Piramal Pharma Ltd (NSE: PPLPHARMA) Q4 2025 Earnings Call dated May. 15, 2025
Corporate Participants:
Unidentified Speaker
Gagan Borana — Head Investor Relations
Peter DeYoung — Chief Excutive Officer
Vivek Valsaraj — President and Chief Financial Officer
Nandini Piramal — Chair Person
Analysts:
Unidentified Participant
Amey Chalke — Analyst
Abdul Kader Puranwala — Analyst
Kunal Randeria — Analyst
Madhav — Analyst
Shyam Srinivasan — Analyst
Katabathini Pandu — Analyst
Bino Pathiparampil — Analyst
Vinod Jain — Analyst
Chintan Shah — Analyst
Alankar Garude — Analyst
Presentation:
operator
Ladies and Gentlemen, good day and welcome to Piramil Pharma Ltd. Earnings conference call. 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 in the conference call, please signal an operator by pressing star 100 on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.Gagan Borana from Investor Relations. Thank you. And over to you Mr. Borana.
Gagan Borana — Head Investor Relations
Thank you Ranju. Good morning everyone. I welcome you all to our post Results Earnings Conference call to discuss our Q4 and full year FY25 results. Our results were declared last evening and the results material have already been uploaded on our website. You may like to download and refer them during our discussion. The discussion today may include some forward looking statements and these must be viewed in conjunction with the risks that our business faces. On the call today we have with US our Chairperson Ms. Nandini Piramal, our Global Pharma CEO Mr. Peter DeYoung and Mr. Vivek Valsaraj, CFO of the company.
With that I would like to hand it over to Ms. Nandini Piramal to share her thoughts on the year gone by and the outlook going forward.
Nandini Piramal — Chair Person
Good day everyone and thank you for joining us today in our post results earnings call. FY25 has been a steady year for the company as we surpassed an important revenue milestone of US $1 billion with a YY growth of 12%. This growth was primarily driven by our CDMO business which delivered a revenue growth of 15% with over half our revenues coming from innovation related work. Our complex hospital generics business also crossed a $300 million top line as we maintained our number one rank in sevoflurane and intrathecal baclofen in the US market with a 44% and 75% market share respectively.
Our consumer healthcare business also exceeded 1000 crores milestone in annual revenue on the back of healthy 20% plus power growth in our power brands supported by new product launches and an expansion in our distribution network. In terms of profitability, we reported an ebitda margin of 17% which translates into an EBITDA growth of 15% over the last year. Despite having to incur some 1 off non recurring spends in our CHT business, our net profit after tax also increased 5x to rupees 91 crores compared with 18 crores last year. To ensure future growth we invested about $80 million in capex during the year while maintaining our net debt to ebitda ratio under 3 times to 2.7x.
All of this performance was achieved in a year that was marked by an uncertain business environment with inadequate and uneven improvement in funding for emerging biopharma companies, geopolitical disturbances, high interest rates, slow consumer demand in India and uncertainty around the Biosecure act and trade tariff policies. Talking about our performance for the quarter, Q4 continues to be the biggest quarter for the company with a higher share of full year sales and profits coming in Q4. During Q4 FY25 we reported 8% revenue growth with a 22% EBITDA margin. Our net profit after tax grew by 52% as we crossed 150 crores during the quarter.
We witnessed a strong traction in new order inflows during the quarter particularly for our overseas sites such as Grange, Bath, Riverview, Sellersville and Lexington. On quality and compliance, we continue to maintain our best in class track record of 0oais from the US FDA since 2011. This year as well, we successfully cleared 36 regulatory inspections while 65 customer orders without any major observations. We remain committed to quality as a culture rather than quality as compliance. On the sustainability front, we made significant progress during the year with the SBTI approval of our decarbonization plan, we’ve taken up targets to reduce our scope 1, 2 and 3 greenhouse gas emissions by 30 to 42% by FY2030.
As a significant step in this direction, we converted our coal fired boiler at Ligwell to operate on biomass briquettes which are expected to eliminate about 24,000 tons of CO2 greenhouse gas emissions as well as 17% of our total emissions. We also conducted comprehensive energy audits across our sites to identify energy efficiency opportunities and increase the share of renewable energy at various locations. Additionally, we conducted water use assessments across multiple sites that led to the implementation of micro projects resulting in savings of approximately 100 kiloliters per day. We also maintained our zero fatalities and zero hazardous waste to landfill status, reinforcing our commitment to safety and environmental solutions.
Women now represent about 20% of our total workforce, reflecting our ongoing efforts to foster merit based gender diversity. The Ramal foundation of Philanthropic ARMS continues to work towards community wealth and upliftment of our society. As a result, we’ve seen a significant improvement in IESG scores by S and P Global and ecobartis. Moving on to Business Specifics Highlights Starting with the CDMO Business Our CDMO business has delivered a strong financial performance over the last two financial years with a revenue growth of 19% in FY24 followed by 15% in 2025 coupled with a significant improvement in our EBITDA margin.
