Neuland Laboratories Limited (NSE: NEULANDLAB) Q4 2025 Earnings Call dated May. 15, 2025
Corporate Participants:
Unidentified Speaker
Abhijit Majumdar — Chief Financial Officer
Saharsh Davuluri — Vice Chairman and Managing Director
Sajeev Emmanuel Medikonda — Head, Corporate Planning and Strategy.
Analysts:
Unidentified Participant
Vivek Patel — Analyst
Shyam Srinivasan — Analyst
Vidit Shah — Analyst
Ritika — Analyst
Ritika Agarwal — Analyst
Akul Broachwala — Analyst
Proline Nandu — Analyst
Ishmohit — Analyst
Sanjaya Satapathy — Analyst
Keshav Kumar — Analyst
Chintan Shah — Analyst
Naveen Baid — Analyst
Mehul Panjwani — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Newland Laboratories Limited Q4 and FY25 earning conference call. As a reminder, all participant lines will be in the lesson only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Raviyod Deshi from Ernst and Young. Thank you. And over to you, sir.
Unidentified Participant
Thank you. Abhirat. Good evening friends. We welcome you to the Q4 and. FY25 earnings conference call of Newland Laboratories Limited. To take us through the results and. To answer your questions. We have with us the top management. From Newland represented by Mr. Suchit Dawleri, Vice Chairman and CEO Mr. Sahaj Dawuluri, Vice Chairman and Managing Director Mr. Abhijit Majumdar, CFO and Mr. Sajiv Emmanuel, Mediconda, Head Corporate Planning and Strategy. We will start the call with a. Brief overview of the financials by Mr. Abhijit Majumdar. And then Suharsh will give you broad highlights of the business trends and what he is seeing in the market. And post that we will open up the call for the Q and A session. As usual, the standard safe harbor clause applies as we start with the call. With that said, I now hand over. The floor to Abhijit. Over to you, Abhijit.
Abhijit Majumdar — Chief Financial Officer
So thank you very much Ravi and a good evening and a warm welcome to each of you for joining our call. The financials for Q4 are as follows. Is the total income is 335.8 crores which is a decrease of 14% year on year as compared to 90.4 crores in the same period. Prime and specialty segments were the main contributors to revenue. As we have said earlier, we would like to point out that the inherent nature of our overall business is uneven. On a quarter, on quarter or even on an annual basis our EBITDA stood at 58.2 crores with a margin of 17.3%.
The decrease in contribution is attributable to the business mix and the decreased revenue base and decrease in gross margins leading to a decrease in EBITDA in Q4FY25 as compared to Q4FY24 where the EBITDA stood at 112.2 crores. Now coming to specifics, the gross margin for the quarter was 56.3% as compared to 58.8%. In Q4FY24. This gross margin includes manufacturing expenses and other costs directly attributable to the product. The profit after tax was 27.7 crores as compared to 67 point crores in Q4FY24 and the EPS stands at 21.6 rupees per share. For the full year FY25 our total incomes stood at 1,497.3 crores versus 15.71crore.
A marginal degrowth of 4.7%. EBITDA excluding exceptional items of 7.6 stood at 342.8 crores in FY25 as compared to 474.5 crores in FY24. We continue to focus on cash to optimize our working capital which stood at 107 days of sales at the end of March. We generated a free cash flow in the full year of 111 crores. We also paid back some of our term loan debt of around 39.4 crores and consequently our net debt position stands at a negative of 29 crores. As part of our overall investments we have invested 26.4 crores in capital spends and are committed to balancing growth and profitability by continuously optimizing costs and processes to ensure long term sustainability.
The additional production block in Unit three has been capitalized and we expect to start commercial production in FY26 while FY25 was a year of consolidation. As we have stated this earlier in our earlier earnings call meeting, our customer pipeline gives us a good visibility. We are confident that the commercialization of Unit 3 production block will give the business greater revenue momentum from the later half of FY26. We continue to be cautiously optimistic about our future and the potential that our business holds. With that I would like to hand over the call to Sahaj for his remarks.
Thank you very much.
Saharsh Davuluri — Vice Chairman and Managing Director
Thank you Abhijit. Good evening everyone and welcome to the call. Over the years Newland has steadily established itself as a dedicated API solution provider possessing in depth expertise and extensive complex chemistry capabilities and we are collaborating with both innovators as well as generic formulators to create a healthy world. So before talking about the year gone by I’d like to reiterate a few points which we have made in the past. Our business is uneven due to the inherent nature of the CDMO business as well as the specialty GDS business which is focused on small volume products.
As a result, evaluating Newland’s trajectory on a three year block basis is perhaps a more accurate measure than comparing quarter to quarter or even an annual basis. Again, they may be the odd year also where the trajectory will not be here due to the specific mix of how projects or products are taking off. However, the completion of manufacturing facilities coupled with the scaling up of commercial molecules on the CMS side gives us a great deal of confidence of achieving our stated objectives in FY26 and beyond. We continue to see increased interest in customers wanting to partner with Nuland as they look to bring in their innovative medicines to patients and I think in many ways this can be attributed to three factors.
