NEULANDLABNSEQ4 & FY26May 16, 2026

Neuland Laboratories Limited

7,822words
61turns
13analyst exchanges
4executives
Management on call
Saharsh Davuluri
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Abhijit Majumdar
CHIEF FINANCIAL OFFICER
Sajeev Emmanuel Medikonda
HEAD, CORPORATE PLANNING AND STRATEGY
Ravi Udeshi
ERNST & YOUNG
Key numbers — 40 extracted
INR788.7 crore
ver longer periods. With that context, let me start with the numbers for Q4FY26. Total income was INR788.7 crores, up 134.9% versus INR335.8 crores in the same period last year. Commercial CMS projects drove
134.9%
th that context, let me start with the numbers for Q4FY26. Total income was INR788.7 crores, up 134.9% versus INR335.8 crores in the same period last year. Commercial CMS projects drove the growth wit
INR335.8 crore
ext, let me start with the numbers for Q4FY26. Total income was INR788.7 crores, up 134.9% versus INR335.8 crores in the same period last year. Commercial CMS projects drove the growth with CMS contributing ove
62.1%
rove the growth with CMS contributing over two thirds of revenue this quarter. Gross margin was 62.1% versus 56.3% in Q4FY25, driven largely by the business mix. We also managed higher freight cost t
56.3%
owth with CMS contributing over two thirds of revenue this quarter. Gross margin was 62.1% versus 56.3% in Q4FY25, driven largely by the business mix. We also managed higher freight cost towards the en
INR319.4 crore
udes manufacturing expenses and other costs directly attributable to the product. EBITDA stood at INR319.4 crores and a margin of 40.5%. This exceptional operating margin reflects the record high revenue this q
40.5%
other costs directly attributable to the product. EBITDA stood at INR319.4 crores and a margin of 40.5%. This exceptional operating margin reflects the record high revenue this quarter. And it is also
INR212.5 crore
enue flows and should not be seen as an indicator of our future performance. Profit after tax was INR212.5 crores versus INR27.7 crores in Q4FY25, and our EPS stands at INR165.6 per share. For the FY, revenue w
INR27.7 crore
ot be seen as an indicator of our future performance. Profit after tax was INR212.5 crores versus INR27.7 crores in Q4FY25, and our EPS stands at INR165.6 per share. For the FY, revenue was INR2053.1 crores ve
INR165.6
ance. Profit after tax was INR212.5 crores versus INR27.7 crores in Q4FY25, and our EPS stands at INR165.6 per share. For the FY, revenue was INR2053.1 crores versus INR1,497.3 crores, a growth of 37.1%. E
INR2053.1 crore
sus INR27.7 crores in Q4FY25, and our EPS stands at INR165.6 per share. For the FY, revenue was INR2053.1 crores versus INR1,497.3 crores, a growth of 37.1%. EBITDA was INR603.4 crores versus INR342.8 crores i
INR1,497.3 crore
Q4FY25, and our EPS stands at INR165.6 per share. For the FY, revenue was INR2053.1 crores versus INR1,497.3 crores, a growth of 37.1%. EBITDA was INR603.4 crores versus INR342.8 crores in FY25 with FY26 EBITDA m
Guidance — 20 items
Ravi Udeshi
opening
“We welcome you to the Q4 and FY26 earnings conference call of Neuland Laboratories Limited.”
Abhijit Majumdar
opening
“EBITDA was INR603.4 crores versus INR342.8 crores in FY25 with FY26 EBITDA margin at 29.4% compared to 22.9% last year.”
Abhijit Majumdar
opening
“For the FY26, the free cash flow was negative at INR49.4 crores, driven primarily by higher working capital during the year, along with increased capital cash outflows.”
Abhijit Majumdar
opening
“Capex cash outflow for FY26 was INR397.1 crores.”
Abhijit Majumdar
opening
“Closing cash balance of FY26 was INR75.4 crores as compared to INR130.4 crores at the end of the year.”
Abhijit Majumdar
opening
“Working capital days stood at 137 days in Q4FY26 versus 107 days in Q4FY25, mainly driven by higher inventories and receivables, and we believe that this should normalize in FY27.”
Saharsh Davuluri
opening
“While we have not given formal guidance in the past that we do not intend to do so going forward, we did indicate earlier that FY26 would be a year of strong growth when viewed against FY24, especially since FY25 represented a period of slight degrowth.”
Saharsh Davuluri
opening
“As we look at Q4 and FY26 through this more favorable lens, it's also important to recognize the inherent lumpiness of our business.”
Saharsh Davuluri
opening
“In the short to medium term, our business visibility continues to be anchored by commercial and near commercial molecules.”
