and validations only two years from now.
Bharat Sheth
Okay, good. And my second question is to Krishna Chetanagaru. So currently if you see there is a significant payoff demand coming to India on small molecule side from innovators. So basically what I understand is that the innovators are changing for capacity. So with this background, how is nor has prepared to handle this surge of demand? Are the current capacities sufficient to satisfy the CDMO demand and are we considering scenarios like freeing up generic capacities and allocating them to cdmo?
Satyanarayana Chava
I think one of the strategies that we’ve adopted is investing ahead of time and that was the case over the last couple of years where we continue to do significant amount of capex that was in in line with what we were expecting from capacity requirements and customer additions. And therefore that has positioned us strongly to meet some of these new opportunities that are coming about. And that’s also in line with our current guidance on capex for this year and the next year. This is to create capacities for our partners and opportunities that we are seeing.
Bharat Sheth
So basically we didn’t lose any business because of not having capacity.
Satyanarayana Chava
Basically. That’S a fair statement to make.
Bharat Sheth
Yes. Okay, thank you. Thank you very much. And my last question is to Swamiagaru. So it’s on generic. So recently 3 billion tablet capacity has come online in unit 2. So may I know from when do we expect to generate revenue from this new capacity?
Satyanarayana Chava
We’ve already started using the additional capacity and we will see a little bit of increase or jump from next calendar year, from next financial year, next quarter.
Bharat Sheth
Q1. Okay, yeah, thank you. Thank you very much. Yeah, that’s it from my side. Thank you.
operator
Thank you. The next question is from the line of Vivek Agrawal from CITIGROUP please go ahead.
Vivek Agrawal
Yeah, thanks for the opportunity. So first question is related to peptides. You are making ongoing investments so just want to understand how much or what kind of the investments you are making here. Let’s say for the next couple of years and when you see the revenues starting from this particular segment. Thank you.
Ravi Kumar
I think we’ll give more details at appropriate time as we work on this. But I can give you a glimpse. We are creating capacity for a fully integrated programs that would protect amino acids, unnatural amino acids, fragments, final peptides and purification and isolation. So the capacity being created is fully integrated. Yeah, and we’ll give you both details at an appropriate time.
Vivek Agrawal
So just try to understand more. So is it like that you already have some contracts or talks with some of the big pharma or it’s like you are creating the capacity first and then for example you are expecting some kind of business from this facility?
Ravi Kumar
I think I can’t give you more details.
Vivek Agrawal
No problem at all. And in CDM actually just harping on the comments that you made during the call. So in 4Q you are expecting growth. So just want to understand is growth is expected to come from supply of a new commercial molecule or is kind of a late stage molecule. You can, if you can provide some more color.
Ravi Kumar
Most of the revenue in Q4 is going to come from commercial supplies of molecules what we supplied earlier.
Vivek Agrawal
Okay, understood. And just last question on CDMO. So in calendar year 2026. Right. So how many commercial molecules on the new commercial molecules you are you are. Going to supply in the last 18. Months I can give you because we. Did add a review internally. So we supplied three commercial NCE’s in the last 18 months. And just lastly on the generics. Right. So in CMO you commented about that QQ growth, YUI growth in the fourth quarter. But how to think the performance of generic business in 4q so in this quarter actually there is significant step up. So I just want to understand what is the sustainability of the step up in 3Q and how to look this particular segment in FY27. Thank you.
Ravi Kumar
In the generic space, lion’s share of revenues are coming from ARVs, both APS and formulations and that business is pretty stable actually we were able to increase our market share in both API and formulations in that and our North American formulation and European CMO sales also going up. I think we believe those numbers what we did in Q3 are sustainable.
Vivek Agrawal
Understood sir. Thank you. That’s from my side.
operator
Thank you. The next question is from the line of Ramesh, Jen and Ca. Please go ahead.
Ramesh Jain
This is to Mr. Ravi Kumar. Just. I want to understand why there was a. I mean marginal growth in CDMO business quarter on quarter as compared to our generic business. You are telling for nine months. Of course I understand. But for this particular quarter, why growth was not visible?
Ravi Kumar
What you are. Can you just repeat your question?
Ramesh Jain
Why CDM revenues are not great? If the.
Ravi Kumar
If your question is why CDMO revenues are not growing, it is as we indicated, you can’t compare a quarter on quarter for a CDMO revenue. You have to see on a year basis. So the year as for nine months, we, as Dr. Sathya said, we already achieved a 50% growth for a year. Also we expecting to have a higher growth. And then you don’t compare quarter on quarter. I hope your question is that.
Ramesh Jain
And the margins are sustainable, sir, even for the next quarter.
Ravi Kumar
Yes.
Ramesh Jain
Thank you. Thank you.
operator
Thank you. The next question is from the line of Manavu Mehta from Ridan. Please go ahead.
