VIMTA LABS LTD (NSE: VIMTALABS) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Narahari Naidu — Chief Financial Officer
Harita Vasireddi — Managing Director
Analysts:
Vishal Manchanda — Analyst
Viraj Mehta — Analyst
Ankit Gupta — Analyst
Ankeet Pandya — Analyst
Milan Shah — Analyst
Vignesh Iyer — Analyst
Unidentified Participant
Dhwanil Desai — Analyst
V.P. Rajesh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Vimta Labs Limited Quarter Two FY ’25 Conference Call hosted by Systematix Institutional Equities. [Operator Instructions] Please note that this conference call is being recorded.
I now hand the conference over to Mr. Vishal Manchanda from Systematix Institutional Equities. Over to you, sir.
Vishal Manchanda — Analyst
Thank you, Siddhant [Phonetic]. Good afternoon, everyone. On behalf of Systematix Institutional Equity, I welcome you to the Q2 FY ’25 earnings call of Vimta Lab.
We thank the Vimta Lab management for giving us an opportunity to host the call. Today, we have with us the senior management of the company represented by Harita Vasireddi, Managing Director; Mr. Satya Sreenivas Neerukonda, Executive Director; Mr. Narahari Naidu, Chief Financial Officer; and Mr. Sujani Vasireddi, Company Secretary.
I’ll now hand over the call to the company management for opening remarks. Over to you.
Narahari Naidu — Chief Financial Officer
Thank you, Vishal. Good afternoon, and a very warm welcome to our Q2 FY ’25 earnings call.
Our investor presentation and the financial results are available on the company website and on the stock exchanges. Please note that anything said on this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks which the company faces. The conference call is being recorded, and the transcript along with the audio of the same, will be made available on the website of the company as well as on the stock exchanges.
Please also note that the audio of the conference call is the corporate material of Vimta Lab Limited and cannot be copied, rebroadcasted or attributed in the press or media with a specific or written consent of the company.
Now I would request our Managing Director; Ms. Harita Vasireddi, to provide you with the updates on the quarter September 2024 financial results.
Harita Vasireddi — Managing Director
Thank you. Good afternoon, everyone. Thank you for joining our Q2 and H1 financial year ’25 earnings call.
The first half of the financial year 2025 was good according to the market response and the way we have delivered our services. The Indian economy demonstrated positive movement with growth driven by robust domestic demand, infrastructure spending and government-led initiatives. The manufacturing sector saw substantial growth buoyed by increased exports and the success of the PLI scheme. Certain sectors such as IT, financial services and retail also focusing well. However, inflationary pressures and global economic uncertainties pose some risks. Despite these challenges, India’s economic fundamentals remain solid, positioning it as one of the fastest-growing economies in the world.
Coming to the TIC, testing, inspection and certification and CRO industries we operate in, based on moderate growth driven by continuing demand for stronger compliance and the quality assurance across various sectors, including manufacturing and health care. However, economic uncertainties and inflationary pressures have tempered the overall expansion. Talking about the quarter and the business highlights. Vimta Labs witnessed very good year-on-year growth of 26.4%. This was primarily led by our pharmaceutical services, which continue to drive our business.
Overall, we saw good traction across all our verticals and would like to highlight that our new life sciences facility will be commercialized from third quarter. The clinical trial services had a positive impact on our revenue. This being one of our growth drivers, we are confident that these services will bring in good performance in the years to come.
Looking at the food testing services, we witnessed a slap in the business due to certain factors, which we feel would stabilize in the coming quarters. On the electronics and electrical testing, there continues to be new products coming in for testing in our lab and these services to have performed well for us. We are also in the process of expanding the space for electronics testing at our Life Sciences specialty in Hyderabad. We are adding a new EMI/EMC chamber to further gear up to the market requirements. As per the press release published on August 30, 2024, Vimta Labs has divested the diagnostics services business to Thyrocare technology. This decision allows us to sharpen our focus on our core services and optimize resources for sustained growth, which will result in a significant improvement, as you see in our financials, which our CFO, Mr. Narahari, will take you through in a bit. Looking ahead, we are optimistic on all the services we offer. And with the growth drivers in place, we are confident that we will achieve our near-term target of INR500 crores.
With this brief overview, I now hand over the call to Narahari to walk you through the financials. Over to you, Narahari?