First is that our reputation is continuing to grow as a result of the work we’ve done over the last couple of decades, especially on the CDMO business. Second is that our business development teams who are also seeking new relationships are getting increasingly focused on finding the right opportunities that actually fit our long term strategy, so being very selective, very decisive in whom we want to work with. Third is that the macroeconomic factors which we all have been talking about have also been favorable to us and therefore we are enthused by the range of customers expressing their interest in working with us and that’s what’s giving us the excitement about this business.
Coming to the year FY25. I would like to state that we had some molecules which contributed in FY24 which didn’t contribute at the same level in FY25. This was due to the natural lifecycle of the products in our portfolio and you would also find this evident in the business mix. Therefore, I would urge you to look at our income of FY25 from this perspective. Having said that, I would like to reiterate that this was expected and yet we have invested in capacity building for existing as well as new molecules in FY26. The CMS revenues which were I think around 637 crores.
These were largely driven by molecules in the commercial segment. We also had a molecule which got commercialized during the year and expect another molecule to be commercialized in FY26. We are seeing good traction in terms of early stage projects as well as customers reverting to us with more projects in their pipeline. So we expect the buoyancy in the CMS business to continue going forward. On the GDS side of the business, we remain focused on innovating new specialty products while optimizing processes and expanding market share for the key commercial APIs. This is largely driven by Paliperidone and Dorzalomide this time in the prime segment, the strong products for us this quarter were Mitizapine, Levetirstam and Ethiclopram and we are confident that our dual strategy of focusing on high margin specialty business as well as increasing volumes for the prime API business will see good growth in FY26.
As stated last quarter, our peptide investment is on track. We continue to garner more projects in the space which further validates our excitement about the opportunities that the segment holds. We have also filed a US DMS for Daflukephalin which is our first DMF in the peptide space. I would like to emphasize the inherent variable nature of our business which is which makes it challenging to provide any form of guidance, but having said that, our business also provides us that visibility of strong growth in the upcoming period. Another reminder from our previous interactions, we continue to maintain that there are a variety of factors that could influence our projections.
These include performance of individual products, foreign exchange fluctuations, raw material cost, volatility and other dynamics. We are aware of these challenges and continue to monitor these variables closely regarding the capacity building the new production block in unit 3 which is commercialized on schedule and we expect to start fulfilling orders in FY26. Nuland flexibility and agility are crucial for effectively responding to the business environment and our growth strategy remains focused on pursuing high value molecules from innovative companies both on the CMS side and GDS side. And we are committed to enhancing customer experience which we believe distinguishes us as a distinguished API provider.
So our commitment to the future is evidenced by our investments in enhancing our capacities as well as capabilities adhering to our foundational values, which is customer centricity, agility and operational excellence. We have molecules in our pipeline which are currently at the takeoff stage. Therefore, we expect our growth trajectory to resume in FY26 on the FY24 base. In summary, I’d like to conclude that Newland is well positioned to capitalize on long term opportunities even as we continue to navigate through some of these short term challenges that may have come our way. So Ravi, I think with this we can open up for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press CHAR and one on the touchdown telephone. If you wish to remove yourself from the question queue, you may press Char and two participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The first question is from the line of Vivek Patel from Ficom family office.
Please go ahead.
Vivek Patel
Very good evening sir. Thanks for the opportunity. I’m hoping I’m audible. Hello.
operator
Yes, please go ahead.
Vivek Patel
Yeah, thank you. So the first question was that the peptide and unit 3 capacity utilizations were at a lower side or at 30 to 40%. Then what was the rationale behind the large capex of about 350 crores that was announced in January?
Saharsh Davuluri
Sorry, could you just quickly repeat the question again?
Vivek Patel
So the peptide and unit 3 capacity utilizations they were at the lower end of 30 to 40%. Then what was the rationale behind expanding the capacity and putting up capex of 320350 crore that was announced recently.
Abhijit Majumdar
So Vivek, the 30 to 40% was the capacity utilization for unit 3. It was not the indication that we gave for peptides. So the peptide capex was actually dedicated only for peptides and that’s actually happened in unit one and not unit three. So there are two different issues. So the CAPEX approval is for peptides whereas the capacity utilization was for unit three for small molecules.
Vivek Patel
That I understood. What was the rationale for the expansion in IDO and both the cases for.
Saharsh Davuluri
Over 15 years we have lab scale and pilot scale facilities. And with the increasing number of opportunities the company decided that we would like to capitalize on these large scale opportunities. So the 300 crore investment is actually diagram directed towards creating very large scale manufacturing capabilities which currently do not exist in Newland. And these facilities are being created in unit one.
Vivek Patel
Hello.
Saharsh Davuluri
Yes. It doesn’t answer your question.
Vivek Patel
Yes, yes. The next question is that what could be the potential impact of the US tariff given that the company derives about 40% of its revenues from the US and also would it be fair to assume that around 50% of these exports of 40 are coming from CMS segment and the rest is coming from the gds and that the CMS segment might be hit a little harder than gds. Would that be a fair understanding? Sir?
