Laurus Labs (NSE:LAURUSLABS) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Laurus Labs Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal. Thank you, and over to you, sir. Thank you, Bharat. Hi. Good evening, everyone, and a very warm welcome to Laurus Labs Q1 F 'twenty seven earnings call hosted by Dan Capital Advisors Limited. On the call today, we have representing Laurus Labs' management, Doctor. Satinarayan Chawah, Founder and CEO Mr. V. V. Ravi Kumar, Executive Director and CFO Mr. Krishna Chattane Chawah, ED, Head CDMO Mrs. Soumya Chawah, ED, Generics and Commercial and Mr. Vivek Kumar, AVP, Investor Relations.

0:54 Before we proceed, I would like to you that some of the statements made during the call today could be forward looking in nature, and a safe harbor statement to this effect has been included in the press release that has been shared in the company's website. I hand over the call to Doctor. Chawar to make the opening comments and then we'll open the floor for questions. Please go ahead, sir. Thanks for the introduction. Good afternoon to all our stakeholders. We continue to make steady progress and a strong demand environment for multiple complex technology platforms and integrated manufacturing capabilities. We reported significant acceleration in our CDMO business, maintained sustained momentum in affordable medicine portfolio and continued to show tangible advancement in our mid and late stage commercial projects with global innovators.

1:46 We're executing well on our transformation strategy with a clear focus and determination to realize the near to medium term opportunities. At the same time, we continue investing in capacity readiness to better meet our client needs, New technologies, emerging and complex modalities like peptides, ADCs, gene therapy, etcetera. To seize the next wave of business opportunities that will positively drive future value creation for all stakeholders. Moving on to financial results. Laurus maintained its strong growth momentum, delivering highest quarterly revenue, EBITDA and profits during the first quarter. The company's revenues were 2,026 crores, growing at 29% growth.

2:36 This was mainly driven by growing contribution of commercial supplies in CDMO segment and continued strength in affordable medicine portfolio. Gross margins were also very healthy and maintained around 62.7% and EBITDA margins further expanded for previous quarter by seven percentage points to 31.8%. Our product mix within the business divisions and operating leverage have continued to do well supporting LV margins for. We also achieved several milestones in our operations. The first one is we signed a development and commercial agreement with Arabic Therapeutics for two ADC molecules for India markets. Those are in the clinical stage.

3:29 We have onboarded big pharma client with significant opportunity side of us. The third one, the final andover of 400 plus acres of land passing from AP government is in the final stages now. I would like to thank our dedicated team for their relentless effort and strong progress we are achieving now. I would request Mr. Krishnan Chawan to share key updates on our CDMO segment. Thank you, sir. Within the CDMO side, the division has continued to deliver strong operational execution in Q1, reporting a growth of 69% with the sales of $8.35 crores on the small molecule side.

4:19 This is mainly driven by acceleration in the late stage clinical and commercial deliveries of the programs for multiple global partners. We continue to see good and encouraging progress across both human health and animal health businesses, both on volume ramp ups with existing portfolios and also new potential customer engagements. As we continue to strengthen capabilities of our CDMO platform, we are constantly enhancing the service efficiency and also conversion of the opportunities at various different clinical stages, reflecting client trust in our technical and commercial capabilities. Continued investment into capacity creation at our WIZAC site and also advancing quite well on the commercial scale peptide capacities based on customer demand.

5:16 I would say with customers' ongoing demand for enabling services, our strong CDMO business model and the management execution, in line with which the company is confident to sustain a very healthy business growth. Now moving on to the Laurus Bio side of things. Bio division reported Q1 sales of about 35 crores, which is about 21% growth year on year, which is broadly in line with our expectation. The growth is supported by customer revenue diversification and also continued pipeline progress on some of the larger global accounts, both in the animal origin free space and also in the CDMO side. We have continued to demonstrate significant value add through the expanded application and capabilities, especially in the enzymatic and biocatalysis platform across various different clinical phases, further deepening long term customer partnerships.