This performance has been mainly driven by increased traction in our innovation related work, especially the unpacked commercial manufacturing which grew from $52 million in FY23 to 179 million in FY25. As a result, the contribution of the innovation related revenue in our CDMO business has increased from 45% in FY23 to 54% in FY25. Over the years we have consistently invested in our differentiated capabilities such as edc, hpapi peptides, hormones and unpatoned API development which continue to witness strong demand. These strategic investments have translated into a growing share of revenue from differentiated offerings within our CDMO business rising to 49% in FY25 compared to 37% in FY23.
We’ve also recently announced a $90 million expansion investment at two of our sites and which includes the addition of commercial sales rail detectable capabilities in Lexington and additional development and commercial scale capabilities and payload linkers for Bioconjits and Riverview. Both of these site expansions together play a vital role in our integrated ADC development and manufacturing program. Talking about the order inflows, custom inquiries and our fees remain strong particularly at our overseas sites such as Grange Mouth, Riverview, Lexington and Salisville. Driven by the customers needs to de risk and diversify their supply chain, there is a high demand for integrated service offerings and a geographically diversified facility network on account of ongoing geopolitical uncertainties.
However, customer decision time making timelines are prolonged particularly for early stage projects due to an inconsistent recovery in the funding for emerging biopharma companies and uncertainties over tariffs and trade. As we tide over these near term uncertainties, we believe that we are well placed to capitalize on CDMO opportunity over the medium to long term with our globally diversified network of facilities and differentiated capability. Our stellar quality track record and continuous focus on customer delight through superior execution puts us in good stead to win repeat orders and add new customers. We stand committed to grow our CDMO revenues to $1.2 billion by FY2030 with an EBITDA margin of 25%.
Moving to our complex hospital generics, FY25 was the mixed year for the CHG business in the US Inhalation anesthesia segment. While we had lower price realizations during the first half of the year, we largely offset that through new order wins and some major contract renewals thereby maintaining our market leadership position with 44% market share in the non US markets such as US, UK, France, India, Vietnam, et cetera, we’re seeing an increased traction for inhalation anesthesia products as per secondary sales data by IQVR Row Market which is ex US and ex China. Size of the CBO market is about 400 million.
To capitalize on this market opportunity, we have invested in setting up a new civil manufacturing line at adequate facility and increasing the cares they are manufacturing in ADEH facility to ensure vertical integration. We’re happy to share that these capacity inspection projects tracked well on our timelines and we have started commercial production at our zero flooring at our Big One facility from last month. This should be an important driver for our CHG business over the next three to five years as we look to penetrate deeper into the ROW markets and build our market share in the intrathecal therapy segment, we continue to hold our leading market positions in the us.
Our flagship brand Gablofen remains the top ranked Baclofen, pre filter range and bioproduct in the US market with a 75% market share. Michigo, a morphine sulphate brand also registered healthy growth during the year. Talking about the progress in our specialty and differentiated pipeline, our partner Bruckco Pharma received approval for Neatricon for multiple markets such as the uk, Germany, France, Italy, Spain, Netherlands and a few more. We have the marketing and distribution rights for these markets. Neoatricon is the only pre diluted age appropriate formulation for dopamine approved for treating children and infants with hypertension. Our Indian consumer healthcare business delivered steady double digit revenue growth crossing a strategic revenue mindset on 1000 crores anchored by strong growth of over 20% in our power brand.
The performance was delivered despite the slow consumer demand in India in one of our power brands, ipil, seeing a regulator mandated price cut, we continue to invest in media and trade promotions to support the growth in our power brands. Our new product launches have also played an important role in driving growth in recent times. During the year we launched over 50 new products and SKUs. In terms of trade channels, E Commerce continues to be a major driver growth with 30% growth during the year. In general trade, we’re increasing our penetration in smaller towns and and transitioning from a pharmacy dominant network to an omnichannel consumer healthcare network.
We’re continuously working on increasing our reach by new trade channels such as quick commerce, supermarkets, hypermarkets and standalone one chain outlets. Summarizing our performance, I’d like to say FY24 and 25 have been two good years for the company with mid teen revenue growth accompanied by 500 DPS improvement in EBITDA margin. This has been significantly driven by CDMO business which has delivered 16% revenue growth CAGR during this period with a significant improvement in EBITDA margin on account of operating leverage and improved revenue mix. In the last two years we have also seen a very good increase in increase of shared CDMO revenues from differentiated offerings and innovation related works, especially revenues from on patent commercial manufacturing.
While these unpattered commercial manufacturing are long duration contracts with good growth potential and superior EBITDA margins, their contribution does vary across time periods especially in new product launches. It’s normal to see a phase of inventory buildup at the start followed by a brief period of inventory normalization and then steady growth over a longer period of time. In one such case, a recently launched blockbuster on patent commercial products by customer, we benefited in FY24 and 25 as the customer built inventories to gain market share. In FY26 we expect a brief period of inventory normalization. Post this inventory normalization we expect the orders to pick up from FY27 onwards.
The near term order fluctuation due to customers inventory adjustment will have a temporary bearing on our FY26 financial which should reverse an FY27. Barring this, our underlying CDMO performance is expected to grow the mid teen rate reflecting a healthy demand for differentiated capabilities and integrated service offerings. We are seeing good demand at our overseas site especially Grangemouth, Lexington, Salisbury and Riverview which should help improve their capacity utilization and their profitability. In terms of broader outlook for CDMO industries, we’re positive on the growth prospects over the medium to long term given the growth in the global pharmaceutical market, an increased preference for outsourcing to CDMO companies and supply chain diversification by pharma companies.