Saharsh Davuluri
I’ll let Abhijit answer the split about the exports for CMS versus gds. But I think on an overall basis we don’t really have any clarity on the tariffs at the moment. I think they’re under suspension and I think broadly for India as a country and even for pharma and I think we are hearing different kinds of arguments against why tariffs should be imposed. And I think right now we continue to have conversations with our customers. There is no imminent indication that it’s likely to come and Even if it would, we would, perhaps they would get passed on to our customers.
And I think the, the basic notion that we are looking at is that this would end up getting passed on to the patients eventually. And that’s the basic understanding we have right now. But I think we’ll have to wait and watch to see what clarity comes.
Abhijit Majumdar
And in terms of the, you’re referring to the US end market. I think that is a combination of both the GDS and cms. I think both what we share there is across both the businesses and we have a good generic business even in the US as a geography where we as well as Indian customers serving the U.S. market. So it isn’t just the CMS business with us as the end market.
Saharsh Davuluri
So the CMS GDS in the U.S. it could also be about 50, 50. No.
Abhijit Majumdar
So currently, you know, tariff I presume is applicable when you supply to us. Even if you have a dollar sale, typically what could happen is you could be supplying to an end formulator in India or to anybody that depends on where you supply it. So you know, broadly 30% of our revenue is based on supplies us. Right. But we could still be doing dollar denominated sales outside us. So that’s the way to look at it. So I, it’s not CMS GDS you should look at what is your revenue generated from supplies to, to us, which is very important to determine if there’s a tariff implication.
Vivek Patel
Thank you sir, Thanks a lot. I get back on with you. Thank you.
operator
Thank you. Participants are requested to ask their two questions up front. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Shyam Srinivasan
Yeah, good evening. I’m actually on the road so if there is a break, please. Pardon me. So this is the two questions I have. First one, Sahas, you mentioned growth on fiscal 24, not 25. So and I know you didn’t give a quantitative number, but how should we look at 26 growth over 24? Let’s assume. Right. And maybe just some qualitative color around GDS versus CMS as well.
Saharsh Davuluri
Yeah, Sean, I think FY25 is, you know, like a four and a half, 5% degrowth on FY24. Right. So I think basically we want to make the reference back to FY24 because I think that’s how we have always narrated our growth to investors. I think even back in 21 or 22 where we had a year of flattish or a slight degrowth, we stated our growth based on how the previous Year was. And I think that’s the only reference that that’s being made anyway. As you know, we don’t give any quantitative guidance. So ultimately, the number in terms of what growth we are pursuing, we are not disclosing that, but we’re Fairly optimistic that FY26 looks good in terms of GDS versus CMS, I think both the segments we expect to grow.
But as you would imagine, FY25 has been a significant down year for CMS for the reasons that I had explained in the opening remarks. And I think we see a lot of that getting addressed and we actually even see a new molecule coming in. So with all those factors coming in, we see more growth coming from CMS as a percentage than gds. But overall, both will grow. And overall, we’ll see good growth in FY26 as well. But we will obviously not be able. To quantify anything
Shyam Srinivasan
helpful. And my second question is just on the margins. So I know we have in the past talked about a 25 to 30% margin. I know in fiscal 25, we have been below that. But once growth comes back, should one bake in operating leverage and margins to get at least to the range or, you know, somewhere around the range? Thank you.
Saharsh Davuluri
Yeah, I think whatever we have seen in FY24, I think we had also indicated that those are highly optimized kind of margins. Right. You know, I think very favorable exchange rates, raw material costs, product mix, etc. We had always said that, you know, that’s more like a North Star of our margins. We don’t expect that to be like a basis or a benchmark. But I think, having said that, I think what we’ve seen in FY25 is kind of, you know, deleveraging. And therefore, you know, I think the margins are suboptimal. So I think we should try to go back to higher margin levels.
I’m not sure if it helps to give a range or anything like that. Definitely, I think the margins we achieved in FY24, it’s hard to predict we’ll be able to achieve that or not. But also there’s also capital being deployed. More assets are getting capitalized. You’re going to see more operating expenses. So I think we would like to keep it a little vague, but definitely you can see margins going up. Are you guys there? Sham.
Shyam Srinivasan
Thank you. And all the best. Thank you. Thank you.
operator
Thank you. The next question is from the line of Vidit Shah from Spark Capital. Please go ahead.
Vidit Shah
Hi. Thanks for taking my question. I have two questions. One is on the new product launch in cms. If you could give some color on the size of the opportunity that we can see in the long run from this one particular product. And what are the launches that you anticipate beyond FY26? And the second one is I understand that the CMS business a little lumpy given the model, but what caused the sharp revenue decline in the specialty molecules in the GDS segment.