Narahari Naidu — Chief Financial Officer
Thank you, Ms. Harita. Now I would like to walk you through the consolidated financial performance for the quarter ended 30th September 2024. After which, we can open the floor for question and answers.
Before I start discussing the financials, I would like to highlight that the previous period figures for P&L items have been regrouped ensure comparability with the current period. This is the announcement of sale of Diagnostics and Pathological Services business on 30th August 2024.
I’ll start with the consolidated financial highlights for the quarter. Total income for quarter two FY ’25 stood at INR854 million as compared to INR676 million in Q2 of FY ’24, up by 26.4% Y-o-Y. EBITDA stood at INR306 million in Q1 FY ’25 as compared to INR194 million in Q2 FY ’24, up by about 57% on a Y-o-Y basis. EBITDA margins for the quarter stood at 35.8%. Earlier, the margins were in the range of 23% to 30%, which has now significantly improved. Profit after tax in Q2 FY ’25 stood at INR170 million as compared to INR81 million in Q2 of FY ’24, a growth of more than 100% on a Y-o-Y basis. PAT margins for the quarter stood close to 20%.
Moving on to half year performance. Revenue from operations for H1 of FY ’25 stood at INR1,610 million as compared to INR1,439 million in H1 of FY ’24. This roughly translates to a growth of 12% on Y-o-Y basis. Interest stood at INR472 million in H1 of FY ’25 as compared to INR572 million in H1 of FY ’25 as compared to INR468 million in H1 of FY ’24. This translates to EBITDA margins of 35.5%. Profit after tax in HY FY ’25 stood at INR309 million as compared to INR226 million in H1 of FY ’24.
On the balance sheet side, we continue to have net debt-free balance sheet with cash and cash equivalents, including other bank deposits of close to INR28 crores. Our total debt stands at INR116 million as on 30 September 2024, with a debt-to-equity ratio of 0.03x. Capex for the quarter stood at INR30 crore. We continue to maintain our capex guidance of INR90 crores per FY ’24-’25.
With that, we can now open the floor for Q&A. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Viraj Mehta from Enigma. Please go ahead.
Viraj Mehta
Yeah, hello, ma’am, and congratulations for the numbers. Sir, my — ma’am, my first question is regarding the divestment of diagnostics. I can see the loss that you have mentioned in the quarterly run rate, but in a sense, is it safe to assume that if you take out diagnostic this very high margin of mid-30 percentage points is more or less sustainable for Vimta? Is it a fair way to think about this?
Narahari Naidu
Yes, as you rightly said, of course, the numbers what you are seeing for Diagnostics business what we had reported, excluding that, the margins are sustainable around 35%.
Viraj Mehta
Okay. And sir, Madam mentioned that we are looking at INR500 crores in near term. And we have already mentioned, we’ll be able to do it in FY ’26. So are we on track for to do that?
Harita Vasireddi
Yes, we are still on track to do that.
Viraj Mehta
So ma’am, we are in FY ’25. So, FY ’26, you think that we would be at a quarterly run rate of INR125 crores from INR80 plus crores this quarter. The only reason I’m asking this is because when we mentioned INR500 crores, we also had diagnostics in our business. Now that, that is gone, do you take out some money like do you take up INR30 crore, INR40 crore from our ambition, or we are still looking at INR500 crore?
Harita Vasireddi
Yeah, I think we would have to remove that 9% of the pie that Diagnostics was occupying. But having said that, the I’m pretty confident that we will hit that run rate during the next financial year.
Viraj Mehta
Okay. And ma’am, as a company, that incremental INR40 crore revenue if you take as in quarterly INR40 crore incremental revenue that you thought that we will hit by Q3, Q4 of next year, where do you see incrementally a large portion or where are the higher portion of that incremental revenue you think will come from? Which part of the businesses?
Harita Vasireddi
The growth will come from all the business units according to the portion of business they currently contribute to. Like for example, pharmaceutical still remains the dominant business for us. So majority of the growth will come from there in terms of absolute number. But our other divisions are also gearing up to deliver a very strong growth in the next few years.
Viraj Mehta
Makes sense. And ma’am, my last question is, when we go from INR85 crore quarterly revenue as in basically INR27 crore, INR30 crore monthly revenues to INR40 crore kind of monthly revenue with such high gross margin business, what kind of operating margin or operating leverage do you think will play out in our business? At that revenue, can we be a company of 30%, 40% margin or even higher?