Manav Mehta
Hi sir. Good evening. So my question is on the MoU where we are signed with Lord in South Korea where we’ve announced entry into OLED materials. OLED materials. So my question is how does Loras enter into this structure apart from pharmaceuticals?
Satyanarayana Chava
So our similar to our strategy across different areas. Right. Like for example, human health, animal health and crop science. OLED represents another potential opportunity where we could be a potential player in the OLED materials which are again small molecules or chemically synthesized compounds. Right. For that. That’s an MOU that we had agreed upon with Lorden. And we don’t necessarily expect to see any meaningful revenues this year or the next. But that gives us an opportunity to potentially play in this very lucrative market.
Manav Mehta
Understood, sir. Thank you.
operator
Thank you. The next question is from the line of Vishal Daga, an individual investor. Please go ahead.
Vishal Daga
Hi. My question was similar to, you know, what was the previous person asked? Just to add on to the question, what would be the total time of the market in the oled segment? Maybe 27, 28.
Satyanarayana Chava
Yeah, it’s still an emerging development given that the partner program that we’re working on is also a developmental program. So I can’t necessarily comment on the market size itself because that’s an emerging space that’s currently under development.
Vishal Daga
Understood. Okay, thank you.
operator
Thank you. The next question is from the line of Aseem and individual investor. Please go ahead.
Vishal Daga
Yeah. Hi. Thanks for the opportunity. Many congratulations for the fabulous results for quarter three. So one of my question of the business is already answered. Thank you for that. I have one question on the financials for quarter four. If you look at the last year quarter four, we have other income of around 40 to 50 crore which has led to a higher profitability. So my question is, was this a one off or we can expect a. Similar level of other income in this quarter as well.
Satyanarayana Chava
We are not expecting an other income in the quarter four.
Vishal Daga
Okay, so that was a one offer last year.
Satyanarayana Chava
Yes.
Vishal Daga
Okay, thank you. Thank you.
operator
Thank you. The next question is from the line of Abhijit K, an individual investor. Please go ahead.
Abhijit K
Hello, can you hear me?
Satyanarayana Chava
Yes.
Abhijit K
Yeah, I’d like to understand. I have two questions with regards to the One question is regards to the asset turnover. May I know what is the asset turnover currently?
Satyanarayana Chava
0.9. 0.91 actually.
Abhijit K
Okay, 0.91. And I look at the generic business and the FDF. Mr. Chava had mentioned that you have entered into some new products and the volume is the volume growth was there significantly. Right. How sustainable is this? Because we’ve seen that the API and FDF sector has been fluctuating over the last 24 months. Actually 24 to 36 months if you see. But now this has been a significant ramp up in the FTF and API both sectors. Is this like something that we can expect the company to continue to grow because you also have new capacity that has come online.
I will mention on the call also.
Ravi Kumar
The growth in generic API business we believe is very sustained. And when it comes to growth in our other FDF business it also eventually sustainable despite up and downs because our capacity increased capacity for our GMO business. In Europe with the European customer will yield revenues starting from this quarter and fully operational by next quarter. So we expect those numbers are also sustainable in the long run. May not be in Q4 this year and Q1 next year but eventually we expect to do well there as well.
Abhijit K
Okay, and one last question with regards to the peptides sector that is happening. We understand that you are working with the American biotech company and we want to understand the timelines of these projects. Is it 24 months, 36 months or 48 months or is it really, really unpredictable? We have seen some data that there are some trials going on in the US without disclosing the company of course, but if you can understand the timelines because you invested billions of dollars like in your company and you are looking at the future of the sector which is obviously it is ADC and Peptides which is like a revolutionary thing in pharma.
So we wanted to understand what is the timeline if you have any visibility or anything in that.
Ravi Kumar
I think you. Have to have bear with us for some more time. We will give you the details appropriate time. Yeah, but as you mentioned, we are investing significant amount in peptides as well as also significant amount in ADCs.
Abhijit K
So in that part can we conclude that you are trying to move from being an API or CDMO sector to a biotech company? A company that is like the longer term vision for the organization?
Ravi Kumar
No, see our investments in biotech, for example cell therapy, gene therapy, ADCs our most emerging fields globally. And we wanted to invest ahead of the curve and wet our hands to capture opportunities in the case of patriots and all. We are well established, we have investment, we have programs running right now. So the answer to your question is we are more focused on small volume CDMO than large volume CDM right now. Large volume cdm.
Abhijit K
Yeah. Okay. All right. Thank you. Thank you.
operator
Thank you. The next question is from the line of Anjan Banerjee, an individual investor. Please go ahead.
Abhijit K
Hello. Am I audible?
Satyanarayana Chava
Yes.