Saharsh Davuluri
opening
“Alongside this, while our GDS business was softer in FY26, we see good growth potential ahead and have deployed substantial resources across development, customer engagement and capability building to support growth in the short, medium and long term.”
Risks & concerns — 8 flagged
But I think your encapsulation of the challenge is very accurate.
— Saharsh Davuluri
So usually, when these kind of M&A transactions happen, we don't see any immediate risk.
— Saharsh Davuluri
I think as an organization that's manufacturing oriented, we are also looking at enterprise risk, sustainability.
— Saharsh Davuluri
Is that the nature of volatility changing and it would be much less volatile?
— Chirag Shah
I think volatility and how long it will last, is difficult for us to say because we are seeing a very dynamic growth in the business.
— Saharsh Davuluri
The older molecules tend to be less volatile.
— Saharsh Davuluri
I mean just full disclosure, I'm an electric engineer, so I might find it a little difficult to explain it to you technically.
— Saharsh Davuluri
But I really don't want to either agree or challenge the hypothesis that you made.
— Saharsh Davuluri
Q&A — 13 exchanges
Q
Yes. Congrats to the management and team for the great set of numbers. So first question obvious question I have was on the performance of our CDMO business for the quarter. I agree with you that there would have been a benefit of currency depreciation, but it would be to the extent of 10%, 12%, right? Still our growth looks phenomenal over a year-on-year basis. So what is driving this? Is it the existing commercial projects? Or have you added any new product in the commercial side? And was there any bunch of orders from the last quarter, which would have also helped during the quarter? Yes.
Saharsh Davuluri
Yes. Thanks for the question. Amey, I think it's -- yes, I think currency definitely helps, especially because we had a strong Q4 and a lot of shipments happened as the rupee depreciated. So I think we did see a chunk coming in. But yes, I think it doesn't really take away from the inherent growth we've seen in the business. I think the contribution has come from the products we've been looking at in our pipeline. Amey, I think we had one new commercialization this year, but we've also had ramp-up of volumes of previously commercialized products. So those have largely driven the growth. We con
Q
Hi, team. It's always good to see the convex side of volatility and lumpiness, excellent show. I've got 2 questions. First is Neuland has built strong capabilities in complex chemistry and peptides, but the industry's value creation is in my view increasingly shifting towards hybrid modalities like ADCs and fermentation-enabled manufacturing. So what do you see as Neuland's biggest capability gap in sort of participating meaningfully in that kind of an ecosystem? And how are you addressing all of it today? That's my first question.
Saharsh Davuluri
Yes. Hi, Sajal, it's always nice to hear from you. I don't know if I would completely subscribe to the hypothesis. I think that I would agree with the basic concept that more value is in complex chemistry, complex modalities, but I would probably put peptides into that category as well. I think today, if you see the explosion happening in the GLP-1 and the peptide arena, I think some of these peptides, especially the innovative volumes are going into multi metric tons and the commercial value for a CDMO business is running into billions of dollars per molecule. So I would argue that the peptid
Q
Yes. Just 2 quick ones. First one is on the recent development, 1st of May when one of your big customers of bempedoic acid, Esperion, has been taken over or at least has been a bid from ArchiMed. So just not getting into that transaction, but more from a longevity of this business. is there any change in course, you think? Or the dedicated capex we put some time back, and what are some of the messaging you are actually picking up from this transaction? Because one of the key concerns from an investor perspective is what happens to bempedoic acid post patent expiry sometime later this decade,
Saharsh Davuluri
Yes, Shyam, thanks for the question. Shyam, I think just given that these CDMO molecules are under confidentiality clauses, we will not be able to comment or acknowledge what molecules we make for whom and what the underlying transaction that you're referring to. I think general comment I can give you, which might be helpful is that, see, generally for all our CDMO businesses, M&A of sponsor companies is a very natural part of the business. I think a lot of biotechs get acquired, some of the biotechs we've contracted with have gotten acquired by big pharma. One is supply agreements usually hav
Q
Congratulations on a very good FY26 performance. Would it be possible for the management to provide the capacity utilization across the 3 units at the moment?
Abhijit Majumdar
Yes. So the current capacity utilization of those 3 units are close to between 85% to 90% and the last unit is around 65%. Okay. And in the initial comments, you talked about the longer capital deployment cycle now. Can you elaborate a little more on this? So what are we thinking in terms of capex and utilization of the cash that we have generated in FY26? Yes, I think maybe I'll just give an answer and then maybe I'll request Abhijit to add if there's anything after that. I think what we were alluding to is that as the facilities are getting utilized and we are seeing the business grow in sca
Q
Congratulations on a great set of numbers. I wanted to have an understanding of any of the reasons for the leadership transition with Saharsh taking over as CEO and MD from Sucheth, who become a Vice Chairman.