6:16 Construction work for the commercial scale fermentation facility and strengthening of our downstream processing infrastructure is progressing in line with the plan, and we expect Phase one of this capacity, which is a little over 400 kiloliters, is expected to be operational towards the end of this year. Thank you. Thank you, Krishna. I would like to request Ms. Samir Shahabar to share the key updates on our affordable medicines business. Thank you. Our affordable medicine division delivered a strong quarter one performance with revenue reaching to INR $11.56 crores, which is an increase of 10% year on year. Our growth was driven by higher volumes across our established portfolio, including ARVs and Onco, where we continue to maintain our market leadership.

7:09 Our recently launched products in the developed markets also sustained a strong momentum. Operational execution remains robust, supported by consistent supply reliability, improving efficiencies, and greater resilience across manufacturing and the supply chain. Despite a dynamic and external environment, our teams continue to proactively manage production, shipping and inventory to ensure uninterrupted customer deliveries and execution excellence. We are also accelerating product registrations across three emerging markets, building a stronger and more diversified growth pipeline. The establishment of a new office in South Africa further strengthens our commercial presence and positions us to capture the growing opportunities in this region.

7:56 We continue to make a steady progress on regulatory filings. Our cumulative BMS filings now stand at 92. In developed market formulation, dossiers, we filed two dossiers during q one, taking a cumulative product filings to 96. Thank you. Thanks, Krishna and Samir, for the overview of affordable medicines and CDMO business segments. On r and d front, we spent 5.8% of our revenue on R and D, which is a significant layer, 70% more than the previous year. This was an account of capital development and efforts for our gene therapy ADC technology infrastructure. And there are some complex pipeline building activity on affordable medicine side as well. Having said that, the recurring spends are in line with full year target.

8:50 We maintain our commitment to invest in portfolio focusing on product complexity, scale and sustainable technology platforms. Let me share brief on quality and ESG side as well. In quarter one, the company underwent 24 quality audits by multiple regulatory and customers. Company has successfully passed these audit inspections without any critical findings. On ESG side, we continue to take steps towards meeting our ESG commitments with a focus on clean energy. In Q1, the science based target initiative was validated. Our targets to reduce our near term emissions. You can refer our IR for more details on this. As we look forward, we continue to see robust demand for our specialized technology offerings and the integrated manufacturing capabilities.

9:41 This is significantly accelerating our global position and expanding various market opportunities. We therefore remain confident in our ongoing transformation strategy and in our ability to deliver sustained growth and value creation for all our stakeholders. Now I request Mr. Ravi Kumar to share overall financial highlights. Thank you, Doctor. Satya, and very warm welcome to everyone on our quarter one FY 'twenty six earning call. Total income from operations is around INR 2,026 crores, this resembling the current year, current calendar year, registering a growth of 29%. The main driver is CDMO and of course, affordable also has been contributed.

10:30 Gross margin maintained at 62.7%, about 3.3% higher than before. This is due to the division mix and the process improvement efforts. And EBITDA for the quarter one stands at INR $6.44 crores with EBITDA margin of 31.8%, which is about 7% higher than before, which is consistently improving since last several quarters. This is largely on account of improvement in capacity efficiency, driven by the growth of late stage clinical and commercial projects. Our profit after tax is around INR $3.68 crore and ROCE is around 19%, but again is 17.7% of the previous year. On the CapEx front, we invested about INR $3.94 crores for the quarter.

11:20 Our net debt stood at INR 2,656 crores and debt by EBITDA is around INR 1.28 against 1.25 of the last quarter on the back of strong internal cash flows. So slight increase in the debt is due to the CapEx plans. On the capital allocation part, our strategy remains unchanged and we will continue to prioritize investment into high value business segments to drive near and long term growth and returns for our shareholders. You can refer our IR presentation for more details. With this, I would request the moderator to open the lines for Q and A. Thank you. Thank you. If you wish to remove yourself from the question queue, you may press star and two.

12:09 Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of from Antara Growth Capital. Please go ahead. Sir. Hello, am I audible? Yes. We are audible. Congratulations, team. And it's very heartening to see these kind of numbers. Just two questions. First question is regarding the CapEx that you've guided. We started with 1,000 crores, then up the guidance to INR 1,500 crores. And in our AGM, we spoke about INR 2,000 crores CapEx for FY 'twenty seven.

12:55 And could you please explain what would have changed in the last six, eight months that you've closed to double your guidance on CapEx? The increase in numbers for the CapEx spend was broadly based on our requirement for capacity to meet our customer demands. The current year investments into capacity expansion is based on what our customer demands are and creating capacity to meet that demand. Got it, sir. And for the second year, which is FY '28, would you continue to maintain the older guidance or any revision there?