Saharsh Davuluri
So I think obviously won’t be able to reveal much about the new molecule that will get commercialized. But definitely what I can share is that it is a commercially approved drug. It’s been out in the market for a few years now. The first source is non Indian source and Newland is getting added as a second source. In fact, Newland has been added as a second source. It’s just that the timing of commercial supplies is set to start soon and we are very excited. I think the reason for the excitement is also that it is relatively high volume product.
But again, if you look at, you know, the entire gamut of CMS commercial APIs we have, we have contributing from very, very large value to low values. I think this will be somewhere in the top. Maybe it’s, I would hold back to say how much, etc. Because again that would reveal too much. And we expect this business to be a steady business, which means that it’s not just going to start in FY26, but we expect it to continue for a long period. I think in terms of the contribution, the second part of the question, Sajiv, do you want to answer that in.
Sajeev Emmanuel Medikonda
Terms of the GDS business? In terms of the specialty? I think we have had a few products where the volumes are uneven because of their small volume products. Some of them are ophthalmic kind of products which have contributed in the past and as a result of it, as Saj had also mentioned during his opening remarks, it is likely in certain quarters is likely to be uneven because of the small volume nature of those products.
Vidit Shah
Okay, this is a follow up to the first response. When in FY26 can we expect, you know, delivery to begin?
Saharsh Davuluri
We won’t get that specific. So I think you should start seeing it in FY26 like.
Vidit Shah
Sure.
Saharsh Davuluri
But yeah.
Vidit Shah
All right, I’ll get back in here. All the best. Thank you.
operator
Thank you. The next question is from the line of Hrithika from ValueQuest. Please go ahead.
Ritika Agarwal
Thank you for taking my question. Again in addition to the earlier participants question of the new molecule. So what therapy is this molecule in? If you could Indicate that?
Saharsh Davuluri
Yeah, I think we. We don’t want to answer that. Ritika. I think over time you guys will look at export data and everything and figure that out, but we don’t want to disclose that that information.
Ritika Agarwal
The last call you had mentioned looking at molecules in CNS and COPD segment. Would it be one of those?
Saharsh Davuluri
Yes.
Ritika Agarwal
Okay. So secondly, we recently saw Data point for Cobal 5 adjunctive schizophrenia phase 3 data that came. Does it change anything for us versus maybe what we would have thought earlier or got demand from the innovator.
Saharsh Davuluri
I appreciate the question, but I think again, you know, on the CMS molecule specific questions we won’t be able to answer. And also we never as a company get into the development strategy and clinical trial outcomes, etc. Of these individual drugs. We go largely based on the outlook given by customers and operate on those outlook. And if you look at the kind of customers that we have, whether it is big Pharma or biotech, I think typically the visibility we get is a fairly reasonable distance. Like we get one to two years visibility and usually these forecasts are fairly robust.
They don’t get changed fairly easily. So obviously I’ll not comment on individual molecules but at the same time just want to give you an insight on how the business works. Because for us at the end of the day it is about making X kilos of API and those are based on our contracts and forecasts that we have in place. So just trying to give you a little bit insight but I won’t be able to answer the question directly.
Ritika Agarwal
Then. A question. We said that unit three block is.
operator
Sorry to interrupt. Ms. Hrithika, may we request that you return to the question queue for a follow up question as there are several participants waiting for the turn.
Ritika Agarwal
Thank you.
operator
Thank you. The next question is from the line of Akul Brochwala from Avendus Investment Managers. Please go ahead.
Akul Broachwala
Yeah. Hi Saj, thanks for the opportunity. So this, you know, wanted some further details on how you’re planning to ramp up Unit three. I understand that the facility is already ready, but you know, in terms of regulatory approvals and how are you looking at the timelines for ramp up of Unit three? That would be great.
Saharsh Davuluri
I think as we had mentioned in the opening remarks, I think the investment for Unit three we have now fully capitalized and it’s ready. I think product validations are also going on. We expect to start commercial supplies in FY26. I think that’s also mentioned. Yeah, so if we are starting commercial supplies then it obviously is that the product is having regulatory approval. So we expect the ramp up to start pretty quickly. There’s not going to be a big gap.
Akul Broachwala
Understood. And do you believe that Unit three is going to be a fair contributor, you know, for our overall growth that you envisage over next three to four years, or is there anything else as well, apart from maybe, you know, in terms of facilities that’s going to add up to our growth prospects?
Saharsh Davuluri
Yeah, see, I think if you look at how the business has grown, Akul, I think Unit two was driving a lot of the growth until a couple of years. Even until recently, Unit 3 was acquired by us and it was kind of dormant for a few years before we started, you know, adding some products, especially on the CMS side. Now as those products are ramping up, unit 3 contribution has started going up. Now, as you would imagine, with the additional investments that our board had approved in December 2023 and those assets coming in line, you know, we expect further ramp up of Unit three to happen.
But what we are also seeing is that, you know, over time Unit three will also get saturated because there’s only limited number of additional, additional capacity that can be created. We also have, as you may have seen in our previous disclosures, expanded Unit one. And we have also, we are also building a peptide facility over there. We are also creating small molecule facilities in Unit one. So over time, although nothing is specified, Unit three will drive growth for the immediate period, maybe the next couple of years, and then maybe unit one will drive the growth again.