Harita Vasireddi
That is a little tricky to answer in a straightforward manner because when your top line growth, then the economies of scale hit in, but then after a certain time, you would need fresh capacities to be added. So it is kind of go in a slightly wave fashion. So I won’t be able to accurately answer that. But the margins that you’re seeing now are sustainable.
Narahari Naidu
Yeah, I’ll just add on to that. The reason why we are not commenting on a higher EBITDA margins is that because we are having addition of capacity, which is going to commence from quarter three. And it would take a little more time for us to fully occupy it. So till then, we would were very happy to maintain margins around the current levels. And once we reach a critical volume of INR450 crores around, probably that point in time, we’ll have to relook if you have — if we can have higher margins or not. But as such, the industry we are way above the industry average margins currently. So yeah.
Viraj Mehta
Sure. Thank you so much. And ma’am last, just wondered you comment on our food initiative for the government. What is the monthly run rate there? I mean we have been much lower than our anticipation when we put it up. So has there been any improvement there? And what is our future for that?
Harita Vasireddi
Yeah, there is a betterment of revenues there. But I would still say it is significantly lower than what we had anticipated. But it has kind of stabilized where it is for now. So we will — we don’t have any forecasting on that side of revenue.
Viraj Mehta
Sure, ma’am. Thank you and best of luck.
Harita Vasireddi
Thank you.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Thanks for the opportunity and congratulations for a great set of numbers. So my first question was on, if we look at our performance as you had said in your initial commentary that food continues to remain a bit sluggish. So the — that the top line growth if we remove the diagnostic business performance in last year’s performance is primarily driven by pharma is what we can infer because the rest of the segments are pretty small to make much of a dent on our overall numbers.
Harita Vasireddi
Yes. So what is the question?
Ankit Gupta
So is the — like the growth that we are seeing or the run rate of around INR85 crores that we have seen in this quarter, the growth is largely driven by the pharma?
Harita Vasireddi
Yes, yes. It is largely driven by pharma and you’re right, the other segments, except for food are too small to have a significant impact on the absolute number. And food also is mostly due to internal reasons. We are shifting from the existing facility to the new facility that we have built in life sciences. So there is inevitably a little slowdown in operations. And since this is a retail kind of business, there is a little impact on that side of the business.
Ankit Gupta
Sure, sure. And sir, if you can talk about the — this the biosecure at and how it is going to impact us, are we seeing increased inquiries over the past few months and increased traction with the existing and new clients?
Harita Vasireddi
Yeah, there is a positive impact of that regulation in U.S. that we see here, some big corporations, MNCs have reached out to us. We see if there could be possible partnerships, but these are all still in very early explorative stages. We think that the momentum could pick up in the upcoming quarters or maybe a year or so.
Ankit Gupta
Sure. Sir — ma’am, this INR85 crore run rate is now become — like normally we are seeing that you know because of some capacity constraints, we were not — we were facing some challenges on the growth, plus there was some slowdown in the U.S. pharma segment. So now given how things are looking at that new additional capacity coming in our life sciences campus, INR85 crore run rate is a new base now from where we can see a growth hopefully over the next few quarters?
Harita Vasireddi
Yes.
Ankit Gupta
Okay, okay, okay. Thank you and wish you all the best. Thank you.
Harita Vasireddi
Thank you.
Operator
Thank you. Our next question is from the line of Ankeet Pandya from InCred AMC. Please go-ahead.
Ankeet Pandya
Yeah, hi. Thank you for the opportunity and congratulations on the great set of numbers. Ma’am, just two questions. So firstly, on the top line growth, so like we have seen top line growth driven by over — the overall pharma segment. So can you give more — like can you throw some light on what has worked for us during the quarter and like just directionally over the next few quarters and like one, two years, how are you looking at the pharma sector?
And secondly, you mentioned in the opening call that there’s some challenges we’ve faced in the food segment. So if you can highlight what — if possible to highlight what were the challenges that we faced in the food segment?
Harita Vasireddi
Sure. In the pharmaceutical services, we have preclinical services, we have clinical research services and also analytical services. So in this quarter, all three of them have picked up on the revenue side. Clinical research especially got a boost because of the clinical trials that we started. And on the analytical side also, the investments that we have made on the biopharma side are slowly starting to be — we are starting to see returns on those investments. And pay clinical also has shown growth during the quarter. So all three segments have helped push the pharmaceutical revenues quite well.