13:45 See, we changed our guidance. Last quarter, we said 3,000 crores for FY '27 and FY '28. We may do more than that, but we don't have a correct number to give you in this call. Got it, sir. And last question from my end, just a bookkeeping question. What would be your operating cash flow for this quarter? Operating cash flow, we have not disclosed. We'll get back to you. Okay, sir. Thank you so much. Wishing you all the very best. Thank you. Thank you. The next question is from the line of from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity and congratulations on good set of numbers. Sir, if you could firstly highlight what was the constant currency growth for the quarter?

14:36 Constant currency growth revenue is around 36 crores. For growth Sir, you're asking this only. Right? Will 36 crores? I mean, constant currency growth. 36 crores only. 36 crores only. Percentage. Percentage you're asking? Yes, sir. Percentage is about 2%. Year over year? Yes, yes. Current was 2%. Okay. So secondly, with respect to the delivery of late stage molecules, so this is with respect to supplying to the customer in terms of anticipation of product approval? Or these are with respect to products which are approved and we have initiated the supplies for these projects?

15:42 It's a mix of both in... Towards preparation of launch and also for products that have already garnered the approval. Can you share the sort of mix so that... Which can be a sustainable number and which could sort of have a temporary pause once the inventory buildup completes? So in the small molecule CDMO business, about 55% of revenue came from commercial supplies. Understood. And sir, if you could just lastly let know what was the let's say customer advance in this quarter or let's say compared to what it was in FY twenty twenty six?

16:34 No, we didn't have any customer advances during this quarter. Got it. Thank you. Thank you. The next question is from the line of Krish Mehta from Inna Holdings. Please go ahead. Thank you for taking my question and congratulations on these numbers. So I just wanted to get the split between your FDF and API within the ARV revenue, if you could just disclose that? And the second question I had is that, now this quarter, we're seeing that mix of ARV versus non ARV coming back down to like the onethree, twothree split, which we have spoken about for a while. So how do you think about this going forward for the next three, four years?

17:20 Are we going to be at this mix now? Have you reached that stable level of onethree, twothree? I'll answer the last question. See, currently two thirds is non ARV and one third is ARV. We expect to... This will be the highest. I expect we will go down further, but I'm not... I don't think it will go up beyond this number. To answer your first question for ARV API, did about 415 crores and ARV SCS is 254 crores. Together, its total ARV revenue is 669 crores. Okay. Thank you very much.

18:05 Thank you. Thank you. The next question is from the line of Sachel Kapoor from Antifagile Thinking. Please go ahead. Yes. Hi. Good evening, team. Congratulations on a strong quarter. I have two questions. First is, doctor Satya, take us back to 2023, please. The numbers were weak. The stock was under pressure, yet you kept investing. What was going through your mind during that period? And what gave you the conviction to stay the course? And I would also like to hear Ravi's comments on this question, please. Thank you. In the CDMO business, what we have realized, customer would like to see the capacity before giving products.

19:04 And second, the trend what we also seen when they put a very important program updates, they don't want to see that says increases. They didn't want to see change of manufacturing lines, change of manufacturing sites to minimize the regulatory complexity. Since we realized this very early in the CDMO growth, we did invest aggressively. We we realized we are taking risk, but we are not taking the risk putting the company at a bankruptcy. So we decided to invest aggressively, created capacity and that attracted customers, that attracted complex project, but also attracted the projects at scale.

20:00 That's helpful. And and, Ravi, being the being the CFO, it's your job to not approve any project. Right? So I'm sure you must be having a a very close scrutiny on, you know, at that point in time because the environment was foggy. And and at least to us as investors, it was very less visible. Looking at the numbers, the ROCE was collapsing, the margins, the sales. I mean, the CDMO segment itself saw a big collapse because of disappearing of that purchase order. So what gave you the conviction to, you know, sign on the capital allocation decisions that the team was making? So, actually, your question has an answer. FY twenty three is the best year because of that execution of large budget charter.

