Natural Capsules Limited held its Q4 and FY26 Earnings Conference Call on June 02, 2026, hosted by TIL Advisors. The call featured Managing Director Mr. Sunil Mundra and CFO Mr. Raj Kishore Prasad discussing financial results and business updates.

Financial Performance

Q4 FY26 Results:

  • Consolidated revenue from operations: ₹58.45 crores, representing 55% quarter-on-quarter growth and 30% year-on-year growth
  • EBITDA: ₹1.33 crores, showing 157% improvement over Q3 FY26
  • EBITDA margins: 2.28%, representing sequential improvement of 844 basis points but 747 basis points below Q4 FY25 level
  • Loss before tax: ₹4.98 crores
  • Depreciation: ₹4.28 crores
  • Finance cost: ₹2.89 crores

Full Year FY26 Results:

  • Consolidated revenue: ₹187.20 crores, up 11% from ₹169.21 crores in FY25
  • EBITDA loss: ₹1.56 crores at margin of -0.83% compared to ₹17.52 crores (10.35% margin) in FY25
  • EBITDA margin deterioration: 1,119 basis points
  • Finance cost: ₹10.95 crores, up from ₹6.31 crores in FY25
  • Depreciation: ₹17.14 crores, higher than FY25's ₹9.12 crores
  • Profit before tax loss: ₹27.92 crores
  • Net loss: ₹24.66 crores
  • Total equity: ₹234.72 crores
  • Operating cash flow: Positive ₹10.92 crores

Operational Updates

Capsules Business:

  • Q4 FY26 was the strongest operational quarter with clearance of deferred dispatches accumulated during Puducherry plant shutdown
  • Approximately ₹6 crores of Q4 revenue represented deferred sales with higher net realization
  • New HPMC line commissioned in FY26 increased installed capacity from 19.5 billion to 25 billion capsules per annum
  • HPMC line fully ready for double zero capsule production with revenue expected in second half of FY27 subject to US customer approvals
  • Current order backlog: 36 days across all capsule types
  • 18-member marketing team operating globally

API Business (Natural Biogenex Private Limited):

  • Q4 FY26 marked commencement of commercial API sales at Tumkur facility
  • Executed definitive framework and contract manufacturing agreement with Fermbox Bio Private Limited
  • Fermbox to provide advanced fermentation technology and equipment at Tumkur facility
  • Natural Biogenex to handle licensed manufacturing, quality assurance, and regulatory compliance
  • Current API products carry lower margins due to pending regulatory approvals for higher-value customer segments
  • Working with regulatory authorities for approvals to improve profitability profile

FY27 Guidance

Management provided conservative FY27 revenue guidance:

  • Gelatin capsules: ₹170 crores
  • HPMC capsules: ₹20 crores
  • API domestic sales: ₹70 crores
  • Fermbox CMO contract: ₹14 crores
  • Total consolidated: ₹274 crores

Margin expectations:

  • HPMC capsules: 18% EBITDA margin
  • Gelatin capsules: 13% EBITDA margin
  • API domestic: 2-3% gross margin, potentially negative EBITDA
  • Fermbox contract: 20% EBITDA margin based on agreed cost sheet

Strategic Initiatives and Challenges

HPMC Business:

  • US market demand slowed due to tariffs imposed by US government
  • Neutra business particularly affected as wellness segment
  • Expecting improvement in 3-6 months
  • Focusing on other markets including Brazil, Mexico, and Europe
  • Recently obtained organic certification for European market

API Business Challenges:

  • Significant excess Chinese capacity depressing prices
  • Chinese export prices to India much lower than other markets
  • Domestic market highly price-sensitive with single-digit EBITDA margins
  • Targeting semi-regulated and regulated customers for better margins
  • Working on PLI scheme products: Prednisolone, Dexamethasone, and Betamethasone
  • Achieved kilo-level batches for Prednisolone and Dexamethasone
  • Expect commercial scale production in Q2-Q3 FY27 for these products
  • Applied for government RDI scheme funding through BIRAC

Fermbox Collaboration:

  • Fermbox investing approximately ₹60 crores in equipment at Tumkur facility
  • Products include yeast-based and enzyme-based items with different downstream processing
  • Natural Biogenex free to use equipment with applicable charges
  • No-compete clause with Fermbox for similar products
  • Expected to improve fermentation capabilities and knowledge

Regulatory Approvals Timeline

  • WHO GMP: Targeted for next quarter
  • CEP filing and inspection under WHO GMP: Q2 FY27
  • USFDA: Q3-Q4 FY27
  • Each DMF preparation cost: ₹75 lakhs to ₹1 crore, taking 8-9 months

Capacity and Utilization

Capsules:

  • HPMC capacity: 1.5 billion capsules per annum (2 lines of 750 million each)
  • Gelatin capacity: 1.8 billion capsules per annum per line
  • Gelatin utilization: >93% consistently
  • HPMC utilization: <50% expected due to US market uncertainties

API Facility:

  • Current utilization: 25-30%
  • Annual fixed cost burden: Approximately ₹15 crores per annum
  • Additional investment required: ₹25-30 crores for two more clean rooms to achieve ₹250 crore revenue target

Funding and Liquidity

  • Exploring various fundraising options due to balance sheet pressure
  • Considering preferential allotment with promoter participation
  • Potential right issue
  • Promoter group wants to avoid significant dilution
  • Total debt: Approximately ₹110 crores if additional ₹20 crores borrowed
  • Annual debt repayment: ₹10-12 crores

Market Context

  • Steroidal API market affected by Chinese overcapacity
  • Chinese prices in Indian market very competitive, potentially below cost
  • 5-6 major Chinese manufacturers control the market
  • Government imposed minimum import price for some PLI scheme products
  • Expect similar support for Prednisolone and Dexamethasone once commercial production demonstrated
  • Anti-dumping duties and Trump's 50% tariff affected HPMC exports to US
  • Chinese companies routing through third countries to circumvent duties