Alivus Life Sciences (NSE:ALIVUS) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good morning, and welcome to the Alivus Life Sciences Limited Q1 FY 'twenty seven Conference Call. As a reminder, all participant lines will remain in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I will now hand the conference over to Ms. Soumy Rao, Senior General Manager of Alivus Life Sciences Limited for opening remarks. Thank you. And over to you. Good morning, everyone. I welcome you all to the earnings call of Alivus Life Sciences Limited for the quarter ended 06/30/2026.

0:47 From Alivus Life Sciences Limited, we have with us Doctor. Yase Raoji, our MD and CEO and Mr. Prashant Mistry, our CFO. Our Board has approved the results for the quarter ended 06/30/2026. We have released it to the stock exchanges and updated it on the website. Please note that the recording and transcript of this call will be available on the website of the company. Now I'd like to draw your attention to the fact that some of the information shared as part of this call, especially information with respect to our plans and strategies, may contain certain forward looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts and assumptions that are subject to risks and which could cause actual results to differ materially from these statements depending upon the economic conditions, government policies and other incidental factors. Such statements should not be regarded by recipients substitute of their own judgment. The company undertakes no obligation to update or revise any forward looking statement. Our actual results may differ materially from those expressed in or implied by these forward looking statements. With that, I invite Doctor.

1:46 Yasir Raoji to say a few words. Thank you, and over to you, Doctor. Thank you, Shami. Good morning, everyone, and welcome to our Q1 FY 'twenty seven earnings call. We are pleased to begin the first quarter on a positive note, marked by healthy revenue growth, improving profitability and continuing momentum across our markets. So we reported revenues of $6.40 crores, which is a 6.4% year on year growth during the quarter. Our performance this quarter was particularly encouraging as it delivered despite a significant decline in the GPL business, reflecting the growing strength of our broader portfolio and the resilience of our business model. Our non GPL business delivered strong growth of 26.5% year on year, driven by successful new product launches and strong demand across all geographies.

2:42 So the momentum we have built in recent quarters continues to strengthen with recently launched products continuing to gain scale across markets. So this has provided greater diversification to our revenue base and created a platform for sustainable growth going forward, giving us confidence in the sustainability of this momentum. GPL has been muted as a result of inventory rationalization. And so if you recall, Q4 was pretty strong and we saw a dip in Q1, a decline of 52.6% year on year. However, the strong execution across the non GPL portfolio helped us to offset this impact, underscoring the benefits of a broader and increasingly diversified growth engine.

3:33 While growth in the GPL business is expected to remain flattish in FY 'twenty seven, the business has been historically weighted towards the second half of the year. And we expect a similar trend to play out this year, resulting in a stronger H2 performance. At the same time, we expect the healthy growth momentum in the non GPL business to continue, supported by a robust product pipeline, recent launches and sustained demand across all markets. This provides us confidence in our ability to deliver growth despite the near term weakness in the Overall, the underlying strength of the API business remains intact. Geographically, we saw broad based growth across all markets during the quarter, highlighting the strength of the diversified business.

4:22 On the profitability front, a favorable product mix and newer launches helped improve gross margins to 60.2%, an increase in five ten basis points year on year. Enhanced operational efficiencies and ForEx gains also supported six fifty basis points Y o Y improvement in EBITDA margins to 36.6%. These margins reflect the quality of our growth and disciplined execution. Our CDMO business recorded 3.8 Y o Y growth during the first quarter. Given the inherently lumpy nature of CDMO business, the performance does vary from quarter to quarter. We've seen that before. However, we can expect the segment to gain momentum in the second half of the year, supported by contributions from newly added projects.

5:14 On the CapEx front, Cholacur continues to progress as planned. There's a little bit of a delay, but it's going to be operational in early Q3 of FY 'twenty seven. So construction at Taloja, the R and D center has begun in earnest, and it is it will happen on schedule. The pipeline remains robust with six fifteen six seventeen, I'm sorry, DMF and CEP filings globally as on June 30. Our high potent API portfolio continues to advance with 29 products in the active grid, representing a total addressable market of $82,000,000,000 Of these 13 products have been validated, seven are in advanced stages of development and the remaining nine products are progressing through lab development stages.