Abhijit K
Yes sir, I have question Dr. Java and thank you for the opportunity. Sir, I have question on the CDMO space. Like we have been seeing the many of the Indian foreigner players, they have been expanding their capacity in towards this CDMO segment. So as per the understanding how big and long is this opportunity and given that Laura has invested so much in the last couple of years towards expanding the capability and capacity. So what is the competitive advantage that Loris Labs has as compared to its peers? So that’s one of my questions.
Satyanarayana Chava
I don’t say we have advantage. We were well prepared to take the opportunity, I’ll put it that way. So people look at us. If there is a complex chemistry, if there is a scale involved, if it is a flow chemistry, if it is biocatalysis, if it is high energy chemistry and involves scale and we are the forbid partners. So we have invested in these modalities and created capacities.
Abhijit K
Okay. So as per you whatever that you talked about. So is it a fair assumption that developing these capabilities is a very long term process and any pharma company just cannot hire scientists and let’s foray into these because they are very skillful operations. So is it fair that developing these and getting the customer approval is a very big thing? Because the capability matters a lot as compared to the capacity? Is it a fair assumption?
Satyanarayana Chava
Yeah, I think initially we are creating capabilities and then investing in capacities. So what I mentioned, Laros currently uses enzymes at the commercial scale. Laros uses flow chemistry at commercial Scale. So we are going in phase manner. First we create capabilities and then create capacities and we believe products will come.
Abhijit K
And second question from the CDMO space only that you have constantly guided that we intend to reach that 50% of our share which will be driven from the CDMO segment. So is it the ceiling or once we reach this 50% we will look beyond the breaching dates. That 50% ceiling also that’s the second question.
Satyanarayana Chava
I think our first goal is to reach 50% long term. We are given a is not going to be there in the medium term. It is a long term goal for us to get there.
Abhijit K
Thank you very much and all the rest. Thank you.
operator
Thank you. The next question is from the line of Kodanda Panif, an individual investor. Please go ahead.
Abhijit K
Good evening. Very thanks for giving a good result for this quarter. So I want to ask the what is the exchange benefit for this quarter? Because of the huge volume.
Satyanarayana Chava
Yes, but not very significant.
Abhijit K
Okay. Okay, thank you. Most of the things already clarified and. Yeah.
Satyanarayana Chava
Okay, thank you.
Abhijit K
Thank you.
operator
Thank you. The next question is from the line of Nitin Agarwal from Dam Capital. Please go ahead.
Nitin Agarwal
Hi. Thanks for taking my question sir. You know on the ARVs you’ve been earlier mentioning that the business will stabilize around 24, 2500 crores. We seem to be running significantly ahead of the run rate in the current year. So is this has something changed in the ARV space per se which has enabled us to improve our scale in this business and is it sustainable?
Ravi Kumar
See earlier we guided 2500 plus or minus 200 crores. But you’re right, current run rate is little beyond that. The main contributor for that is we have expanded our API capacities to meet our customer demand that is driving our positive growth there. Now if you have to reset that, currently we are at 26 plus times 200, I’ll put it that way. But fundamentally hasn’t changed much.
Nitin Agarwal
And sir, you know, given there were some changes in the market landscape, has the profitability of the business also improved versus the dip it had a couple of years back? Is it a much better business profitability wise than it was maybe a couple of years back?
Ravi Kumar
It’s profitable if we sweat assets more. That’s what we’re doing right now.
Nitin Agarwal
But you don’t see any major change in the competitive intensity in the business?
Ravi Kumar
We are not seeing any. But Nitin actually what happened? Actually we suffered for few quarters because of the steep price reduction. But that we could able to recover those things like no. Because of the some process improvements Raw material prices and productivity improvements as we have been indicating for the last six quarters that we have been working on ARVs that is being resulted in this quarter. API sales.
Nitin Agarwal
Secondly, on the formulation non ARV formulation business, what are the growth drivers for this business? When you look at next 12 to 18 months.
Satyanarayana Chava
We expect to sustain those because of additional capacities coming up for our CMO partner in Europe and also volume gain in US and also some new launches in North America, both US and Canada. Because this quarter was probably the first decent quarter of ramp up which happened. We had a pretty meaningful ramp up actually this quarter. Is this like a run rate from your own or there will be lumpiness in this business as we go along? I think we expect little lumpiness but it is not significant. Lastly, on the CDMO business versus the kind of conversations we were having with investors or other with our partners a couple of years back to the kind of conversations we’re beginning to have now, what has been the change? I mean if you can qualitatively indicate the change in the quality of discussions we are having, scale and scope of discussions we are having with various partners on cdmo. Krishna, you want to answer any change in. I mean it’s a long, long answer that. But okay to just summarize it. I think the tone of the conversations continue to remain the same in terms of what kind of capacities, capabilities and credentials that the company has. I think that’s what primarily attracts customers. With that being said, I think the global landscape has been a tailwind for potential conversations with customers. But the fundamentals need to be sound and that will only drive the business. Our understanding.
