Key Financial Performance (Q1 FY27)

Revenue Performance:

  • Quarterly revenue: ₹469 crores, representing 43% year-on-year growth
  • Fourth consecutive quarter of highest-ever quarterly revenue

Profitability Metrics:

  • Gross margin: 71% for the quarter
  • EBITDA: ₹139 crores, growing at 42% year-on-year
  • EBITDA margin: 30%
  • Operating PBT (before share of profit from JVs and exceptional items): ₹92 crores (vs. ₹50 crores in Q1 FY26)
  • Reported PBT: ₹98 crores, growing 98% year-on-year
  • PAT: ₹101 crores, growing 115% year-on-year

Tax Considerations:

  • Negative tax rate in Q1 due to reversal of deferred tax liability
  • Company planning to switch to new tax regime for lower tax incidence
  • Expected normalized tax rate: ~25% for coming quarters

Capital Expenditure:

  • Capex spent in Q1: ₹114 crores
  • Primarily funded through internal accruals
  • Deployed across different businesses

Return Ratios:

  • ROCE: 12.5% (improved from 8.8% in FY25)
  • ROCE adjusted for biologics and NBE businesses: 18.3%
  • Net debt-to-EBITDA: 1.3x (improved from 6.7x three years ago)

Credit Rating:

  • Upgraded from A+ to AA-
  • Reflects significant improvement in operations and financial performance

Segmental Performance Breakdown

API Division:

  • Revenue: ₹260 crores, 15% year-on-year growth
  • Non-captive third-party API sales: ~15% growth year-on-year
  • Growth drivers: Improved offtake from newly expanded capacities, strong captive demand from formulation vertical
  • Specialty CDMO showing strong traction with new client acquisition in developed markets
  • Working on 25+ NCE programs (many in Phase I/II, 3 programs in late stage)
  • 15 new oncology product validations targeted for FY27
  • New peptide manufacturing capacity commissioning by end of FY27
  • 3 NCE programs in advanced phases for commercialization in FY28

Formulation Division:

  • Revenue: ₹198 crores, over 100% year-on-year growth
  • Base business (ex-licensing income): ~112% growth
  • Growth driven by complex FDA portfolio in U.S. region, supported by EU and ROW regions
  • Key products:
  • Nor-Ursodeoxycholic acid (Nor-UDCA): Performing as expected in Indian market with good clinical outcomes
  • Three commercial 505(b)(2) products: Growing sales quarter-on-quarter
  • Near-term filings: Abraxane, Enzalutamide, Abiraterone formulation on track for FY28 launch
  • Rotigotine transdermal patch: Approved in Europe, filed in U.S., partnered for FY28 launch
  • OLC opportunity with Unicycive Therapeutics: CDMO partner for API and Formulation

Biologics Division:

  • Revenue: ₹52 crores, 42% year-on-year growth
  • Growth driven by licensing/partnership deals and CDMO business
  • Biosimilar pipeline:
  • Aflibercept: Clinical studies completed, India launch expected in FY27 (partnered with 3 Indian companies)
  • Nivolumab: Partnered with Orion Corporation for Europe, India clinical study started, India launch expected in FY28
  • 5+ biosimilars in pipeline
  • First ADC biosimilar on track for human studies in FY27
  • CDMO capabilities: 6+ active NCE programs with partners
  • Strategic investments: mAbTree and Alveolus Bio programs on track for human studies in FY27
  • NBE program: Recombinant human albumin expected to start human clinical studies in current year, filing expected next year in India

Strategic Business Updates

Global Expansion:

  • Nor-UDCA: Completing European and U.S. scientific advisers, starting global Phase II clinical studies in FY27
  • Japanese market: Onboarded 2 Japanese customers (late-stage projects, details confidential)
  • U.S. market: Not significantly impacted by tariff threats due to complex product portfolio (no me-too generics)

Capacity Utilization:

  • Biologics and new businesses have significant room for capacity utilization improvement
  • Existing investments provide growth runway for next 3+ years without significant new capex
  • API division requires continued investment due to high utilization

CDMO Strategy:

  • Integrated capabilities across small molecules, large molecules, API, payloads, linkers, conjugation, ADCs, and Mabs
  • 20+ customers across Shilpa Group
  • Selective stake-taking strategy in partner companies (confidential details)
  • 3 late-stage NCE programs expected to enter commercialization next year

R&D Focus:

  • Continued investment across all divisions
  • Focus on complex products with sustainable market opportunities
  • Avoidance of products with short commercial lifespan

Operational Highlights

Manufacturing Capabilities:

  • Integrated ADC manufacturing capabilities (one of few in India)
  • Biologics: Clone development to Fill & Finish capabilities
  • Peptide manufacturing: Solid-phase synthesis from start to end

Human Resources:

  • Certified as Great Place to Work
  • Strong team building in Biologics division with experienced professionals and consultants
  • Dr. Uday Harle joined Shilpa Biologics

Regulatory & Market Environment

U.S. Market:

  • Tariff threats not significantly impacting Shilpa due to complex product portfolio
  • Monitoring Trump administration policies for potential manufacturing decisions
  • Biosecurity Act primarily aimed at China, no major impact expected

Tax Regime:

  • Switching to new tax regime for lower tax incidence
  • Forgoing accumulated MAT credits but benefiting from lower tax rate
  • R&D capex benefits already utilized through existing functional units

Forward-looking Statements

Growth Outlook:

  • Management confident of improving operating leverage and ROCE
  • Robust growth expected from pipeline launches
  • Biologics division expected to show significantly higher growth due to smaller base

Margin Outlook:

  • EBITDA margins expected to remain around 30% range
  • Gross margins affected by global raw material price increases due to political situation
  • Partial pass-through of cost increases to customers

Capex Outlook:

  • No significant new capex anticipated in Biologics or Albumin for next 3 years
  • Continued investment in API and new formulation molecules
  • Capex primarily funded through internal accruals

Q&A Session Highlights

Capacity Utilization: Variation in quarter-on-quarter supplies, particularly in Europe tendered business

Product-specific Details: Management declined to provide specific product revenue breakdowns or margin details

CDMO Economics: Potential for materially higher returns than normal CDMO due to strategic stake-taking in partners

Licensing Income: Mixed business model with both recurring and milestone-based revenue, difficult to quantify margin profile

Biosimilar Strategy: Mixed approach including biosimilars, CDMO programs, and strategic partnerships for long-term bets