6:04 So while we remain watchful of the evolving geopolitical and demand environment, the strength of our business fundamentals gives us confidence in our growth outlook. We are guiding for revenue growth of 10% to 12% in FY 'twenty seven with growth skewed towards H2 FY 'twenty seven. We also remain confident of sustaining EBITDA margins in the 30% to 32% range. So with this, I now turn the floor to our CFO, Mr. Prashar Mistry, who will walk you through our financial performance for the quarter in-depth. Thank you, Doctor. Yasir. Good morning, everyone. Welcome to our Q1 FY 'twenty seven earnings call.

6:49 I would like to highlight the key performance updates for the quarter ended thirty eight June twenty twenty six. For Q1 FY 'twenty seven, revenue from operations stood at INR $6.40 crores, a growth of 6.4% year on year. Gross profit for the quarter was INR $3.85 crores, up 16.3% year on year. Gross margin for the quarter stood at 60.2%, up five ten basis points year on year, driven by new launches, product mix and operational efficiency. EBITDA for the quarter was at INR $2.34 crores, up 29.1% year on year. EBITDA margin for the quarter was at 36.6%, up six fifty basis points year on year. PAT for the quarter stood at INR 160 crores with PAT margins at 25%. Turning to the therapeutic mix. CVS and CNS continued to anchor growth during the quarter, together contributing 58 to the top line. Overall, chronic therapies accounted for 74% of top line in Q1 FY 'twenty seven.

7:45 R and D expenditure for Q1 FY 'twenty seven was INR 24 crores, which was 3.7% of our sales. On the balance sheet and cash flow movement, our CapEx for the quarter stood at INR 85 crores. We expect to incur a CapEx of approximately INR $5.40 crores in FY 'twenty seven. We generated a strong free cash flow of INR 90 crores, leading to cash and cash equivalents, including short term investments of INR $8.80 crores as of 06/30/2026. We continue to remain a debt free company. Overall, we believe the business is well positioned to deliver steady growth over the coming quarters while maintaining strong profitability, supported by improving demand trends and continued operational discipline. With that, let us open the floor for Thank you.

8:34 Ladies and gentlemen, we will now begin the question and answer session. We questions. Take the first question from the line of Ahmad from Unifi Capital. Please go ahead. Thanks for the opportunity. Doctor. Raji, congratulation on the great set of numbers, especially for the non GPL business. My first question is to understand the gross margins little better. If you look at last three quarters, obviously, the gross margins improved materially.

9:25 You've spoken about lot of process improvements, yield improvements and so on and so forth. If one has to try to understand the the the data which has come in, how much is due to the process improvements you have made, and how much is because certain products, new launches have done well the initial life cycle, and that may sort of normalize as we move ahead. How should we look at it? And the point I'm trying to understand is whether 60% is a more sustainable gross margin or as things move ahead, it may normalize a little bit? So the two main reasons are launches and operational efficiency. Launches will not I mean the margins from launches will not just drop off. I mean the word we used is normalized, right, because we are always ready with the second gen process, okay? So we expect and the sort of launches have not fully fruitified.

10:28 There are still markets opening up for the new molecules that we recently launched. So that growth along with the margin stability will continue. And we've had significant improvement on the operational efficiency side, which also is incremental and will continue to deliver. Sure. Then in that case if we assume gross margins to be more sustainable, obviously there will be a quarter or two year or there. Then the EBITDA margin guidance which you have is then it implies it's fairly conservative. Yes. We can guide to a better margin, frankly, I mean, even up to 34%.

11:13 The issue is this war situation, right, and what it's doing to raw material prices. So we need to be a little cautious. There's no point giving you a higher guidance and then not delivering. So I'd much rather, I mean, as a company, we've been always conservative. We tell you what we can do. And if there's an upside, there's an upside. But basically, it's the worst situation that has made us a little more cautious in giving a higher guidance. Sure. And secondly, mean, the worst situation itself, how do you see, I mean, dominant trade prices have they corrected meaningfully from the peak for you as a basket? Have you been able to pass on the pricing? Has there been price hikes in your end products and that helps you mitigate part of the raw material hikes?

12:06 So there has been an increase in raw material prices. It's not been very steep, okay? And we have managed to pass on a part of it to our customers. But we'll have to see how to I mean manage that. I mean, there's a steep increase, obviously, customers do understand. And I mean, we've had positive feedback from customers that, yes, we know the situation, and we are okay to support. But then you can't do that across the board. So we need to understand that too. But is it fair to assume the near term, the 60% margin broadly should hold or it's just we have to wait a call. Yeah. Like you said, a quarter here, a quarter there, but yeah, I think we can hold.

12:54 Yeah. On the GPL part of the business, obviously, was steep degrowth. You have alluded to full year numbers being flat. Does that confidence come from the conversations in terms of what order pipeline, what product pipeline you want to deliver them over the next three quarters? Because there is a certain resistance among investors at least that part of the business, if that degrows materially, the entire efforts on the non GPL business is sort of offset it. So how should one look at it as a whole for the full year? Yes, understand Q1 was inventory acceleration those things happen, but full year if you can give a little more color in what gives us confidence to achieve whatever INR700 crores, INR750 crores range which you have been delivering for last three years in GPL business?

13:46 That's exactly right. I mean what you said is that it's that they are an old customer, okay, and a very big customer spread it out. There are more than 50 commercial products that we supply them. So there's Q1 is not an indicator of how the year will go. And we are pretty confident that in the sort of worst case, it will be flattish growth. On the new launches and HP API pipeline, I mean, I'm assuming there will be gradual progress happening every quarter in terms of where we reach in terms of commercializing those 28, 29 products we have as of now. Is there anything coming by end of this fiscal year or it is more tilted towards FY '28, '29 and beyond?

14:35 Are there any new launches you can expect to happen in FY 'twenty seven and also on? Yes. So the sort of it starts off in the end of calendar 'twenty seven with the patent expiries. But then we have a good run for the next four to five years with the pipeline on API, okay? So end of calendar 'twenty seven, so that's more like FY 'twenty eight. Of course, API starts off a little earlier, okay, because they have to buy launch quantities, customers have to prepare for launch.

15:22 Correct, we could something, okay, but our projections are more FY 'twenty eight. That helps. Lastly... Amit, do apologize to interrupt you. Could you please join back the queue for follow-up questions? Sure. No worries. Thank you. Thank you. You. We take the next question from the line of Yog Raghani from Omega Portfolio Advisors. Please go ahead. Hi, thank you. My first question was regarding the margin improvement. So since our GPL business has come down, would it be a fair assumption that the non GPL business is more margin accretive than the GPL business?

16:12 Yes, we can say that. Okay. Great. My second question is if you could give us some more clarity into how we are better positioned with regards to the entire global conflict. So as I understand, we are very good at solvent recovery compared to, say, a lot of our peers. So does that put us in a significant competitive advantage in the current situation? So net consumption, I mean, is favorable for us on our processes, but there's still a requirement now. And we have a pretty wide product basket. So even the range of solvents that we use is much, much bigger than we typically would if we had a sort of lesser portfolio.

16:59 So solvents are and you've seen oil prices, right, the way they are going. So solvents do have an impact. And we're trying to get better. Recently, I mean, we introduced a membrane based technology apart from just regular distillation, okay? And that is proving to be pretty effective. So we might scale that up. But again, we might improve by about 5% to 10% there on recovery. It's not going to be like we want to cover everything, okay? Okay. All right. Thank you. Sure. Thank you.

17:52 We take the next question from the line of Kausar from Pall Asset. You previously highlighted that you're expecting to close two brand new CDMO contracts in early H2 FY twenty twenty seven. So is this still on track? Or are there any changes? It's on track. It's on track, right? So as I understand, the non GPL business is more margin accretive, right? So will the EBITDA margins blend lower as GPL revenues improve in H2F by 2027? Well, we factor that into the And that's the reason why we are giving slightly, I mean, 32% while we are saying, and Doctor. Mentioned that it can go to 34%.

18:44 But given the current quarter is 36.6%, if GPL comes in, it can come down to around 34% in a steady state scenario. We take the next question from the line of Supreet Dipatu from Eyesight Fintrade Private Limited. Please go ahead. Good morning to the team. I have two questions. The first question to Mr. Yes, it is. Beyond the regular outlook, what are the top two to three execution priorities you are focusing on in the next few quarters?

19:30 And alongside that, what do you see as the biggest risk in client adoption, regulatory shifts, or compliance pressure? And how are you preparing to manage them while strengthening Alivus position in the API and Life Sciences solutions? That's my first question. I'll let you second with an update. Thank you. Wow, that's a big question. You talked about compliance pressure and what else, Sukrit? CapEx, regulatory approvals or the diversification along those. Okay. So see, Sholapur will be up and running by Diwali, okay? And we are going to trigger an inspection within a year from some major regulatory agency, okay? So we've lined up those products, okay? So I would say that if we are able to achieve that within a year of getting Shodhakura up and running, then that's a big milestone that we would be we would have achieved because then we get a good runway for the next three to four years for servicing the business with Cholapur, okay? That's one big thing.

20:49 As far as compliance pressure goes, I think we've had a pretty decent track record. Things have been going well. And because we got the FDA, we got a VAI in and Keshwar and an NAI in the H, a lot of agencies are actually not coming anymore. Okay. So this year has been relatively light in terms of the audit scenario from major agencies. Of course, we continue to have customer audits and those are fine, those are happening. So I don't see any major compliance pressure issues, okay? You also asked about scaling up the business.

21:36 Execution priorities. Execution priorities. Yes. So look, I mean, we've got to get the launches right, okay? So far so good. If you've seen the last three quarters, launches have been contributing significantly. And I explained to one questioner, I think, Ahmed before that the launch momentum is pretty strong, okay, because market because patents don't expire at the same time in all markets. And so as patents are expiring, the our newer products are having a significant volume growth. So we need to execute and ensure that we service across markets. Can I ask my second question? Yeah. Yeah.

22:25 Go ahead. So with regards to mister mister, along the similar lines of forward looking one, from a financial point of view, what key risk or challenges do you anticipate in the coming quarters? And what specific measures are being taken to manage margins, cash flow, and balance sheet strength, especially in areas like raw material cost volatility, receivables or compliance? Obviously, compliance, we have given a guidance, but just along this, actually. Yes. So margins, as Doctor. Mentioned earlier, we are confident of delivering these margins.

23:11 Doctor. Has added to 32% on a conservative basis. But if the steady state of affairs remain, given the war like situation does not impact us significantly, we can be touching 34% margin as well. While we are seeing the raw material prices are going up. And in fact, it started from solvents and then now to ASMs, it is moving towards that. But having said that, we are actively monitoring it on a almost on a daily basis and looking at as to what is the impact on the cost on our cost of production and then taking adequate steps to get engaged with customers and see as to how we can pass on some of these to our customers.

24:00 So while this exercise used to be once in a while, now it is being done on a more regular basis so that we don't get caught on the wrong side of the margins. As far as the cash flow are concerned, cash flows are robust. The receivables, we haven't had any defaults on receivables yet. Receivables are coming timely in a timely manner. We don't see those challenges. Exchange is favoring us today because of the rupee depreciation to a great extent because we are net exporters. There will be a slight increase on the inventory side is what we are seeing as we keep on building inventory so that we are able to continue to support our customers in a timely manner and at more predictable prices. So that's why we will be covering our inventories at prices which are more suitable to us. And that is something that will continue to happen over next few quarters.

25:13 So overall, it's a while the balance sheet is having cash, it's a good position to be in. Even in these times of uncertainty, we are well positioned to face these challenges and see through these challenges very effectively. Thank you. And best wishes. Thank you. We take the next question from the line of Prateek Kothari from UniqPMS. Please go ahead. Yes. Yes. Hi. Good morning, sir. So, ma'am, if you can break this growth down to what it will per time. If you are not.

26:00 Prasik, I do apologize to interrupt you, but your audio is not clear. I trust this is better. Go ahead,. Yeah. So my question, one, if you can break this growth down in volume and price even given FY twenty seven half? So the non GPL business, you have seen a 26.5 growth Compared to Q1 last year to Q1 this year, the exchange has given us an impact of about 7% in that. So if we look at a constant currency growth is about 20%. Within that 20%, the volume growth will be about 21% to 22%.