And on the food side, I was explaining earlier, it’s mostly internal reasons. One of our labs in — that we had in Pune, we shifted to Nashik. So there was a temporary gap. There still is a little bit of a temporary gap of revenues from that lab location. And here also in the Hyderabad headquarters lab, we are shifting the food testing services from our existing life sciences building to the new building that we have built. So it’s in transition phase. So during transition, the equipment have to be shut down, and they have to be reinstalled at the new location, so they have to be validated again. So we are trying to do this very, very slowly, but it does have a little impact on the operational capacities, day-to-day capacities. So, therefore, the factors are more internal than external on the food business.
Ankeet Pandya
So ma’am, on the food side, will it be right to say that like was there a loss of business that can like you transfer to the next quarter or something like that — on those lines? Will be that right way to look at it?
Harita Vasireddi
As of now, I won’t say there is a loss. But even if it was there, it could be a temporary transfer because it’s like a retail business, we are not available to give the report in three days. Then, of course, they will have to look for that testing service somewhere else. So that little chance that little risk is there, but we have good relationships, especially with our large customers. So there shouldn’t be a long-term impact of this.
Ankeet Pandya
Okay. And on the pharma side, like, we bring on the clinical no clinical that we have recently started. So again, I think the momentum that will be one of the key sort of like the bulk up in the revenue going forward that we can see on the quarterly basis.
Harita Vasireddi
We have actually just begun the first trial. The first trial is going very well. So more projects have to be added and the efforts are on. The first few ones may not come one after the other in a very successive manner. There might be some gaps, but it will pick up.
Ankeet Pandya
Okay. And ma’am, one last question on the bookkeeping. So in the balance sheet or in the other financial liabilities, there’s an increase from INR24 crores to INR45 crores. So anything to read in those numbers?
Narahari Naidu
Can you refer to the exact — [Foreign Speech] other financial liabilities. So this is because of capex expenditure. So there are certain capex-related vendors, which were due payment which were not due payment, but which were accrued as a payment liability. So that was the exact reason.
Ankeet Pandya
Okay. That’s it from my side. Thank you.
Operator
Thank you. Our next question is from the line of Milan Shah from Urmil Research Consultancy. Please go ahead.
Milan Shah
Hello.
Operator
Hello, Mr. Milan.
Milan Shah
Hi. Can you hear me?
Operator
Yes, sir, your line is unmuted. Please go ahead with your question.
Milan Shah
Okay. Congratulations for a great set of number. And madam, in opening notes, Sir has said that presentation is uploaded on exchange and website, but there is no any presentation on the site or BSE exchange. So look in the matter because of investors going through and then after they’re going to ask the question. So my request to. And second question is what is the export of the business content in this quarter result?
Narahari Naidu
Can you please come again with the question?
Milan Shah
What is the content of export in current quarter business and half year?
Narahari Naidu
So typically, our export is in the range of 25% to 30%. So this year, there is no — this quarter also, there is no exception to that general percentage.
Milan Shah
Okay. And after third quarter our next expansion is on-road then it is a chance to increase the export revenue?
Harita Vasireddi
It has no direct connection between expansion and export revenue so the typical trend has been around those numbers. It’s our continuous endeavor to increase those numbers. Fortunately, for us, India’s market is also very strong. So we are able to drive good growth in both domestically and internationally.
Milan Shah
Okay. And electrical and electronics side, we are going to expansion in this way or this is slowly we are going to add at that?
Harita Vasireddi
We have created a space to add one more EMI/EMC chamber. The chamber also is ordered, but it has a long lead time. So we expect the installation of the new chamber to be done maybe around Q4 or early next year.
Milan Shah
Okay. Thank you and good luck for next quarter.
Narahari Naidu
Sir, as we speak, I just cross-referred on the investor presentation. It got uploaded. Could you please recheck and have a look at it?
Operator
Sir, the line for Mr. Milan dropped.
Narahari Naidu
Okay.
Operator
Thank you for your answer. Our next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.
Vignesh Iyer
Hello.
Operator
Yes, Mr. Vignesh. Please go ahead with your question.
Vignesh Iyer
Sir, actually, I think I missed the initial part of the call. So after the understanding, we are targeted to do INR500 crores next year, is that correct?
Harita Vasireddi
Yes, we want to at least reach the run rate of INR500 crores in next year.