20:50 But maybe the the execution itself is a classic example or, like, you know, precision to improve a CapEx. So had we not had capacity before offering that... Before accepting that order, actually, we should have been missing the entire CDMO opportunity in the last last maybe in the next future years. So that created a milestone. And fortunately, I'm there in this business and with doctor Satya for a long time. So we know we may have some... Differ some... Sometimes, but it go together. So that's how we have done. And then, you know, only seven quarters we had a not so great results. Those seven quarters we use a... We read Bhagavad Gita well, so we were having a balance of mind and then we were reaching our judgment to invest continuously.

21:45 That is really paying well for last five quarters, and then it will will repeat in the next years. I hope I answered your question, Rajendi. Yeah. Definitely. Definitely, Ravi. You read the the most important book at the at the point in time which, you know, you created the maximum return on that investment of your time on that one. So thank you for answering that. Second question is second question is, Laurus now seems to be at a stage where some investments are being harvested, others are scaling, while the third set is still being seeded. How do you think about balancing these three horizons when allocating capital?

22:32 Because a lot of what you are seeing today will not be visible to us as as outsiders or investors, maybe maybe next five years, maybe four years. Who knows? The one segment, our investments are not going to give returns. Is the... Our advanced biologics, our investments into gene therapy, ADCs and all. That investment we're doing consciously because that those modalities are the one which are growing faster than others. Except that our investment in the small molecule API, small molecule drug product, I think we know we as you always say the CDMO, CMO business is lumpy, but predictable.

23:24 So now our investment is CapEx is very heavy because we're able to predict better than earlier. I just want to add one more Yeah. Sure, Rajee. Please. The... You see, few years back, we have taken a call when we started generating more cash. So we started... We took a call that lay up to 10% of our investments, our our profits into a disruptive technology, in house or external. That's also is paying well. And then, for example, some of the initiatives what we have taken, they are not even generating any revenue or maybe not meager revenue. Not yet generating a meager revenue. So I think the the combination of all these strategies or three points what you have said, which can create a sustainable organization.

24:19 The other point will end... Just one. Yeah. Please please, doctor. Other point I want to add here is, see, any major investment, new areas, it will take four, four years. So unless we invest right now for our growth in FY thirty onwards. So we we don't see the growth coming after four, four years. Yes. Absolutely. And unlike generics, as you said, doctor Satya, ours is a lumpy business, but it also is predictable. How predictable you think is the fermentation and the and the precision fermentation, the Laurus Bio, including the Visek 400 plus scale that will go commercial starting early next year.

25:09 How predictable is that side of the business? That business currently giving give or take 200 crores right now. The 200 crores, are very confident that we'll generate. Next ramp up, we are we are banking on month... Multiple products. I hope all will not succeed and this is all will not fail also. So we are hopeful some products will succeed and that will give a massive upside. Our next twelve to eighteen months will be very crucial which molecule, which program in our fresh fermentation will take up, which will not take up. So we have that's the reason this gestation period we expect the eighteen months for our bio business to see significant ramp up. Yeah.

26:02 And the capacity there is fungible. Right? So even if some molecules fail the lesson and the learning will be deployed to the next set of opportunity and we could use the same infrastructure to manufacture something completely different there. So capacity market created upstream, downstream are fungible. So we can use the same capacity for multiple programs. Thank you. Thank you. That answers all my questions. Best wishes. Thank you. Thank you. Thank you. The next question is from the line of Bharat from Quest for Value Capital. Please go ahead. Yes. So congrats for a good set of numbers. Regarding this FY twenty seven CapEx guidance as one of the participants already read, so you have effectively doubled CapEx from INR1000 crores to INR200 crores in just six months, yes? So could you help us understand what has changed during the six month period?

26:57 What new opportunities have emerged that made you to do two factors in core region of CapEx? Is it due to increased inquiries from big pharma due to supply chain diversification? It is from the the capacity needed for our existing customers. Some programs we are doing advanced into mails, maybe we have to do API. We were expanding our offerings in the programs. We are investing in new modalities within the small molecules also. So this CapEx unlike we had clear CapEx what we've done, this we're doing for a purpose, for a product and capacity what is needed in the near term for our partners' needs.

27:57 Okay. Thank you. Thank you very much. Understood from my side. Thank you. The next question is from the line of Tien Tsin Mina from Moonshot Capital. Please go ahead. Sorry to interrupt. Mr. Dansham, may we request you use a microphone for asking a question? