SOLARANSEQ1 FY26July 29, 2025

Solara Active Pharma Sciences Limited

6,181words
146turns
20analyst exchanges
4executives
Management on call
Arun Kumar
FOUNDER AND NON-EXECUTIVE
Sandeep Rao
MANAGING DIRECTOR AND
Sarat Kumar
CHIEF FINANCIAL OFFICER– SOLARA ACTIVE PHARMA SCIENCES LIMITED
Abhishek Singhal
INVESTOR RELATIONS – SOLARA ACTIVE PHARMA SCIENCES LIMITED
Key numbers — 40 extracted
10%
t expansion. And the third thing I said is that we expect our business to grow top line by around 10% and EBITDA by around 15% to 20%. In line with that, I'm happy to say that we
15%
d thing I said is that we expect our business to grow top line by around 10% and EBITDA by around 15% to 20%. In line with that, I'm happy to say that we started FY '26 with what
20%
I said is that we expect our business to grow top line by around 10% and EBITDA by around 15% to 20%. In line with that, I'm happy to say that we started FY '26 with what I think
INR320 crore
ht note with a strong Q1. The revenue has grown quarter-on-quarter by about 15%, delivering the INR320 crores. Gross margin is at a healthy 54% and an absolute gross margin of INR173 crores, reflecting grow
54%
grown quarter-on-quarter by about 15%, delivering the INR320 crores. Gross margin is at a healthy 54% and an absolute gross margin of INR173 crores, reflecting growth at around 8% on a Q-o-Q basis. T
INR173 crore
%, delivering the INR320 crores. Gross margin is at a healthy 54% and an absolute gross margin of INR173 crores, reflecting growth at around 8% on a Q-o-Q basis. The business has delivered EBITDA of INR57 c
8%
in is at a healthy 54% and an absolute gross margin of INR173 crores, reflecting growth at around 8% on a Q-o-Q basis. The business has delivered EBITDA of INR57 crores, which reflects Q-o-Q growth
INR57 crore
173 crores, reflecting growth at around 8% on a Q-o-Q basis. The business has delivered EBITDA of INR57 crores, which reflects Q-o-Q growth of 13%. This is our highest PAT in the last 12 quarters. And the ke
13%
a Q-o-Q basis. The business has delivered EBITDA of INR57 crores, which reflects Q-o-Q growth of 13%. This is our highest PAT in the last 12 quarters. And the key feature, which is the contribution
77%
ey feature, which is the contribution from our developed markets continues to be at a very strong 77% of overall sales. In my opinion, I would like to believe that these are the first green shoots of
rs,
I would like to believe that these are the first green shoots of growth. Over the next few quarters, me and the entire team at Solara is going to be working extremely diligently to build on this foun
18%
th on top line with a healthy margin profile of close to 54% and hence, clocking EBITDA margin of 18% with an absolute value of INR57 crores, which reflects a Q-on-Q growth of 13% and 36% year-on-yea
Guidance — 18 items
Abhishek Singhal
opening
“The transcript of this call will be available in a week's time on the company's website.”
Sandeep Rao
opening
“And the third thing I said is that we expect our business to grow top line by around 10% and EBITDA by around 15% to 20%.”
Vishal
qa
“And any guidance you would want to give for the year for this business?”
Krisha Mehta
qa
“And -- so although we have reduced our dependency on ibuprofen from 50% to 30%, how do you see the portfolio evolving to support a more diversified and derisked growth profile maybe to a broader top 5 or top 10 product mix target going forward?”
Krisha Mehta
qa
“Is it fair to expect that we would be beating our full year guidance or are there any specific cost or variables that we should keep in mind?”
Arun Kumar
qa
“And at this stage, we think it's a little too early to revise any guidance, one or two more quarters is what where we will be in a more comfortable situation to make -- address that query of yours.”
Sajal Kapoor
qa
“Great start to FY'26, and question is with your strong background in fermentation and Biosciences, how do you see these areas fitting into Solara's current strength and future growth potential?”
Sajal Kapoor
qa
“So it's almost certain that an equity infusion will be needed soon to keep the balance sheet healthy.”
Pranav Gandhi
qa
“You mentioned about the ibuprofen new route, which we were going forward.”
Sandeep Rao
qa
“So it is our aim to keep our gross margins at those levels.”
Risks & concerns — 4 flagged
The market for the generic supplies is under intense competitive pressure with new entrants at new chemistry, new pricing and very reliable and good competition.
— Arun Kumar
So to answer your point, there is pricing pressure on specific programs.
— Arun Kumar
And the other question is, we are injecting INR200 crores of debt into Synthix Global Pharma Solutions, which today is a subscale business with weak or maybe negative operating cash flow.
— Sajal Kapoor
Our gross margins have come in at 54% during the quarter, showing a sequential decline.
— Dheeraj Shah
Q&A — 20 exchanges
Q
With respect to your CRAMS business, could you share what was the top line this quarter?
Sandeep Rao
Sorry? So I wanted to know the top line for your CRAMS business, CRAMS and polymer business, which is going to get demerged? So the run rate, Vishal, for that business as we -- when we announced the CRAMS carve out, it's just about INR100 crores. So we are INR100 crores on an annualized basis. So currently, the run rate is within that range, quarterly run rate. Okay. And any guidance you would want to give for the year for this business? Like last year, it was INR100 crores. So would this be around the same level for the full year? Or maybe we'll make a strong improvement? So to be honest with
Q
Sir, congratulations for the margin improvement in this quarter and the turnaround in this quarter. I just have two questions, broad questions. First one is could you share the contribution of ibuprofen to the overall revenue for the quarter? Also, a quick update on the ibuprofen market would be helpful? And also, any pricing trends now? Or are the pricing trends now more stable? This my first question.
Arun Kumar
Sandeep, go ahead. So, ibuprofen as a portfolio, we have close to done roughly 30% of the business entirely from ibuprofen, which includes ibuprofen plain as well as ibu derivatives. And on your question, is it a stable business. We have mentioned in the past that we are only going after marquee customers and high-quality, sticky businesses. No, no, no. I didn't ask whether the business is stable. I'm asking whether the pricing has been stable or not? Yes, the pricing is stable. The pricing is stable because we're only working with up-tier high- quality marquee customers in the developed marke
Q
I have two questions. Firstly, what would you call the key levers for the API business over the next 2, 3 years? And -- so although we have reduced our dependency on ibuprofen from 50% to 30%, how do you see the portfolio evolving to support a more diversified and derisked growth profile maybe to a broader top 5 or top 10 product mix target going forward?
Arun Kumar
I can try and answer that question. First of all, we are in this phase of reset. And in the reset phase, we have been focusing on costs, operational efficiency, cost of goods as in our cost of production and our network optimization, which effectively another way of saying is that we are focusing on the inefficiencies that are inherent in the business. We believe that once that is solved for, that will entail a very significant improvement in our gross margins and EBITDA. That's our first focus. And this is our second quarter where we are delivering on that promise. We will take four, five qua
Q
Great start to FY'26, and question is with your strong background in fermentation and Biosciences, how do you see these areas fitting into Solara's current strength and future growth potential?
Sandeep Rao
It's nice to know that somebody is tracking my background. But look, the simple answer is that we are looking at new growth areas. When I talk of new growth areas we are talking of different manufacturing capabilities that we want to bring in-house, especially to the CRAMS business. So we're evaluating other areas may or may not essentially be fermentation, but over the next few quarters as we grow our CRAMS business, we'll come back to you with further details. That's fine. That's helpful. And the other question is, we are injecting INR200 crores of debt into Synthix Global Pharma Solutions,
Q
Congratulations on the number to the management. I just have one question. You mentioned about the ibuprofen new route, which we were going forward. Have they received any regulatory approval for the same?
Sandeep Rao
You're talking about the new route for ibuprofen? Yes. No, we're still in the process of implementing it. So we have not we're really still in the development process. We haven't taken into approval as yet. Also, as you mentioned about the equity for the CRAMS business, the fund raising, will it be a pref or like a rights issue? It's very early days for now. We will probably have more answers for you in the next call. Okay. Thank you so much.
Q
This is Dheeraj Shah. I had a question on gross margins. Our gross margins have come in at 54% during the quarter, showing a sequential decline. Could you walk us through the key factors that drove this moment?
Sarat Kumar
Yes. Dheeraj if you see -- so what we have done is with respect to gross margin profile, we have a certain product mix. So as a business, it would not be fair to assume exactly 57% every quarter. So from our 57%, what we had clocked in Q4, we are down to 54% but if you see in terms of overall for the past 5 or 6 quarters, we have gradually scaled that number from 40s level to a mid-50s kind of range. And we believe that being in a catalogue generics API business, this gross margin profile is fairly healthy. Okay. So in the past…
Q
In the past, we have indicated that a 53% to 55% gross margin range is sustainable in Catalogue API segment. Would it be reasonable to assume that the midpoint of this range would be good base for FY '26?
Sarat Kumar
Yes, correct. That's what we are working for. We are working towards keeping that high quality of business, which is reflected in our gross margin. So it is our aim to keep our gross margins at those levels.
Q
On the generic API business, anything specific that you want to highlight in terms of how would you be approaching the business in terms of building that up?
Sandeep Rao
So I'll take that question. See, typically, when you talk of growth, I see 4 levers, okay? There are new products, a pipeline that we need to create you talk of EBITDA and gross margin growth to cost improvement initiatives. The third lever is new markets that you try and get into. And the fourth lever is that you try and create more capacity for key products through incremental capex. And I can tell you that on all these four fronts, we are actively involved. So we're working all these four levers to make sure that we can grow the company. Okay. Like where would we be currently in terms of th
Q
Sir, my first question is on ibuprofen. I think in one of your previous answers, you mentioned that you have been facing intense competition in the ibuprofen market. So my question is with regards to the demand-supply situation. If you can help us understand the current demand in terms of volume versus the supply that is coming in, let's say, in the next 1, 2 years? And in line with this, if you can give us a number with regards to the current realization of ibuprofen that would be helpful. This is my first question, sir?
Sandeep Rao
Okay. I don't think we can give you product-wise realization or segment-wise realizations, but I can tell you that in ibuprofen, we've taken a conscious decision to focus only on high-quality business and customers who give us good gross margin. So in that sense, we decide whom we want to supply to. There is demand in the market, but we've been extremely picky and choosy about which customers we work with. And that's the result that we're working with only high profile, as I said, marquee customers in developed markets. Does that answer your first question? Sir, my question was more on the ind
Q
Yes, I will do that.
Management
Q
Sir, my first question is, we said we are on a reset stage for the next 3 to 4 quarters. So how do you tally that with the 10% revenue outlook for '26?
Sandeep Rao
So, Mohammed if I can take that. FY '25 was a reset year for us, and I said that the focus was on debt reduction, maintaining and establishing good governance and margin expansion. But what we realize is that we have to grow the company because once you grow the company on the same opex platform, everything flows down into the EBITDA. So FY '26 is going to be all about growth, which is where I come back to my -- if you look at our Q4 revenues, we were at roughly INR280 crores. From there, we have gone to INR320 crores. Are we happy? Answer is yes, but we need to grow beyond this foundation now
Q
Sure.
Management
Q
I had 2 questions. My first question was on the ibuprofen. What would be, as we mentioned, the share is 30%. But you just mentioned 20%. So is it 20% in the Q1 estimate you have for FY '26 as a whole? And what would your percentage currently be for ibuprofen derivative versus plain ibuprofen? That's my first question.
Sarat Kumar
When we said 30% overall, that had both ibu plain at close to 21% plus balance 9% was from ibu derivatives. Okay. And this is for Q1 FY '26? Yes, correct. Yes. And my second question was, what would be our share for the top 5 molecules out of our sales? Top 5 molecules out of our total sales. So top five molecules will easily give us close to 55% - 60% kind of revenue. All right. That would be my question. Thank you, sir.
Q
Sir, are we done with our cost improvement program, right? That's my question.
Sarat Kumar
Cost improvement programs are something which we actually work on a kind of a continuous basis. So what we as a company do is, every quarter, we identify a few molecules where we have to work on the cost improvement program. And then we keep on improving on that particular piece. As you would know that, since we are operating in a generic API business, we will always have certain price pressures in certain pockets. So we actually try to kind of mitigate that particular piece with our cost improvement programs. So we can't say that we have stopped doing that because that will be a continuous fe
Q
Firstly, congratulations, Arun, Sarat and Sandeep, you have done an amazing job and congratulations to your entire team. The question is how far is our Vizag plant utilization? And what kind of asset turnover we are operating at and 2, 3 years down the line, what kind of asset turn we would be -- we are planning to achieve for both APIs as well as plants?
Sandeep Rao
Plant utilization, I think we spoke about earlier. The plant utilization currently stands around 60% to 65% across the board, okay? And what was the second question, sir? Second was, 2, 3 years down the line, what kind of asset turnover we would be approaching? What kind of turnover, do you mean? Asset turnover? We actually are close to 1.2 kind of a number. Okay. And are there any leadership changes or have we started recruitment, particularly in our upcoming CRAMS or we are holding it right now? At this time, we haven't yet started any recruitment for our CRAMS teams. Like I said earlier to
Q
Yes. My question is already answered from one of the earlier participants. So I don't have anything.
Management
Q
I have two questions on the CRAMS business. So can you share some qualitative aspects of that business, like what is the nature of business in CRAMS versus polymers? Is it NC driven? How we are different from the peers? And why there is a limited competition in the polymer segment?
Arun Kumar
So it is a hard chemistry. There aren't many players in India, not that many other people are not making it. And it requires very special focus in terms of capability and equipment. And that is the reason why we want to especially in a very narrow -- specialize in a very narrow niche to start with, so that we can get into a good footing. And we have some experience in Solara for many years, and we expect that if it's separated in to -- separated into potential it requires to grow it to greater size. Although we are only in pharmaceutical polymers, it does have application in other industries.