But this is just a very broad sketch. I think we’ll have to see how the product mix plays out and that will eventually determine how these numbers come.
Akul Broachwala
Understood. And in terms of, you know, our capital deployment. Mr. Mr. Sure, I’ll get back in the queue.
operator
Thank you. The next question is from the line of Proline Nandu from Edelweiss Public Alternatives. Please go ahead.
Proline Nandu
Yeah. Hi team. I just have one question and this is more like a qualitative color on your CMS part right now. If I look at the, how you have done exceptionally well on the cms part in FY18, you had whatever 100 crores of sales. We are close to 800 crores right now. So from here on, the ask rate to probably, you know, is very, very high, right? In some sense. So when I look at, let’s say your slide number 12 and you know, in terms of the numbers that you give, in terms of number of projects that you’re working on, so let’s say this, 81 in FY22 is now 97.
Right. So in terms of one is the number right? 81. 97 is higher than 81. But in terms of the quality of these 97 projects, how different are they versus what they were, let’s say in FY22 in terms of chemistry, in terms of size and apart from the peptide part that you have probably discussed. Right. And also putting up the capex, any other chemistry which you have developed, which you are, you know, very optimistic about also, which is also based on, we have something related to that chemistry in the pipeline. So some qualitative color on, you know, your pipeline for CMS project will be helpful.
Saharsh Davuluri
Thanks. I think it’s a very good question. Maybe what you’re really trying to understand is that yes, the pipeline, the numbers are showing some improvement, but qualitatively, is that going to result in higher growth? I think just given the fact that we are already at a sizable CMS business, will we be able to sustain growth given that we are at a larger base now compared to where we were in FY18? Maybe. If I have to answer this question qualitatively, if you can just kind of recall what was said in the opening remarks, we are seeing kind of a snowballing of our past efforts in this CDMO business.
I think we’ve been there in the CDMO business for almost 20 years now. We have been working steadily with innovators, primarily biotech companies in the US and we’ve actually gone through many cycles of development. What that has given us is a lot of credibility in the market. This coupled with also having a very, very focused business development team. One thing that’s also very different about Newland’s business model is we’re not a one stop shop. We are a pure play API company. So we also seek out those kind of projects. And when you couple that with, I think favorable industry tailwinds, we are seeing a very good momentum in terms of how the business is looking now.
If you have to just look at the pipeline quality itself, what I would say, and this may sound a little anecdotal, but it is true, the quality of projects that are entering the system every year, the overall quality is only improving. And if I have to illustrate that, let’s say if we say, okay, how many hundred crore opportunities are entering the system? Maybe 10 years ago we would barely see 100 crore CMS opportunity. I think today we see a far higher number of hundred crore opportunities. It doesn’t mean that we only pursue hundred crore opportunities, but that is fairly evident in our efforts.
So, one, I would say to your question that we are seeing higher quality opportunities come our way because of the three factors that I mentioned that we have established credibility, our BD teams have become more focused and I think Newland with all its investments, infrastructure and the market conditions is looking more and more attractive. The other part which is also important, which you asked, is I think getting recognized on specific technologies is very important for us. We have initially been recognized as a deuterated API player. I think we have a few molecules in our development pipeline.
We have one in our commercial and we continue to be seen as an expert in deuterated chemistry. Peptides is something we talked about. I believe we have maybe 10 to 15 projects in our pipeline which are peptides. Those tend to be an area that make us stand out. Even if you look at the Indian landscape, we become kind of very obvious choice if an innovator is having a peptide molecule and is looking at India as a region where they want to outsource the API. Other than that there would be specific areas like chiral chemistry or hydrogenations or able ability to do like, you know, the physical aspects of the API, like, you know, getting targeted particle size distributions, etc.
I think a lot of this information we have published numerous white papers. So again, you know, I wouldn’t, you know, trouble everyone by going through all those details, but the overarching point I want to make is that we don’t go and typically try to offer a Chinese menu to customers. We try to identify where there is a technical fit and we try to have deeper conversations with those limited customers. So therefore the number in the table may not increase dramatically, but whatever numbers are increasing are higher value opportunities than what we’ve seen in the past.
So try to cover all the questions that you’ve asked, but yeah, does it make sense? Did I miss out?
Proline Nandu
No, no, no, no. It makes a lot of sense. Let me just one follow up on this, right? The same aspect, right? See, you have outlined the quality of pipeline in depth, right? In great detail. Now, in terms of obviously the success rate, right? And obviously it’s not in our hand, right? But in terms of that conversion rate, right. Could you just comment a little bit there as to what have we done to, you know, improve the probability of, let’s say, whatever molecule that we are working on going to the next phase, right? Again, as I mentioned, we have limited things in our hand, right? It depends on the innovator.
But what could we do to help us improve that success rate? So to Say, and what have we done, let’s say, in the past, Right, for five, six years to improve that?