Withstanding the current short term volatility in the macro environment caused by uneven improvement in funding for emerging biopharma companies and uncertainty of trade tariffs leading to prolonged decision making by the customers. We believe that our network of globally diversified facilities and investments in differentiated capabilities, we’re well placed in the industry to succeed with the widest possible range of outcomes when these uncertainties resolve. Also our late stage pipeline which is where the clients funding remain directed in scenarios of restricted funding remains exciting and we’re tracking well to grow this. Talking about the outlook for the other two businesses, complex hospital generics business and consumer healthcare business, we expect them to grow well with an improvement in EBITDA margins tracking in line with our FY30 aspirations.
Hence, on an overall basis for FY26 we expect a mid single digit consolidated revenue for the company followed by significant recovery in FY27 with mid to high teen revenue growth. Accordingly, in FY26 we expect reported EBITDA margins to moderate and mid teen level followed by material improvement about 19 to 20% net 027 on the back front, if the geography makes a revenue remains aligned to our forecast, we expect a modest yy growth in FY26 which should increase multifold in FY27. Thus, on a two year basis we should continue to deliver revenue growth and EBITDA margin in line with our FY30 aspirations to become a $2 billion revenue company with a 25% EBITDA margin for the high teens.
Roce with this I’d like to hand over back to Gagan Borana.
Gagan Borana — Head Investor Relations
Yeah Moderator, can we start with the Q and A session please?
Questions and Answers:
operator
Thank you. 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’ll wait for a moment while the question queue assembles. First question comes from the line of Amey Chalke with J M Financial. Please go ahead.
Amey Chalke
Yeah, thank you so much for taking my question and congrats to the management. So first question I have is on the 180 million 179 million revenues we have generated from the protected commercial sales in FY25. As I understand during the like finishing your remark, you mentioned that the FY26 could be kind of a muted year on account of loading the sales of this commercial. So where do you see this 180 million number to be in FY26?
Peter DeYoung
So we’re not giving a specific quantified target for that carve out. However, I think in Nandini’s remarks she mentioned that we have a single customer, which is a large customer, which is as part of their launch program they built a significant amount of stock to plan for success and we benefited from that over the last two years. But we don’t anticipate much ordering from that customer in the upcoming year, which is what’s driving the more muted growth in the FY26 time horizon. Although we’re not giving a specific carve out for that guidance, I think what we are giving is that in that one customer for that one product we would anticipate the inventory issue.
But what we are trying to signal is that everything else in the business is healthy. And we also expect that customer to resume ordering once they’ve addressed their one time inventory issue in the future.
Amey Chalke
So is it fair to say at present we don’t have orders for the customer for at least for next few months?
Peter DeYoung
We would anticipate that the customer will need to pause deliveries for a period of time while they adjust their inventory.
Amey Chalke
So second question I have you have 31 projects in phase three. How many of these projects do you expect to get commercial in FY26 and 27?
Nandini Piramal
I think that will be up to our customers. I don’t think we can generally comment on regulatory timelines.
Peter DeYoung
But what we would want to comment is that back to the comment Nandini made in her earlier remarks, which is one, that we would anticipate the issue of the one customer restocking event, we are expecting mid teens revenue growth for the remainder of the business. And the second point is that when you factor in the resumption of orders at the expected levels, given the underlying product that we’re supplying is performing well in the market for our customer, that FY27 would be back on track for our LRP plans. And so what we’re trying to signal is that one, the overall health of the business in the next year is strong and also the overall health is on track for FY27 performance.
Looking at all and including that customer.
Amey Chalke
Sure. Second question, third question I have is on the setting up of these new blocks in US where we are expanding these injectable units. So is it on any customer order we are doing this or you expect the orders to kick in after the expansion?
Peter DeYoung
We already have customers at those facilities that place the work at actually both facilities and really the both expansions anticipating or counting on us making these extensions. And so for example, in the case of the Lexington extension, which was previously announced late last year, we did that decision when we had clarity based on customers that had already decided to place work with us at those facilities. And so continuing that expansion that we announced last year and we kind of reaffirmed that commitment earlier this week, it’s really about us making sure the capacity is available for our customers that are already there so that when they succeed, we can succeed with them.
And in the case of the Riverview facility, that is a new announcement. And actually we already have placework that would take advantage of that expansion. And so it’s largely booked out what we’ve Already started the expansion there.
Amey Chalke
So thank you so much. I will turn back with you.
operator
Thank you. Next question comes from the line of Abdul Kader Puranwala with ICICI Securities. Please go back.
Abdul Kader Puranwala
Yeah, hi, thank you for the opportunity. My first question is with regards to your commercially on patent products, specifically in terms of the contracts, what you would have. Could you help us understand what is the tenure of this kind of a contract? A couple of years or. It’s quite short term in nature so.
Peter DeYoung
We don’t comment on specific contracts. But what we would say is that typically when we sign up to work with clients in the commercial phase, we have multi year contracts and that is the case here also. And we would typically expect the customers to have continuing work with ins and they wouldn’t typically invest all the time to tech transfer project to our location and stay with there if they weren’t planning to stay. So I would just say that for the customers that are currently in our commercial on patent category, we are delivering on promises for them.