Saharsh Davuluri
Yes. Thanks. Thanks for the question. Yes, I think the role change between Sucheth and me effective April 1 was part of a preplanned transition. Basically, the background is that as the business is growing, both Sucheth and I as full-time directors, promoters were focusing on essentially similar parts of the business. Both of us were looking at the day-to-day business. And what the Board felt as the business is ramping up, it would be more effective for the organization if one of us was to focus more on the 1day-to-day business and how the business is operating on an ongoing basis. And the oth
Q
First question is on peptide facility. We had earlier talked about this getting operational in July. Are we on track for this? And by when do we expect commercial quantities to start? Do we already have firm contracts for this facility?
Saharsh Davuluri
Yes. Yes, the facility will be ready by July as per schedule. There has been no change in the date for that. We have projects that will ramp up in this facility, and we have visibility for these projects. I would probably not go as far as to say that we have firm contracts because these are early-stage projects. And yes, they are near commercial, but I think we will probably focus first on completing validations, qualifications and go through that process, which is pre-commercialization. And then maybe we will, in the same time, get into contracts and stuff. So yes, I think we are very excited
Q
Yes. I've joined a bit late so apologies if I'm repeating the question. The first question is with respect to the quarterly results or H1 results, however you wish us to look at, and bringing in the context of past there is volatility in the business. Any comments? Is that the nature of volatility changing and it would be much less volatile? And how much of the Q4 results is kind of one-off, lumpy, et cetera, et cetera? So that's first question that I have?
Saharsh Davuluri
Yes. Thanks for the question. I think volatility and how long it will last, is difficult for us to say because we are seeing a very dynamic growth in the business. And some of the newer molecules are also fairly high value. Typically, volatility is brought about by newer molecules. The older molecules tend to be less volatile. But when the new molecules are also significant in terms of value contribution, then this volatility will continue. So, I don't even necessarily see it as a negative thing. I think as long as we have investor alignment that this volatility is part of our business, I thin
Q
Congratulations, sir, on the good set of numbers. My question is for the CFO, Mr. Abhijit. Sir, in Q3 con call, an individual investor has asked a question about inventory manipulation. But in the transcript, some words are changed, which has changed the essence of the question, whereas the audio on your website is crystal clear and SEBI guidelines also don't allow these changes. So, this looks like actual manipulation somewhere. Can you please justify this?
Abhijit Majumdar
I'll have to check back on what you have mentioned and then revert back to you, Shilpa. I don't have the facts and figures right in front of me to react to your question? Which quarter is she referring to? Sir, Q3 FY '26 at 24 minutes, 26 seconds. We'll check and get back to you.
Q
Congratulations on a great set of numbers. Sir, you are explaining to one of the participants, Mr. Sajal Kapoor about that we don't see that ADCs are I mean, peptides are less complicated than ADCs. So I understand that peptides are mainly used in GLP-1s. But what leads to the complexity actually? If you can help me for a person, a layman like me?
Saharsh Davuluri
Yes, sure. I mean just full disclosure, I'm an electric engineer, so I might find it a little difficult to explain it to you technically. But I just want to clarify that to Sajal's question, I did not say that peptides are more complicated than ADCs. See, ADCs are a biologic molecule which is tethered to a small molecule using a peptide linker. So even rudimentary textbook definition will tell us that ADCs are more complicated. What I was telling Sajal is that peptides are very lucrative as a business. And when compared to the oligonucleotide business, I believe the CDMO business value of pept
Q
Yes. Over many quarters and years, actually you have been very fair and consistent in guiding about the character of the business and inherent up and down character of the business, so that quarterly kind of precision that unfortunately investors are looking for all the time is something which is not inherent in the business. And you've been very, very fair and consistent in guiding the kind of rough gravy trend the Neuland business is. You made a comment that compared to FY24, FY26 has finally registered a meaningful growth. If you regard FY25 is a blip, but after all the ups and downs over t
Saharsh Davuluri
Yes. Thanks for the question, Bharat. I think whether it's underwhelming or overwhelming, I think those are individual deductions and I think certainly not our place to comment on it. I believe that the kind of growth we've demonstrated and the growth we aspire to is, I think that's what we are talking about. I think the 18% to 20% CAGR that we talked about is potential that we see. And I think the kind of growth we have seen in FY26, where we ended at INR2,000 crores, I think we talked about it on the base of FY24, which was, I think, at about INR1,500-plus crores. So yes, I think when you pi
Q
Sure. So, Saharsh, we are in the peptide capability from last 16, 18 years. We are working on that. We have developed several molecules from basic to complex range. Now we are putting the capacity also. So from an investor's point of view, seeing the company from 5 years and more than 5 years down the line, this category in itself has the potential to create one more Neuland in terms of numbers? I don't want to know the name of the specific molecule, specific capability. Just what the company is building and how should investor look at it from next 5 years perspective? Is it fair to assume tha
Saharsh Davuluri
Yes. See, I think if you look at the market potential, I think we've also had outside consulting firms evaluate this space before we committed to our peptide investment. We were told that it's a $5 billion, $6 billion, just the CDMO space, $5 billion, $6 billion market opportunity, and it has a very healthy CAGR as an industry because there's a lot of GLP-1s coming in. It's not just about the weight loss drugs that have been commercialized, but it's also about the next gens, not just from the large companies, but other companies as well. So there is a plethora of development candidates, which
Q
Yes. Sir, how we are using the AI for our operations for manufacturing processes? Are we gaining some advantage because of using the AI?