Saharsh Davuluri
Yeah. So I think if you look at the commentary we made over the years, I think one area we’ve emphasized a lot is on strengthening our project management area. Because. Because I think we look at ourselves as a service provider and for us to be able to create that deep, meaningful relationships with our customers. I think we’ve been always talking about strengthening our project management systems, making sure that our customers feel like they look at us as collaborators. I think that’s an area we worked a lot on. I think that’s helped us a lot. If you’ve seen, I think as we did our brand relaunched last year, we also talked a lot about our value systems and how we function. And we’ve been kind of, you know, harping a lot on the agility part.
I think trying to stand out as an agile cdmo. I think that’s been something that we’ve been trying to stand true to that. Because to back yourself as an agile cdmo, you need to have flexibility in capacities. You need to be accommodative, especially working with biotech companies. And that requires you to invest in certain kinds of buffers and systems. And I think we’ve done a lot of work in that area measuring the right things. You know, I think we’ve started measuring what we call as FDR or first time. Right. Because one thing that does shatter the confidence of a CDMO customer is that when you take their molecule into the plant for the first time and if you fail and that can become a red flag and irrespective of everything else that you do, if you’re not able to do that on point, that’s going to be a challenge.
We’ve been looking at those metrics, we’ve been incorporating that into our individual performance metrics across the organization. So these are some of the additional things that we’re doing to just kind of make sure that the customer is at the forefront. And yes, you know, mistakes will happen, but to be able to kind of collaborate with customers in the process is also very important. So those are some of the other things qualitatively that we are doing.
Proline Nandu
Thank you so much for those answers. All the very best.
operator
Thank you. Ladies and gentlemen. In order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. The next question is from the line of Ish Mohit from Soik. Please go ahead.
Ishmohit
Hi sir. And congratulations over last two Three years for really turning the fortunes of the company. I just have a question for the cfo. What could be the ballpark margins we could expect in 26, 27? I don’t. We don’t need a firm number, but just a ballpark, basically number.
Abhijit Majumdar
So we don’t give guidance. You know. What a ballpark number is? Because that was a question asked, I think so, by a previous participant, Ishmael. So you should. Like for example, we did 30, then we have dropped down to 17, I think. So the trending is clear that if you grow faster than the market in terms of your growth, your margins will kind of typically go up for you to figure that out.
Saharsh Davuluri
Yeah, I think, see, qualitatively, if you look at it, the business model remains what it is. I think it’s not changing that much. I think the scale of the business is going up. The kind of molecules that we are adding I think are consistent with the theme we’ve said. You’ve looked at our past performance. I believe that you should be able to deduce what could be that range. It’s just that we don’t want to spell it out.
Ishmohit
No words. Thank you. And all the best for the future.
operator
Thank you. The next question is from the line of Sanjaya Satapati from Amperson Capital Investment Advisors. Please go ahead.
Sanjaya Satapathy
Explaining that there was some delay in shipment. So can you just explain that again, please?
Saharsh Davuluri
Sorry, could you please repeat the question? Your voice was not very clear.
Sanjaya Satapathy
No, my question is that some earlier question that you had said that one molecule in which we have been commercialized and you are the second supplier to that and there is some delay, but you are going to start that shipment soon. So can I just reconfirm that?
Saharsh Davuluri
No, actually I didn’t mention there’s a delay. I think the question earlier was if we could throw some color on the molecule that is getting commercialized in FY26. What I had indicated was that it’s a molecule which is already approved in the market. It’s been in the market for a few years and Nuland has been qualified already as a second supplier and the commercial supplies are starting shortly. That’s. That’s all I had said. I had not made any reference to any delay.
Sanjaya Satapathy
Understood. And this is in addition to the first molecule that you already have in your pocket, Right. Because you mentioned that you will be two molecules is what commercial molecule that you will be supplying in FY26. So the first one is something which you already have and this is the second one.
Saharsh Davuluri
Yes, there’s one molecule that has been commercialized in FY25. There’s another one which is going to get commercialized in FY26.
Sanjaya Satapathy
Understood. And the last thing that just wanted to hear from you that.
operator
Mr. Sanjay, may we request that you return to the question queue for follow up questions as there are several participants waiting for the turn. Thank you. The next question is from the line of Keshav from Rakshan investors. Please go ahead.
Keshav Kumar
Hi sir. In the CMS pipeline we have been seeing a reduction in the number of molecules in pre registration over quarters without a commensurate migration to commercial quarter on quarter also it has gone from six to four molecules. So I don’t know if it’s the right way to do. But commensurately our high margin development revenues have also come off. So what is happening there? And also how should it have a bearing on our business going forward?
Saharsh Davuluri
So in terms of the number, I think as we had mentioned earlier, the products which are under pre reg. There could be two. Kinds of products which are there. One is products where the customer is moving forward, has filed the NDA and is waiting for approval. And there are other cases where customers possibly look to add a second source for a commercial product. But at times even though they wish to add a second source it takes a much longer time for them to reach the scale. And in certain cases they don’t even reach the scale where they go for a second source. So in this category I think we have certain products like that which we keep looking at.