We’re meeting their expectations and we believe that we are performing well per their expectation and therefore as they require more product they will continue to make more orders.
Abdul Kader Puranwala
Sure. There. The second question is on your discovery on patent CDMO business. If I look at the revenue contribution from this particular segment that has come down significantly in the last two years. So any color you would like to provide on, you know how the funding environment is in terms of your new project, what you would have.
Nandini Piramal
I think overall, I think we’ve seen an uneven recovery in biotech funding and that is especially targeted at the early phase discovery work. So I think overall, I think it’s still. Yeah, I would say it’s early days. Yes. For recovery of biotech funding.
Abdul Kader Puranwala
Understood. One more on your emulation anesthetic business. So you added two new facilities. I believe this would be for the row markets. So in terms of your growth, I mean how do we look at this from the next two to three years perspective? Any color if you could like.
Nandini Piramal
I think we’re tracking well on our FY13 kind of aspirations for the CHG business. So I think we should see, we should see growth. Overall.
Peter DeYoung
We have already called out the market opportunity in our presentation. It’s about $400 million opportunity and we’ve already put up those two lines in the gwal and we also run the backward integration by increasing our KSM capacity. So and as we’ve given a press release that we have commercialized this production in the month of April. So I think for the next 23 years. A large part of the growth would be coming from the sales in the LW markets. Our current market share is about 9% and we look to grow that.
Abdul Kader Puranwala
So would it be fair to assume that the kind of market share what you have in us is what would be on the TAVIO tier?
Peter DeYoung
I think that would be spectacular. I think we don’t need to achieve that market share to achieve our lrp. I think the overall LRP plan requires growth in our inhalation business, our injectable pain business and then our new pipeline. In the current year we would expect a meaningful part of our growth to come from the inhalation expansion which is driven by the points that Namini and Gagan mentioned. And just to to further elaborate, the first commercial supplies did happen in March for the markets that require light regulatory or limited regulatory filings. We’re going to do filings over the course of the year that will allow us to bring this location in line to serve those RRW markets which will contribute meaningfully to the growth in the current fiscal.
Abdul Kader Puranwala
Understood and final on the debt. So I see in this year here there is a spot small increase in as compared to last year. But going ahead in the next two, three years what is the kind of debt levels we should be looking forward for?
Peter DeYoung
Yes Abdul, so the overall debt levels currently at 2.7 in line with what we guided for which is to be less than 3 for FY26 we shall see some increase in debt content because of the reasons that we spoke about while guiding for next year. But as we have mentioned that our intent is to bring this down by FY30 to 1. 1 the net debt to EBITDA ratio. So while we will see a temporary spike in FY26 the long term intent to move towards one remains and that’s how we’ll be headed forward.
Abdul Kader Puranwala
Got it. Thank you.
operator
Thank you. Next question comes from the line of Kunal Randaria with Axis Capital. Please go ahead.
Kunal Randeria
Good morning. So I’m not sure if you mentioned but while I do understand the inventory correction normalization for FY26, you do expect a very sharp growth in 27. So has the customer communicated this to you or is it your assumption that things will not normalize in FY27?
Peter DeYoung
So we don’t want to get into too many confidential details but I would point to the fact that the underlying product is doing well in the market and it’s typical for a large pharma when they plan for a launch to build inventory so that there is very limited risk of not selling due to lack of inventory and then once the sales settle and the growth rate is more known, they didn’t do a pause while they adjust inventory to match the trajectory. But if you look at the underlying growth and performance of the brand, it looks and shows that it’s growing very nicely.
And so we would fully expect being their lead supplier and with the strong OTIF and good cost position and good quality and safety track record that this would continue in line with our expectations and discussions. But it’s ultimately the customer’s decision.
Kunal Randeria
Sure, that’s helpful. Secondly, just again, so it seems you may have it a feeling in the US now. So just wondering how easy it is to ramp up row because I assume there’ll be a lot of countries, there’ll be registrations and then just to kind of get the market share might be a slow process or you already are kind of registered, just need to improve execution.
Peter DeYoung
So a little bit more color on this. We already sell our products across the globe and they’re already registered across the globe. At the prior years we were actually limited in our capacity and so we were having to prioritize the higher value, more contracted markets or regulated markets so that we could ration our available capacity to meet the areas of greatest value and benefit and also medical parameters. Now that we have the extra capacity, we can tackle the next tier of growth opportunities that we had to deprioritize. But just to further clarify, we are already selling into these markets.
We are already registered. What’s going on is an additional site registration for those markets which will happen at different time frames based on the amount of stability data required and the regulatory processing for site addition of which as Gagan mentioned one already happened in the last month of the last fiscal and so we would anticipate with this new capacity coming online that we no longer have to prioritize and ration the way we were and we can now tackle the marginal incremental opportunities as the individual markets come online with our registrations.
Kunal Randeria
Got it. Just one more if I can. It’s a slightly broad level question. The current US government is trying to insure development and manufacturing in the US Just wondering how this could how the US companies are looking at cdmos do they Kind of. Because while you are an important part of their overall supply chain, it’s a small part nonetheless. Just wondering how you see this panel.
Nandini Piramal
I think overall I think we’re one of the best positions CDMOs to actually benefit from people wanting to onshore manufacturing in the US But I will Say that given the uncertainty, I’d say people are taking time to decide because they’re honestly not sure what will happen in 90 days or 180 days, et cetera. So when people do decide, I think we’re best positioned to actually onshore manufacturing. But for the rest of it, it’s a bit early to say.
Kunal Randeria
Sure. And in case you do have to, let’s say, do onshore manufacturing, you’ll have to, I think, change the irrigation sites and everything. So that also will take a bit of time.
Nandini Piramal
It will, yes.
Kunal Randeria
All right, thank you.
Peter DeYoung
But just to add on the point, if there is a uptick in confirmed customer demand for onshore production, we have capacity at our recently expanded Riverview site, we have capacity at our Sellersville site, and we discussed the expansion at our Lexington site. And so for those three different and distinct capabilities, while there would be time for the customer to make a decision which would require certainty, which Nanity mentioned, and then there would be a tech transfer time for them to move it from whatever site it’s currently at to that site and then to register and then we would obviously then get the benefit of the revenue.
We don’t have to wait for significant brownfield expansions to capitalize on this in that we do have capacity available at all three sites and an expansion going underway at one of them. And so we would be. That’s why Nandini is saying that we are very well positioned because of our already existing site network and available capacities. Once customers make decisions to reshore onshore in line with policy guidance.
operator
Thank you. Next question comes from the line of Madhav with Fidelity. Please go ahead.
Madhav
Hi, good morning. Thank you so much for your time. I had one question on the pnl. If I look at the gross margins for the Company in quarter four, they’ve expanded by 500 basis points, but some of the cost seems to have gone up quite a lot. If I look at the employee cost of the other expenses, both qoq yoy especially other expenses moved up quite sharply. Could you give us some sense in terms of what’s happening there? And I think the PPT did mention certain one offs, so if you could just quantify that as well.
Vivek Valsaraj
Yeah. So Madhav, firstly to address the question on gross margin. So as we’ve maintained the full year gross margin is more representative of what the GP for the business stands in quarter four, particularly last year. In quarter four we had higher inventory depletion, causing a higher overhead charge to the P and L last year. So on a normalized basis, the 64, 65% is a correct representation of the gross margin Coming to expenses again a full year look at expenses of how we have delivered is more representative. Our business as you are aware tends to get very lumpy.
So when it comes to employee expenses specifically last year we had a case where certain performance incentive provisions had to be reversed because we did not meet our internal targets. This year we’ve actually delivered or outperformed internal targets due to which there is a performance provision which has been made because we tend to have a more Lumpier Quarter 4 where a large quantum of sales gets delivered in quarter four. The true up for some of these provisions actually happen during quarter four causing this kind of a lumpiness. Similarly in case of the other expenses as well, things like sales promotion expenses, logistics, freight distribution, a lot of these variable elements of cost tend to be more prone towards quarter four versus the other quarters.
And as I said, true ups happen towards quarter four. So therefore going by the full year number is the more reasonable way to look at how the expenses stack up. And you also refer to certain one off expenses that’s in the depreciation line item towards provision for an intangible asset that is considered financially viable.
Madhav
Even for the CHG business. We have been I guess the new site. So is there any sort of cost sitting there in FY25 which you know was for a new site or new registrations which probably doesn’t occur.
Peter DeYoung
Correct. There is about 4 to 5 million of that cost which is sitting in the expenses. The one off expenses that we alluded to that is there in the FY25 PNL.
Madhav
Okay, got it. That sounds to me. Thank you.
operator
Thank you. Next question comes from the line of Shyam Srinivasan with Goldman Sachs. Please go ahead.
Shyam Srinivasan
Good morning and thank you for the opportunity. Just the first on the margin guidance for fiscal 26 and the margin walk. Right. So I’m just trying to see there. Are multiple moving parts. So if you could help us. So 17% 15 fiscal 25 I think just said going to mid teen. If you could just reconfirm that. And I’m just trying to see the moving part one we obviously have a recovery in the CHG business is one off expenses. Some of this goes away. So there should be some improvement it going back to its closer to its historical level. CDMO business going by the revenue guidance seems to be no growth. I’m just implying. And the other two I’m just assuming that they’re growing at whatever 10 12%. Right. So just want to understand how is the margin walk for us to go from 17 to mid teen? What are the push and pulls here?
Vivek Valsaraj
So firstly let me begin by saying that both the complex hospital generics and the consumer products business is growing in line with and will go in line with our aspirations of whatever we have said we would move towards FY30. So whatever is the impact on the margin is largely coming in the CDMO business which happens to be 60% of what our total business is. And that’s where you know the correction in the margin is happening. But what is important to note that this is a one time impact that’s happening for FY26 to come back to what we believe will be close to 19 to 20% margin overall for the company.
So the pull, the push which is coming right now is largely coming from the cedar part of the business. But to get corrected back in FY27.
Shyam Srinivasan
Sorry Vivek. So we are just looking at consol margin 17. So clearly CDM was lower than that. You have said it significantly improved. So I don’t know where it is where it was before. Maybe it was like low double digit, I don’t know. So now we are seeing this whatever 15, 16, 17, whatever the number is is going back again. And what is driving that? Because we still are having. Okay, there’s no growth. So is it negative operating leverage in the CDMO business? That’s the drug.
Vivek Valsaraj
That’s right.
Shyam Srinivasan
Understood. Okay. And so when we go back to 19 to 20 next year which is 27, you are expecting like a huge uptick in CDMO for fiscal 27.
Vivek Valsaraj
Correct?
Gagan Borana
You’re spot on. So there would be an uptick in that one large customer business in FY27 for followed by our base business. It continues to do well. And then we said the other two business continues to be more consistent growth driver over FY26 and FY27. So 17% EBITDA margin in FY25 will eventually become closer to 19. 20% EBITDA margin in FY27.
Shyam Srinivasan
Helpful. Gagan, just my second question is just on the 19 million and I may have missed your mention the 90 million at Lexington and the additional Capex or bioconjugates at Riverview. Just want to understand what is the current utilization for both Lexington and Riverview and what, you know what is driving this capex? Is it that the current facilities in the utilize. I thought utilization was low. It’s not very high. So is it that we need new capacities for catering to demand? The existing capacities are probably legacy. If you could kind of give us a qualitative color on the additional capex.
Thank you.
Peter DeYoung
The qualitative cover is that we have a number of customers at Lexington, that place to work with us that are not currently in commercial production or recurring production, that are in the, let’s say development slash registration phase that when they succeed, and we believe that there’s a high chance that a number of them would succeed, that if we didn’t have the expansion, they wouldn’t have the capacity to meet their mid range forecast forecasts. And so in order to meet the customer expectation that if they check transfer to our site and they succeed with the regulator that we can meet their production volume requirements.
So that would be what’s driving the Lexington expansion decision, which was really a recommunication of what was communicated late last year. The Riverview is a little bit more different where what we’ve seen is with the overall uptick in antibody drug conjugates and the really excitement in that sector, we’ve seen now a lot of demand for the full package. And so as you know, our history is in conjugation where we began and then we did a lot of, let’s say, fill finish as our first experiment into integration. And then as you know, we’ve now demonstrated with the antibodies in Yapa and in Hyderabad and the linker payloads in Riverview.
But what we realized was that that requires a particular set of dedicated kit and a particular dedicated suite. And we had pretty much sold out our existing suite and kit for linker payloads. And what we realized is that there was a lot of demand out there and we were going to be losing projects if we didn’t increase that capacity. And so we have a, it’s a very small, modest capex. It’s fitting out a room that’s already built to add the kit needed to do additional linker payload volume. And frankly we’ve already sold it. Not all of it, but a lot of it.
Shyam Srinivasan
Thank you. All the best.
Shyam Srinivasan
Thank you. Next question comes from the line of Pandutani with Motilal OSWAL Financial Services Ltd. Please go ahead.
Katabathini Pandu
Yeah, thanks for the opportunity. So just on, in terms of the order book for the CDMO side, if you could, you know, give some more color in terms of these incremental orders coming on with specific segment for us, is it ADCs? If you could, you know, share your thoughts on that.
Peter DeYoung
So we had a strong quarter ending March with order booking. We largely booked what we had expected, expected or hoped to book in that quarter within the quarter, which is what we’re using to base our revenue growth guidance for the year, excluding the one off discussion that we already had. If you look at some sites that have had some particularly strong results, we’ve had a significant number of new program additions in ADCs. It’s been a very hot area for us and some have been conjugation only, whereas others have been integrated programs involving multiple capabilities. And just to touch on that because it’s one of the stronger areas for us, significant new large pharma and emerging biopharma wins at Grangemouth.
But then also we’ve had integrated projects touching and also Lexington Riverview linker payload. We discussed the expansions going on at those two sites and obviously we had the prior wins at Yapon in the MAV area. But what’s also not mentioned is, is that we’re doing a lot of interesting bioconjugates that are more novel. And so we actually had a case where a client worked with us first at PDS and Ahmedabad and we could do some very difficult chemistry with them for a less traditional ADC bioconjugate and we won a multi site project there and another case where we were doing some work with Peptides at our Turbay facility.
And in those two cases these are very prominent, I guess ADC or bioconjugate startups and our secret sauce was the other capabilities that then got us the whole integrated project. So I’d say ADCs would be one big wave. I think the second area is that our Digwall site and our Pitts and Pour site continue to get very strong order inflows and that’s great because it’s our India advantage and we have a good track record there and really good growth prospects coming in from new project additions. And then if we flip it over to the Americas, we’ve had a significant number of new program additions that were reviewed.
Now they are in the earlier stages and they are not all going to be late stage, but it’s a significant we have a few late stage additions there and then the last bit I’d say is from a drug product facility perspective, when you get the subsidiary financials you’ll see it later, but we had significant growth in Lexington revenue year on year in the LTM basis and we see strong order flows there and in Sellersville with all of the onshoring discussion, we’re getting a lot of RFP inflow and a significant number of conversions and a lot of interesting RFPs out there.
So it’s a bit of a long answer, but I’d say if you look at it, it really aligns to our differentiated capabilities. And I wanted to give a significant shout out to both the offshore large size sites and the onshore differentiated sites and ADCs.