26:47 The price decline is about 1% to 2% is what we have seen. Okay. Okay. And sir, this Phase II, Sholapur seems to have been pushed out by another year in our strategic way forward, what we have shown. So any thoughts, comments on why the delay? Even in FY 2027, the capacities that were supposed to come, think, have been delayed by a quarter or two. Just on our execution and how are you thinking out in terms of building capacity? So see, we have been pretty calibrated with respect to bringing on new capacity, okay? The key is to get Cholapur Phase one and one point one on track.

27:35 Once the facility is built out and we get audited by FDA or a European agency, right, then our ability to use Shola Food for the REG markets improved significantly. So the thought process is that it's a greenfield. We need to have a functioning facility, which we are going to do by Q3 and then a little later like in Q4, right? But then once it's operational, then it's how much business we can service out of Sholabur. So the main thing is going to be to bring an agency in quickly for an Once we get that inspection, then we can really drive business hard from Solakur. So we don't want to hurry it up. And our experience on Brownfield is that we are able to put because there is only the manufacturing infrastructure.

28:39 And that can come up in about eight, nine months' time. So we don't want to hurry it up, just have a large like Phase two, you said. Phase will get us in the field. If we execute Phase two quickly, it will get us into a situation where we'll have a lot of under absorption. And we don't want to do that, okay? No point, right? I mean we have the Dahej and Kleshwar, which are rec sites and Mohan. And we are comfortably able to manage the business now because even there is a brownfield expansion happening in Ankleshwar as well as in Dahej, okay, which should give us a lot of comfort for this year and even going into next year. But then beyond that, we need to get Sholakpur basically audited.

29:29 Correct. Thank you and all the best sir. Thank you. Thank you. We take the next question from the line of Ahmed from Unifi Capital. Please go ahead. Thanks for the opportunity again. Question on the similar line on the CapEx front. We have pushed out the time lines a little bit over last couple of quarters. The question why I'm asking this is considering we are already operating at probably 80%, 90% utilization or higher, then capacity constrained to grow in second half or thereafter FY '28, can that be a challenge considering the Ankleshwar and the hedge has been pulled out? And so we can give some sense there.

30:27 Ankleshwar and the hedge are on track, know. We did push out Ankleshwar and the hedge. Sholapur got a bit pushed out, part of it was also there's been a slowdown with labor and you know a few other things. But until the hedge will complete on time. And from a see, because you know that 80 plus percent of the business is a red market business, right? So we can't do that out of Sholapur. So our priority on the CapEx has continued to be completion of the expansion of the Dahed and Ankleswar. So Dahed is getting 160 ks and Ankleswar is getting like 100 and something, 110 ks.

31:17 Sure. So is this capacity enough for us through double digits for this area of added 10 to 11, hopefully, 28 also double digits. So is this capacity enough to grow at double digits for '27, '28 before SolarWinds inspection and stuff? Yeah. Yeah. And see, the thing is Jolapur is not going to run empty. I mean, Phase one and one point one, we've already mapped out enough products to come out of Jolapur. Because initially, we'll be loading it with some intermediate, large volume intermediates for captive consumption. And we also have a big backward integration block that is coming up. So all that will keep Sholapur pretty busy once it gets started. Only thing is we can only do ROW business out of Sholapur to begin with. So for about a year, we'll be parking ROW business.

32:30 We take the next question from the line of Yog Rajani from Omega Portfolio Advisors. So as I see, we constantly increased our R and D expenditure as a percentage of our revenue currently being at around 3.7%. So is there a target cap that we plan to reach because it... It's constantly going up? So we'd... Just would like to understand what our R and D expenses in the future could look like. So we should sort of end up at a steady state of around 4%. Okay. And could you give us some more clarity in terms of the R and D spend in terms of the area that would be going to? Would it be more CDMO driven or more API driven?

33:18 It's API and that's new API because you've been seeing the pipeline has been growing pretty nicely, right? Yes. So there's significant investment in new API. And we also put a fair amount of effort on our second generation processes, next generation processes in order to keep the margins comfortable, right? So that's a big part of the R and D effort. And yes, there is some CDMO element also, which is a broader effort where we support the customers with analytical and regulatory support.