S E Medikonda
So, Raghunath, thanks for your question. I think at this stage, we are in terms of manufacturing, we are still exploring. I think there are certain areas in, say, R&D and certain other operations where we have done a few pilots. I think that is where we are at this point of time. I think there are three basic areas of AI. And I think the base layer, which is trying to get repeat tasks or tasks which are kind of redundant if you can get AI to use them. So, I think R&D is definitely one area as Sajeev talked. In manufacturing, I think the only area that we are exploring is if we can get AI to sc
Q
Good evening, everyone. Thank you once again for your interest in Neuland and for your questions, which helped us to also answer as well as think a little bit more about the business. Even as we probably haven't been able to answer all the questions in the queue because of the paucity of time, please do reach out to Ravi of EY in case you have further questions. With that said, good evening, everyone.
Management
Speaking time
Saharsh Davuluri
19
Moderator
15
Amey Chalke
4
Abhijit Majumdar
3
Sajal Kapoor
2
Shyam Srinivasan
2
Shrikant Akolkar
2
Vivek Rakholiya
2
S E Medikonda
2
Shilpa Saboo
2
Opening remarks
Ravi Udeshi
Thank you, Rutuja. Good evening, friends. We welcome you to the Q4 and FY26 earnings conference call of Neuland Laboratories Limited. To take us through the results and to answer your questions, we have with us the top management from Neuland Laboratories, represented by Mr. Saharsh Davuluri, CEO and Managing Director; Mr. Abhijit Majumdar, CFO; and Mr. Sajeev Emmanuel Medikonda, Head of Corporate Planning and Strategy. We will start the call with a brief overview of the financials by Mr. Abhijit Majumdar and then Saharsh will give you the broad highlights of the business trends and what he is seeing in the market. And post that, we will open the call for the question-and-answer session. As usual, the standard Safe Harbor clause applies as we start the call. With that said, I now hand over the floor to Abhijit. Over to you, Abhijit, sir.
Abhijit Majumdar
Thank you, Ravi. A very good evening and a warm welcome to everybody joining our call. I will take you through our financial performance for the quarter and the year and then share comments on cash flows, working capital, capex and the actions we are taking to strengthen financial discipline through cost and process improvements. As we have highlighted in our previous call, given the nature of our business, quarterly performance can be uneven, and it is best to evaluate the business over longer periods. With that context, let me start with the numbers for Q4FY26. Total income was INR788.7 crores, up 134.9% versus INR335.8 crores in the same period last year. Commercial CMS projects drove the growth with CMS contributing over two thirds of revenue this quarter. Gross margin was 62.1% versus 56.3% in Q4FY25, driven largely by the business mix. We also managed higher freight cost towards the end of the quarter due to the conflict while ensuring continuity of supply to our customers. As al
Saharsh Davuluri
Thank you, Abhijit, and good evening to everyone on the call. The numbers are out there, and Abhijit has taken you through them in detail. All I would like to do is spend a few minutes on talking about what's not explicitly in these numbers, but it's very important for all of our investors to understand. While we have not given formal guidance in the past that we do not intend to do so going forward, we did indicate earlier that FY26 would be a year of strong growth when viewed against FY24, especially since FY25 represented a period of slight degrowth. With the strong performance delivered in Q4, I'm glad to note that this outlook was accurate. We have achieved the kind of performance that we anticipated at the beginning of the year. In fact, slightly better than expected, aided by the favorable exchange rates. As we look at Q4 and FY26 through this more favorable lens, it's also important to recognize the inherent lumpiness of our business. The same lumpiness that resulted in a recor
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