Vignesh Iyer
Got it. And ma’am, the new facility, should we expect the margins to be in the similar level in the pharma and the food segment at an overall level?
Harita Vasireddi
EBITDA margins, yes.
Vignesh Iyer
Yeah. Okay. Yeah. Okay, ma’am. That’s it. Thank you.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Zakir Nassar [Phonetic], who is an Individual Investor. Please go ahead.
Unidentified Participant
Hello.
Operator
Yes, sir, please go ahead with your question.
Unidentified Participant
Yes. Ma’am, congratulations to you and your team on the phenomenal set of numbers, ma’am. I would want you to throw some light on this electronic testing facility, which you are — which one is on and you’ve ordered for another one. How do you foresee this panning out over the next two to three years, ma’am? Thank you.
Harita Vasireddi
The defense sector, I think is getting a very good push in our country and we are sitting in the hub of defense component manufacturers. So the variety of systems that are coming to us for testing is actually adding month on month. So we are quite upbeat about it. Already our capacities have been utilized around 80% to 85% so far. So we are just gearing up for additional capacities because these have very long lead times. The chamber takes a long time to — once you place an order, it takes a long time for it to be delivered and installed. Therefore, we are proactively creating additional capacities, which should help us continue the growth even in the next years without any pause or slowdown in revenues.
Unidentified Participant
And ma’am, bookkeeping question, ma’am, the current — the revenues in the current quarter, would that exclude the division you sold to Thyrocare, ma’am?
Narahari Naidu
Yes, sir. So the numbers reported are excluding of our Diagnostics business. So the top line, what we are mentioning are close to INR85 crore, this doesn’t include diagnostics business for the quarter.
Harita Vasireddi
Thank you. Thank you and best wishes to you for the INR500 crore figure, ma’am. Thank you.
Narahari Naidu
Thank you.
Operator
Thank you. [Operator Instructions] Our next question is a follow-up question from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Ankit Gupta
Yeah. Thanks for the opportunity. Can — ma’am, can you talk about how the NFL lab is doing at JNPT and any positive developments there?
Harita Vasireddi
The sample loads at NFL have slightly better. And after that, they have stabilized now. So there is no forecast, like I said earlier on whether it could go up further more. So as of now, it is better than what it was a couple of quarters before.
Ankit Gupta
So how much growth will that be, let’s say, compared to a couple of quarters? Like, any — will be a significant growth that we see?
Harita Vasireddi
Yeah. That would probably be around 30% to 40% increase in sample volume.
Ankit Gupta
Okay. Okay. Okay. And…
Harita Vasireddi
And one path.
Ankit Gupta
Okay. And let’s say, how far are we from the numbers that we were expecting two, three years back when we started this lab?
Harita Vasireddi
As of now, we are probably still 30%, 40% away from what our expectation was.
Ankit Gupta
Okay. Okay. Yeah. And in terms of you know margins we are — we have seen improvement given in the volume uptick that we have seen there.
Harita Vasireddi
Yes.
Narahari Naidu
So the margin is a combination of economics of scale as well as exclusion of Diagnostics business.
Harita Vasireddi
I think he was were asking about NFL.
Ankit Gupta
Okay, okay. Okay. Thank you. Thank you and wish you all the best, sir.
Operator
Thank you. Our next question is from the line of Dhwanil Desai from Turtle Capital. Please go ahead.
Dhwanil Desai
Hi, congratulations for a very good set of numbers, ma’am. Just one question. I think you alluded to some conversations that you are having with some of the MNC players as a fallout of BIOSECURE Act. Now given that if some of these contracts materializes as and when it fructifies, is there a possibility that we may run out of space even after expansion because that expansion, we may have already kind of tied up the capacity for the existing businesses and the growth for that. So how do you look at that? And is this a single conversation that we are having on? Is there a multiple conversations across three areas on the pharma type that we are having?
Harita Vasireddi
So the relationship that I was talking about has already begun. And typically as in any relationship, especially with a global company, the ramp-up is low and steady. So that is what — that is a phase that we are in. Capacity-wise, I’m not concerned, at least for the next couple of years. We should be very comfortable in accommodating any requirements that such partners may have. And I also want to clarify that there is no direct correlation with the BIOSECURE Act and this partnership. So this is not probably directly because of that.