We look at what is happening in the market too. And some of those products get removed based on our judgment and our discussions with customers. So I think that is all the read that we should take from that.
Keshav Kumar
Sure, sir. Thank you.
operator
Thank you. The next question is from the line of Gaurav Mahidar, an individual investor. Please go ahead.
Unidentified Participant
Hi. I hope I’m audible. I actually wanted to ask that. I see a lot of companies signing long term supply agreements with innovators. Have you ever been approached for something on those lines or are there negotiations of that sort that you participate in?
Saharsh Davuluri
I think typically in the CDMO business it’s quite common that these innovators have these kind of long term supply agreements. And I think for all our CMS molecules we have such contracts in place.
Unidentified Participant
All right. All right. Yeah. That answers my question. Thank you so much.
operator
Thank you. The next question is from the line of Gyan Prakash Yadav, an individual investor. Please go ahead.
Unidentified Participant
Hi sir. Good evening. Am I audible?
Saharsh Davuluri
Yes.
Unidentified Participant
Hello. You suggested a normal Feedback. I am an individual investor so I would request that the management, whenever they are announcing the results and putting up the investor presentation, better to have a one day delay so that we can go through the result and investor presentation and cash flow statement and everything and be ready with the questions. Unfortunately, I am not ready. Second thing, the last year, the financial year 25, we started with somewhere 10% growth that we came to break down and last few con calls. We are very confident about our growth. We are very confident about our growth.
So do you have some guidance when is the growth going to resume? It will be quarter one, quarter two and what will be the ballpark range? Something like this?
Saharsh Davuluri
Yeah. No, thank you for your question. I think with regards to maybe staggering the call a day after the results, I think we’ll definitely take that feedback and see if that’s something that we can do. I think with regards to the performance of the year, you’re absolutely right. I think we started the year we had indicated that we would expect to see a moderate growth. But I think as we were getting into the year we realized that it’s likely not to happen. And therefore we kind of changed our narrative and said that, you know, it’s going to be flattish.
And I think if you see how we ended up, we ended up with a small degrowth. It actually points to the reality of our business. Right. I think it shows that we’re not really fully in control of our numbers. And it is for those several factors that I had also reiterated in the opening remarks today. You know, the product mix, there’ll be a small shift in the product mix, could have an impact. You know, exchange rate, raw material costs, a lot of things can contribute to this. I think these are some of the reasons why I think, you know, these kind of fluctuations happen.
And I think that’s the reason why we also hesitate to give any kind of guidance. But having said that, I think we also know that, you know, when there is visibility of orders and we have, you know, production plans that match those orders, I think we also think it’s fair to give that indication that we expect to see growth. But having said that, you know, I think we only say that growth is in FY26 and onwards. We would not say what quarter or how it would happen. I think that is indication we would not be able to give.
And unfortunately I think that is something that as investors you would have to to take an independent call. And I think we will keep trying to give as transparent messages as possible on the performance. But it Would also be very realistic to expect that some changes will happen based on how things are moving in terms of execution.
Unidentified Participant
Thank you, sir. But you all are in the business, you are working day in and out. You are very close to the customer. We as an investor, we are not close to them. So some sort of guidance could always be. Since we are already in the middle of the May. Thank you. It answers my question. Thank you.
Saharsh Davuluri
Yeah, no, thank you. I definitely understand your frustration and I think a lot of analysts, I know you’re an individual investor, but even a lot of analysts struggle to model our business because of these reasons. The confidential nature of the business creates additional challenges for us. So we definitely empathize with your, with your concern. But also we are also very limited in, in terms of how much outlook we can give because of the nature of the business and the confidentiality, etc. So I hope you will keep tracking us and you will be able to see a pattern.
And our objective is to try to be as honest and transparent in terms of our information flow. But thanks anyway.
Unidentified Participant
Thank you sir. Thank you.
operator
Thank you. The next question is from the line of Chintan Shah from JM Financial family office. Please go ahead.
Chintan Shah
Hi. Thank you so much for the opportunity. So I had two questions. So one is looking at slide number 12 again that is on the project pipeline. So if I look at the phase three as well as registration, so that number has been seeping on a declining phase. I understand that size wise the articles could be much different and numbers do not really make a big difference here. But you know, just beyond this one molecule that’s going to get commercialized next year, just wanted to get a sense, I mean from this pipeline are the molecules who say such large that beyond that also we could see a steady or sort of a high growth for the company continuing into next few years.
That is one and second just supplementing onto this. You know, now Newland has reached certain scale and way we have demonstrated our capabilities in peptide side. So can we expect that, you know, there could be possibility more such projects or molecules that we get added as a second supplier directly on the commercial side and that could, you know, be for the big driver for us in the coming years. Those are my two questions.