34:04 These are more the specialty CDMO projects where they are five zero five(two) filings and so on by the customer. So largely though it's API, I mean, we see a strong enough pipeline that is we are developing and it makes a lot of sense for us to make that investment in R and D today. So that I mean the future is secure. Great. So as the R and D spend has gone up, it's not affected our PAT margins. In fact, our PAT margins have gone higher. Is that a trend that we see in the future as well? Or do we see the PAT margins coming down as a result of this increased expenditure? No, no. PAT will continue to be good. I mean, there's no problem. Great. I just had one other question line by I mean, the whole business is driven by a pipeline.

34:56 Okay. So as the pipeline is better, I mean, continue to drive the business growth as well as the margins. Okay. That's great. I had a question about our acquisition strategy as we have INR800 crores on our balance sheet and we have been thinking about an acquisition, just wanted some more clarity on it. So in case facilities are available, just FDA approved facilities, is that something that we would be interested in? Or are we interested in acquiring companies with their own pipelines available? See, capacity is not a challenge for the growth at Alivus, okay? And if you know, I mean, our facilities are pretty top of the line, okay? So we would not spend money on facilities, right? We have enough capacity.

35:47 As far as pipeline also goes, pipeline is not, again, I mean, unless it's a very different a pipeline that comes from a very different platform, okay, is where we will go after it. So the bigger but the fact of the matter is that, yes, we will be looking and we are looking actively at synergistic opportunities. And we believe that for something that adds greater value to what we already have, not only what it has, but bring greater value. So we don't want to do a one plus one is equal to two.

36:34 We'd rather have a one plus one equal to three or four, okay? That's our thought process. So we want to expand laterally, okay? And we've been talking about Plus. I don't know if you have heard it before from us, but we are more driven by ABI Plus. So get more out of the existing portfolio as well as the new portfolio. And then, of course, whatever the platform technology provides, both for API as well as CDMO. All right. Great. Thank you. Thanks. Thank you. We take the next question from the line of Bhavna Israni from Ambit Asset Management. Please go ahead.

37:28 Hello? Yes. Yeah. Yes. Congratulations, sir, for the good set of results. So just wanted to check on the CDMO side. So we are seeing that the Indian CDMO companies are currently in the sweet spot, gaining more traction. And so from the Alivus perspective, how many new customers we have added in last two, three quarters or the product addition from the existing customers? How has been the inquiries flow and how we are seeing the CDMO business spanning out in the next two to three years? Yeah. This is So CDMO, we have active discussions with almost on about seven projects right now. Okay?

38:18 But it takes time to sort of fortify. And like you said, Indian companies are in a sweet spot. We are seeing that quite nicely, especially from The U. S, okay? But our focus remains on life cycle management as well as specialty. Because again, in about one to one point five years, we can get the project going. And regulatory approvals also don't take that much time. So how it will look in the next two to three years, again, it's going to be a better growth because you realize that we are doing this 160 crores, INR 170 crores, right, which is expected to improve towards second half of this year, okay, because the two new projects are kicking in pretty well and the older projects are also coming back.

39:17 So with this kind of traction, we are seeing that CDMO will grow faster than the overall business. I can't put a number on it, Bhavna, okay? I mean it all depends on the size and the number of projects that we are able to crack. But just thinking on the as you said, we are working on the seven projects, but any new inquiries... One One second. I talked about seven new inquiries that we are working on. You asked it. You got new customers. Okay. The the current revenue is coming out of five projects. Okay? Mhmm. Okay. And, sir, on that... On the margin front, as the CDMO growth accelerate in the second half of FY 'twenty seven or in FY 'twenty eight as the new product commercialized, can we expect that the margin profile of current 33% can increase from here on also or it is going to be a sustainable basis 33%, 34% margin because generally CVMO is a high margin business?

40:24 See, it does add to margins, but then the overall volume is small, plus the API business is also doing very well in terms of margin. Let me explain, right? Most of this margin growth that has come in the last two to three quarters has come driven by partly by CDMO, but the API the new API launches have also contributed quite well. So we expect that margin improvement will come as a mix between CDMO as well as the new launches. Got it. Got it. Okay. Thank you. Thank you, sir. Okay. Thank you. Thank you. As there are no further questions from the participants, with that, we conclude the question and answer session.

41:17 On behalf of Alivus Life Sciences Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.