Katabathini Pandu
Sure. So that’s helpful just on ADC. One more if I typically the success rate for the molecules from clinical to commercial is relatively much less compared to the other segments. And then given that scenario still we are sort of investing considerably as far from manufacturing side that confidence is coming because of the certain products of innovators sort of moving towards the commercial phase or this is more to do for already commercialized products where the customer has asked for additional volume promise.
Peter DeYoung
I’d say most of the new additions have been in the clinical phase and what gets us excitement is not that we have one very large anchor customer that’s providing all of the revenue or revenue projection, it’s that we have a really broad base of both large pharma and emerging biopharma customers that are looking at a range of our capabilities. And so while we’d love for all of them to succeed in the clinic, as you mentioned, that’s rarely the case. And we would anticipate there would be attrition but. But we do see it’s one of the areas with the highest number of clients with I’d say of all of our areas the differentiated area of ADCs would be one of the hottest.
I think the onshore drug product and then the offshore API would be also right up there. But I’d say it’s not like we’re all depending on one particular phase three to make the numbers work. We have a handful of meaningful large pharma and a handful of meaningful emerging biological biopharma that are collectively needle moving and interesting and compelling.
Katabathini Pandu
Thank you so much.
operator
Thank you. Next question comes from the line of Bino Pathiparampil with Elara Capital . Please go ahead.
Bino Pathiparampil
Hi, good morning. Couple of questions from my side. When do you expect your tax rate. To normalize at Consolidated Reno?
Vivek Valsaraj
So Bino, as you’re aware, the overall tax rate depends upon the mix of geographies from where our revenues and profitability arise. The more the revenues coming from the overseas facilities, the more reduction in the effective tax rate because we’ve already got some carried forward tax losses available which we can offset. This will take over a period of time as we have guided to by FY30, we definitely see it moving towards 24, 25% which should be the ideal effective tax rate. You will See a gradual reduction in the tax rate happening across the period as this mix changes with higher utilization of our overseas facilities.
Bino Pathiparampil
Entities where you are making losses, you would be also taking some tax credit on the P and L, right?
Vivek Valsaraj
Well, not yet because many of these are still at that nascent stage. So we haven’t started creating deferred tax assets if that’s what you are referring to. Once they turn around and demonstrate consistency of performance, we’ll start creating those deferred tax assets. So currently we are not
Bino Pathiparampil
Understood what’s. The CapEx expected for FY26?
Vivek Valsaraj
We expect it to be in the range of about 100 to 125 million. This includes the 90 million expansion in the US that we have talked about. Part of that would also get spent in FY26.
Bino Pathiparampil
And last, just to reconfirm the guidance. So this year you said from 17%. The margin could come down, EBITDA margin could come down a bit to mid teens. So does that also mean that the overall consolidated revenue growth also would be a bit neutral because of the issue we discussed?
Vivek Valsaraj
That’s right. So we’ve guided to a mid single digit revenue growth for FY26.
Bino Pathiparampil
Got it. Thank you. Thank you very much.
operator
Thank you. Next question comes from the line of Vinod Jain with WFAdvisor. Please go ahead.
Vinod Jain
Yeah, thank you. Good morning everybody. The incidence of taxation has been high. For the years 2324 and 2425. Now my question is largely answered that the incidence would go down over the. Years to more normalized 24, 25% tax incidence up to in the financial year 2030. But what is the specific guidance you can give for the year 2526? Will the tax incidence be lower significantly. From the earlier two years?
Vivek Valsaraj
So it’s like this, that as I mentioned, it depends upon the mix based on what we see currently for FY26 we do see better utilization and better sales from our overseas facilities. Which means that you would see some reduction in the tax rate rate versus what you have delivered in FY25. So there will be a reduction in the effective tax rate. It’s just that right now we’re not giving a specific guidance because we have to see how this mix pans out. The more the utilization at overseas, the more sharper the reduction.
Vinod Jain
Very well, that answers my question.
Vivek Valsaraj
So Vinod, we also made a point that in FY26, while the EBITDA margin goes down slightly over FY25, but there would be a yoy growth in our patch in FY26 and that also indicates towards a lower tax rate in FY26 over FY25.
Vinod Jain
Understood, thank you.
operator
Thank you. Next question comes to the line of Madhav with Fidelity. Please go ahead.
Madhav
Just one follow up. You know the downfield expansion which you announced of the 90 million at the US sites just wanted to get clarity that typically just this is my understanding that when we do a greenfield expansion in this industry, generally it’s 1 1.5 times something like that, it’s a fixed asset turn. When we do brownfield like at these two sites, typically what could be the revenue potential given? I guess some of the infrastructure is already in place and I would assume, you know, if you could give some color in terms of how different the margins could be given some of the fixed cost cost is probably already sitting at these heights.
Thank you.
Vivek Valsaraj
As you rightly mentioned. First I’ll talk about the margin point. Yes, the margin tends to be more better because obviously a certain component of the fixed cost is already taken care of and therefore the incremental gross margins flow into the ebitda. So yes, margin profile tends to be better in terms of asset turn. Honestly, whether it’s a greenfield or brownfield, the asset turns would tend to remain in the range of 1.5% going up to 2.
Madhav
But would there not be some common infra like utilities etc. Which is already in place at the site? So you don’t need to spend on them.
Vivek Valsaraj
Correct.But a large portion of the capacity spends happen on creating the core infrastructure so it doesn’t very significantly change.