Saharsh Davuluri
Yeah, so I think the. You’re absolutely right. You know, I think it’s difficult to deduce whether it’s a high value asset or not when you just look at the pipeline. I think that’s why what we also try to do to help shareholders understand if there is a specific large Value opportunity that is getting commercialized. We try to highlight that as part of our communication. There might be even smaller molecules that might get commercialized in the same period, but they might not add substantially. So for now, I think we are seeing a good, healthy influx of projects.
I think even in the last 12 months, especially as these geopolitical tensions are emanating, you know, biotech companies moving away from China, we are seeing projects flowing into Newland and those are all coming in phase one, phase two opportunities. We do also see commercial opportunities coming our way. They don’t happen as naturally as early clinical opportunities. So to the example of the molecule that is getting commercial this year, we do see occasionally opportunities where a drug is in phase three or nearing commercial and the customer wants to add us as a secondary supplier. And in those cases there’s an opportunity to start commercial revenue sooner.
But if you look at Newland and how we are visualizing our growth for the CMS business, I think if you look at FY 25, 26, 27, 28, looking at this pipeline, we do believe that we will have commercialized opportunities commercializing almost every year and big molecules commercializing every year. And also to a question that I answered earlier, we’re also seeing a snowball effect. So we’re seeing more and more opportunities coming our way. So while this is anecdotal, we generally feel confident that we will be able to sustain the growth by adding high value molecules. It’s just very difficult to separate the small ones from the big ones.
And that’s where we just show you the table.
Chintan Shah
Got it. Understood. That was very helpful. And just one more question on the balance sheet side.
operator
Mr. Chintan, may we request you return to the queue for a follow up question?
Chintan Shah
Sure, no problem.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. The next question is from the line of Naveen Baid from Nirvama Asset Management. Please go ahead.
Naveen Baid
Thank you for the opportunity. So in the past three to four quarters you have consistently said that, you know, look at us from a two to three year kind of a time frame and you’ve been saying that you will continue to maintain the 25%, 20 to 25% top line category. Since we’ve seen almost four quarters of very, very muted growth and you already have some color on the pipeline that is in front of you, you still believe that we can look at you from that kind of a lens that okay, 20 to 25% kind of CAGR is possible.
As we look into say you know, 27, 28, 29.
Saharsh Davuluri
See I think the, as we had explained earlier, the performance of FY25 is very evident. As in I think we knew there were lesser orders to fulfill. I think molecules which we had fulfilled orders for in FY24. We knew orders were not there in FY25 and we see that again changing in FY26. And I think you’re referring back to that three year block we talked about. I think growth at that rate. What we had talked about is something that’s possible. The part that I’m slightly Disconnected is the 25% that you’re talking about because I think we’ve not given any kind of a hard line number in terms of what kind of growth we are exactly targeting.
But we are Fairly confident that FY26 will be a year of growth. Again, let’s not look at it at a quarter to quarter basis.
Naveen Baid
No, like my question was not that. So like you said that we are not even looking at you from a quarter to quarter point of view but over a two, three, five year kind of a block. Sorry to interrupt.
operator
Mr. Naveen. May we request you return to the question queue for a follow up question?
Naveen Baid
Okay.
operator
Thank you. The next question is from the line of mehul Panjwani from 40 cents.
Mehul Panjwani
Please go ahead sir. Thank you so much. Commentary always got transparent and molecule commercialized by FY25 man or Serbi FY25 so jab FY26 may orange molecule commercialize Hoga so growth and can you just share a comparison?
Saharsh Davuluri
I think when we mentioned that the molecule got commercialized, I think what we would do is if the drug is commercially approved and Nuland is an approved supplier, we would indicate that it is commercialized and that’s why that change would happen in our table that you see on slide number 12. Now what we also expect is that growth will come when we start seeing orders for that molecule. And sometimes the year it gets commercialized you may not necessarily see the orders and therefore it is not directly connected. So what I would suggest is please don’t connect the commercialized comment with the growth comment because ultimately when we are giving you an indication that okay, FY26 will be a year of growth, we are actually looking at the order values and we are looking at the aggregate business and therefore we are giving you that indication because sometimes the year of commercialization may not be the year that the revenue contribution happens.
Mehul Panjwani
Right sir. And likely this molecule commercialized manevala first quarter me hoga second quarter.
Saharsh Davuluri
Again sorry I won’t be able to give a specific quarter level breakdown. You will see it happening in the course of the year. That’s that’s what we can say answer.
Mehul Panjwani
Businessman CMS
Saharsh Davuluri
CMS
Mehul Panjwani
okay thank you so much. All the best.
Abhijit Majumdar
Thank you. Due to time constraints we take this as the last question and now I would like to hand the conference over to the management for closing comments. Once again we want to thank everyone for joining this call and for your interest in Nuland’s business and Nuland as a company. We try to answer every question that is possible but given the constraints of time we may not be able to. Answer all of you. So in case you have further queries please reach out to review the issue of EY and once again thank you and good evening.
operator
Thank you on behalf of Newland Laboratories. That concludes this conference. Thank you for joining us and you may now disconnect.