Q
Yes. I have a question on our CRAMS business. So if you could tell us about the capex plan with respect to this business because as far as we are aware, for us to be a key player in this industry, we might need to invest a significant amount for the capex. So any guidance on that, what kind of investments are we planning for this segment? That is the first part. And second, with respect to CRAMS only, if you can break up the business into that I think one of the earlier participants also asked, how much of INR100 crores are we supplying to, let's say, generic companies versus how much of it is
Arun Kumar
The second point is easier to answer. We can't provide you that data. It is too suboptimal a business for us to get there. You'll have to wait for that. Probably don't -- you have not read the notes on the CRAMS. We are moving out one of our largest plants, which has been mothballed in Vizag, which has got very large capacities. And as you rightly articulated to be in the CRAMS business, you need to invest capacities ahead of time. And while Solara is focusing on its catalogue API business and focusing on operational efficiency, we do not want to be investing heavily on the generic API space.
Q
Sandeep, over to you.
Sandeep Rao
Thank you, Arun. I again would like to thank all of you for being there for Solara for your continued support and your trust and count on us, we are -- this whole team of Solara, including me are working very hard to make sure that we can grow on this Q1 platform that we have created. Thanks again. Thanks to everybody.
Q
Thank you.
Management
Speaking time
Sandeep Rao
26
Arun Kumar
25
Moderator
21
Vishal
15
Sarat Kumar
9
Mohammad Patel
9
Krisha Kansara
8
Jagadish Sharma
5
Shashi Kapoor
5
Pranav Gandhi
4
Opening remarks
Abhishek Singhal
Thank you, Soumya. A very good afternoon to all of you and thank you for joining us today for Solara Active Pharma Sciences Earnings Conference Call for the first quarter ended financial year 2026. Today, we have with us Arun, Solara's Founder and non-Executive Director; Sandeep Rao, MD and CEO; and Sarat Kumar, CFO to share the highlights of the business and financials for the quarter. I hope you've gone through our results release and the quarterly investor presentation, which have been uploaded on our website as well as stock exchange website. The transcript of this call will be available in a week's time on the company's website. Please note that today's discussion may be forward-looking in nature and must be viewed in relation to the risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the Investor Relations team. I now hand over the call to Arun to make the opening remarks.
Arun Kumar
Thank you. Thank you, Abhishek. Good afternoon and thank you for joining the Solara's Q1 Results call. As Abhishek rightly said, the bulk of the meeting would be taken by my colleagues, Sandeep and Sarat. But from a promoter standpoint, I just wanted to express my deep satisfaction for the course correction that Solara is embarked on. There's been a consistent focus on the quality of the business and a compounding effect of our actions in terms of cost containment, focusing on high-margin business and refocusing the company to be an engaged market player, is playing out slowly, but surely. And we are a lot more confident than what we have worked last year as we migrate this business to this new management team. I'm delighted with the performance across the board that the team at Solara has delivered. And I now leave it to Sandeep and Sarat to give headline numbers and happy to address any questions as they come. Thank you, and Sandeep, over to you.
Sandeep Rao
Thank you, Arun. Good morning, good afternoon and good evening, and thank you all for joining today's Q1 '26 earnings call. I sincerely appreciate your time and your participation in this call. If you recap the last call, we had said three things. One, we had said that FY '26 was a reset year at Solara. The primary focus was margin expansion and debt reduction, establishing and maintaining a good governance. Second thing I said was that we want to re-pivot this company to what we call as growth, which is profitable with our continued focus on market expansion. And the third thing I said is that we expect our business to grow top line by around 10% and EBITDA by around 15% to 20%. In line with that, I'm happy to say that we started FY '26 with what I think is on the right note with a strong Q1. The revenue has grown quarter-on-quarter by about 15%, delivering the INR320 crores. Gross margin is at a healthy 54% and an absolute gross margin of INR173 crores, reflecting growth at around 8%
Sarat Kumar
Sandeep, thank you. Good morning, good afternoon, and good evening, ladies and gentlemen. And first of all, thank you for joining in today's Q1 FY '26 call for Solara. As shared by Arun and Sandeep, we are glad to inform you that we are observing green shoots in the entire business, as we continue to pivot the organization towards a growth phase in FY '26 from the reset phase in FY '25. And I believe we have started this journey with a strong Q1. Solara as a business has delivered a positive Q-on-Q growth on top line with a healthy margin profile of close to 54% and hence, clocking EBITDA margin of 18% with an absolute value of INR57 crores, which reflects a Q-on-Q growth of 13% and 36% year-on-year growth as compared to Q1 of FY '25. From a PAT perspective, as Sandeep mentioned, we have clocked in INR105 million of PAT, which is the highest across last 12-plus quarters, which has also resulted in EPS positive at INR2.5 per share. As we continue to focus our efforts on operating cost l
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