Madhav
Got it. Okay, thank you.
Vivek Valsaraj
These capacity expansions will come in come online in FY27. Riverview will be this year. Yeah, with Riverview happening this year and Lexington happening in FY27.
operator
Thank you. Next question comes from the line of Chintan Shah from JM Financial Family Office . Please go ahead.
Chintan Shah
I thank you so much for the opportunity. So I had two questions. So one is we are commenting about the commercial part of the CDMO business but just wanted to check on the other aspect that is the generic side, basically what’s happening there? I mean is that business growing next year? What’s the outlook over there? Or when that’s going to be a muted one. That is my first question. And second over slightly longer term, basically how should we see the mix of this on patent commercial manufacturing to increase to over say three, four odd years? Those are my two questions.
Peter DeYoung
API generics and our CDMO side had a good year. Last year of growth it was returned to healthy growth after a period where it had not, and based on all of the seedings and customer conversations and customer filings that year upcoming that we’re in currently to also be a year of healthy growth. So that’s looking, if you look at the question about the lrp, if you go back to what we’re focusing on in terms of on patent work, differentiated offerings, integrated projects, those themes remain. And if you look at the underlying growth that we’re seeing that Vanity and Gagan described, excluding the customer one off, it’s quite strong and a lot of it’s related to these same themes.
So the outcome is that we would anticipate once the one time issue resolves in FY27 combined with all of our other actions, with all of our other customers, that that number should continue to grow at a faster rate than our overall business.
Chintan Shah
Got it. Understood. So just one follow up on the generic side, I mean did we see some pricing pressure here or that is largely stabilized and the guidance that you’re giving on the cdm despite, even though we’ll be going at a healthy pace in the analytics side, the decline on this side is much more to offset that growth. Is that a fair understanding?
Peter DeYoung
I would say the price always remains important in generics. We’ve done a lot of work on our back integration, our process and our procurement components and we’ve actually taken more steps in house and we’ve changed how we do the steps so that we can maintain and frankly improve our profitability in that space segment while growing, even though we’re not taking price up in the generic segment. So I think we’ve changed how we go about it and we’ve also got some new product introductions that are planned or modest, but we’ve done a lot of work on the back end to make sure that we can meet our margin expectations with the target prices needed to succeed in our molecules.
Chintan Shah
Okay. Okay, thanks for answering, Kush.
operator
Thank you. Next question comes from the line of Alankar Garude with Kotak Institutional Equities. Please go ahead.
Alankar Garude
Hi, good morning everyone. You spoke about the uncertain funding environment, especially at the early stage, and also prolonged plan decision making. On the other hand, you also spoke about strong demand across the key product categories. So the question is if there is further improvement on the macro front and underlying CDMO growth picks up beyond mid teens, do we have sufficient capacity, including the expansion already announced, to meet this demand over the next three, four years?
Nandini Piramal
I think if there is an improvement in the macro, yes, we do have capacity and capabilities available to take advantage of of it.
Alankar Garude
Understood.
Peter DeYoung
And just to in the medium to long term. Our LRP does have CAPEX investments planned, but if we were to have an uptick in demand in the near term, in the let’s say 12 month horizon, we could absorb much of that immediately. But obviously to achieve our long range plan ambitions that we’ve described, there is investment required in the medium to long term.
Alankar Garude
Understood. The second one given the strong US presence for the company, are you starting to have any incremental discussions with clients regarding shifting to your US facilities in the context of tariffs and if you can bifurcate that response across on patent and generics would be helpful.
Peter DeYoung
I think the single most important factor for the Future performance of CDMO’s, including ours, is the macro environment allowing clients to raise money and if they have money to spend money, that is the most important thing that will drive how we or other CDMOs perform. And at the moment it has been uncertain, uneven or insufficient, which is what Nandini described in her remarks. So that’s the thing we need to track first. The second is in terms of clients shifting to onshoring or reshoring, I would say that the incremental choices we have a lot of bids out.
So people are kicking tires. They’re evaluating choices, but if they don’t have to make a decision to progress a program because of certain clinical requirements or otherwise, they’re probably going to delay until they know what the tariff outlook is. If they do have to make a decision, they are making decisions and that’s what’s driving our order book trends. But in the absence of clarity on that one limited point, they will probably defer those certain choices. If I look at the sites, I would say Riverview would be getting primarily on patent RFPs. I would say Lexington is primarily getting on patent and perhaps some 505s.
And then I would say Sellersville is getting a mix of both on patent and let’s say off patent work. And it’s a mix where let’s say an off patent shift onshore because of certain federal contracting requirements, whereas the on patent would be taking advantage of late stage clinical capabilities. So we’re seeing a mix. But that’s the breakdown across the three sites and the types of RFPs in general. There’s always an exception to every rule, but that would be the general trend.
Alankar Garude
Got it. That’s helpful. That’s it from my side. Thank you.
operator
Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to hand the conference over to Gagan Bo rana for closing comments.
Gagan Borana
Thank you very much. We hope that you were able to answer most of your questions. In case you have any follow up questions or any clarification, please feel free to reach out to me and I’ll be happy to respond. Thank you and have a good day.
operator
Thank you. On behalf of Piramal Pharma Ltd. That concludes this conference. Thank you for joining us. You may now disconnect your lines.