Dhwanil Desai
Understood. Understood. And sir, ma’am, you can give some more color on the preclinical side, the scale-up and how you are looking at things, how the pipeline is shaping up, where do we see from here, how can we grow. Some more qualitative insights into that would be helpful.
Narahari Naidu
Pipelines, mainly, I mean two segments that we spoke about, right, which are poised to grow in the future. One is the pharma segment and the food segment.
Dhwanil Desai
I’m asking for preclinical part of it within pharma.
Narahari Naidu
The three segments that are poised for growth and what we are pursuing are the pharma segment, the food segment and electrical and electronics segment. These are the three focus areas for us and these are the three areas where there is a traction globally.
So coming to pharma segment, preclinical is a part of the pharma segment. And preclinical is mainly driven or major opportunities for preclinical are in the countries where there’s a lot of drug innovation going on, which is the vessel world, the European markets and the U.S. markets. So we are equally placed in both these markets. A lot of efforts have been put over the last three, four years, and we are seeing good returns coming in from there. The clinical business, again, is — there’s a lot of business which flows into India from the Western markets. Europe was a market where we were not very strong, but the first in the last year started yielding, we are making partnerships. We are making progress in these markets. So overall, I think the pipelines are growing and the business outlook for the future is also very positive.
Dhwanil Desai
Okay. Got it, sir. Thank you and all the best.
Operator
Thank you. Our next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead.
V.P. Rajesh
Hi, thanks for the opportunity and congratulations on an excellent set of numbers. Just two, three questions. So one is on the partnership that you were earlier talking about. Are you starting to see — aside from that, are you starting to see any conversations which are pertaining directly to the BIOSECURE Act in the U.S.?
Narahari Naidu
So the partnership, yes, we have been talking about is with one of the major U.S. innovator company. And this partnership is not necessarily as on today direct linting [Phonetic] at the BIOSECURITY, but it is mainly on the cost-cutting measures taken by MNCs year-on-year, where we are looking to find markets where we can offshore or send out some of the work which take for a lot of resources. So in our initial decisions of initial work, which is coming in is directly related to that, and that is going to continue. The BIOSECURITY Act is still — I think it is still yet to show much of an impact. But I’m pretty sure it’s going to gradually shape up that way.
Operator
Thank you for your answer, sir. The line for the participant seems to have disconnected. [Operator Instructions] The line for the previous participant has reconnected. Mr. Rajesh, please go ahead with your question.
V.P. Rajesh
Yeah, thanks. Sorry for that. So what I was trying to understand and I’m not sure if you already answered that if you put that partnership aside, which you were saying is more related to cost-cutting, are there any other conversations which are a direct result of BIOSECURE Act? That’s what I was trying to understand.
Narahari Naidu
As on day, we don’t see that in the market where companies are coming through here, but I think eventually it’s going to happen. There are discussions of moving those manufacturing facilities out of China. And I think there are some active discussions happening in the country with some of the major players. I think we will have more concrete understanding of that by — in the first quarter of next year.
V.P. Rajesh
Understood. Understood. And my next question is, and I know man doesn’t like to talk about this, but directionally, can we assume that 70% of the revenue in this quarter was from pharma?
Narahari Naidu
Yeah.
Harita Vasireddi
Yeah, close to that, yes.
V.P. Rajesh
Okay. Great. And then lastly, on the guidance for next year. I heard two numbers. I heard INR450 crores because you are taking the diagnostic out. And I also heard you say the run rate of INR125 crores in a quarter. So should I conclude that maybe in Q3, Q4 next year, you are targeting to hit INR125 crores of the run rate revenue? Is that the way to understand your comments?
Harita Vasireddi
Yeah. That’s the right understanding.
V.P. Rajesh
Okay. All right. Great and all the best. Thank you so much.
Harita Vasireddi
Thank you.
Operator
Thank you. Our next question is from the line of Vishal Manchanda from Systematix Institutional Equities. Please go ahead.
Vishal Manchanda
Good afternoon and thanks for the opportunity. I have a question on the Biosimilar business that you’re trying to build. So would you be able to provide any color whether you have been able to win any contract there in terms of executing the trial or maybe the basic bioanalytical test on the — in that line of the business?
Narahari Naidu
Yes, we have been doing pretty well in this segment of Biosimilars and some of the other big molecule, large molecule areas. This is an ongoing work. We have been doing it for quite some time on the preclinical space, but now in the analytical and clinical space also, we have contracts and we are executing.