Nitin Agarwal
Okay, thank you so much.
operator
Thank you. The next question is from the line of Abhijit K. An individual investor. Please go ahead. Abhijit, please go ahead with your question. Your line is unmuted.
Abhijit K
Yeah, I just. I had a clarification with regards to the CDMO business. You mentioned animal health and crop sciences. Animal health will continue in FY27 and crop sciences. One product has been commercialized and meaningful supply will happen in 12 years. I remember in the previous con calls you had mentioned about human health CDMO contract also is that still on track or is there approval spending and etc.
Satyanarayana Chava
In the human health space. There are several different programs that we currently work in with several partners and there’s Dr. Satir mentioned there’s several commercial supplies ongoing in the human health.
Abhijit K
Okay, but you are percentage wise, can you give a breakup? Like is it possible to say what are you looking more at? Is it Crop science is animal health or is the future going to be human health? Because that’s where I think a lot of companies are talking about it. So just a picture, not to be too specific but just.
Satyanarayana Chava
Our largest share of CDMO is in the human health space by far and that will continue to be the case after that. We have a sizable portion coming in from animal health and the third one, which is again currently very small is in the crop science space. And this ranking of human health analytics and crop science will be similar if I project a couple of years on. The road as well.
Abhijit K
Okay. And the crop science is the one. Is this a patented product or no? I’m asking this question because next year and or in the next two years a lot of products are going off patent. So I just wanted to understand if it will affect you or not.
Satyanarayana Chava
Yeah, the commercial one is technically a patented product and some of the other opportunities that we’re working on are also on the patent ones that we’re looking at.
Abhijit K
Thank you. Thank you.
operator
Thank you. The next question is from the line of Dheeraj Kumar Reddy from ECWA Square. Please go ahead.
Dheeraj Kumar Reddy
Thanks. Thanks for giving me this opportunity. I just have a couple of questions. The first question being many CDMA players are talking about peptides as an opportunity today. I mean even you know, new land or like, etc, right? They say that this is a 10 billion dollar opportunity. Dr. Sara, I just wanted to understand what out of this 10 billion dollar opportunity how much will probably come to India or is it only Indian opportunity and relevant players will get like what kind of market share out of this overall? You can just give me in a three to five year, five year time frame maybe.
Ravi Kumar
Yeah, it’s a very difficult question to answer. See we don’t have visibility on who is investing, what capacity, what products we have, they have. But whoever gets the GLP opportunities, people are investing in amino acids, protective amino acids fragments and some of them investing in small volume, some of them invest in large volume. Opportunity is going to be meaningful for good number of players and I will not be in a position to comment any further on this.
Dheeraj Kumar Reddy
Got it. And my second question Dr. Chawa is basically so if you are saying that ARV will be more or less in the range of this 2500 to 3000 crores, what is the expected growth in the API segment going forward? API and the formulations, like how will they grow in the next one, two to three years?
Ravi Kumar
We grow in the next year. But significant growth will come in the FA28 because we’re adding capacities. We’re validating some generic APIs and formulations. So growth will be significant FA28. But there will be some growth in FY27 as well. The generic ATR product that we are space.
Dheeraj Kumar Reddy
Understood. Okay. Got it. Got it. Thanks. I think that’s all for me.
operator
Thank you. Ladies and gentlemen, this will be the last question for today which is from the line of Mr. Bansal from NBG Investments. Please go ahead.
Bansal
Yeah, you said, you know, while answering. One of the questions from the participant that your asset Turnover is. Is 0.9. So what is the maximum achievable capacity? Sorry, Fix asset turnover ratio.
Ravi Kumar
If you look at our 1 of our slide in the investor presentation, our 5 year average asset turn was 1.1. Our first target is to reach 0.1. Maybe 0.9 to 1.1 we will reach. But our peak assertion was 1.4. We are not anticipating 1.4 at this moment but we are targeting 1.1 over a period of time.
Bansal
Okay, so that means you are almost at the full capacity utilization.
Ravi Kumar
But 0.9 to 1.1. Actually there is a. Like we can.
Bansal
We can. Okay. Okay. Thank you very much.
Satyanarayana Chava
Thank you.
operator
Thank you ladies and gentlemen. As this was the last question for today, I now hand the conference over to management for closing comments.
Satyanarayana Chava
Thank you everyone for asking very insightful questions. And thank you.
Ravi Kumar
Thank you.
operator
Thank you on behalf of DAM Capital Advisors limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.
Satyanarayana Chava
Thank you. Methyl.