Vishal Manchanda
So you mean you would be doing a trial for a client on the Biosimilar front. You have a contract for that?
Narahari Naidu
We today have — I won’t go into much specifics, but yes, we are part of such contracts, under [Speech Overlap] clinical type programs, yes.
Vishal Manchanda
Okay. And just one more final question on the pharma analytics side. Just wanted to understand the driver of growth for the business. So is it primarily the filings that companies do for their products in the U.S. to support this filings, they need analytical tests and Vimta supports these companies on those analytical tests? Is that a driver or there are other drivers as well for the Pharma analytics business?
Narahari Naidu
That is essentially the basic driver for any of the CROs, the outsourcing work to support these filings. But the other part of that same, what do you call, driver is the complex products. So for the general products and all, they have a number of labs available. But for complex and more R&D support kind of work, they rely on CROs of experience or CROs, which have been with complex solutions — sorry, solutions for the complex problems like Vimta, so that is the second part, which is also fueling the growth.
Vishal Manchanda
You’ve started to get more complex work related to complex generics now.
Narahari Naidu
Yes, yes. We are supporting a lot of those complex generic studies.
Vishal Manchanda
And are these primarily Indian clients or the global innovator clients? How would you kind of [Speech Overlap]?
Narahari Naidu
It’s a mix of both the Indian clients, European, North American, Southeast Asia. But the common factor between all these companies are they are filing in regulated markets, which could be North America, Europe, Japan and some of the SEBI [Phonetic] regulated. Got it. Thank you very much. That’s all from my side. Yeah. Thank you, Vishal.
Operator
Thank you. Next is a follow-up question from the line of V.P. Rajesh from Banyan Capital. Please go ahead.
V.P. Rajesh
Yeah. Thanks for the follow-up. So I wanted to just inquire about the transition that we were doing from the facility that you guys showed us during the Investor Day and obviously, the capacity was very tight at that point in time. So if you could just comment about that, how is that transition of going into the new place, etc., is going on and what is sort of the deadline as to when that will get done?
Harita Vasireddi
The new facility is created to house food testing services and also to house preclinical services. So food has almost 90%, we have moved food from the existing facility to the new facility. Food also has multiple labs. We have the nutrition testing laboratory, we have the microbiology laboratory and we have the residue trace analysis laboratory. So nutrition lab is fully migrated. The trace analysis lab is also almost migrated. The last one will be microbiology that we will be moving in this month or maybe till mid of next month. Preclinical, we are yet to start shifting, so that also we will initiate in the month of November and that will also be very gradual. And the reason we are doing it very gradually is because we do not want to impact our service to the customers.
V.P. Rajesh
Got it. And I think you had also talked about putting up a second chamber for the electronics business. So any update on that?
Harita Vasireddi
Yeah. So we have placed an order for the chamber and the delivery is expected late Q4 or early Q1?
V.P. Rajesh
Okay. Okay. And then lastly on the capex side, if you can just update us as to what’s the plan for this year and what are you planning for the following year?
Narahari Naidu
So if we have to divide between the infrastructure addition as well as other than infrastructure. So infrastructure, we may incur close to INR70 core in totality, which we expect it to be capitalized during quarter three, out of which majority was spent last year. And this year also, we are spending out of the overall budgeted allocation of INR70 core. Other than that, we can expect an incurrence between somewhere around INR50 crore — INR50 crore to INR60 crore, and we already incurred close to INR30 crore in the H1.
V.P. Rajesh
Got it. Got it. Thank you. That’s all.
Operator
Thank you. Our next question is from the line of Milan Shah from Urmil Research Consultancy. Please go ahead.
Milan Shah
Hello. Hello?
Operator
Yes, Mr. Milan, please go ahead.
Milan Shah
I want to know that we are going to a big expansion. So any plan to [Indecipherable] or fundraising planning for this year or next year?
Harita Vasireddi
As of now, we don’t have any thought in that direction.
Milan Shah
Okay. Thanks.
Operator
Thank you. As there are no further questions on the participants. I now hand the conference over to the management for closing comments.
Harita Vasireddi
Thank you, Siddhant. I want to thank all the participants for joining us in the call today and also for all the good wishes that we shared with us. I wish to thank even Vishal and Systematix for hosting this call today. Thank you all. Bye-bye. Good day.
Narahari Naidu
Thank you all.
Operator
[Operator Closing Remarks]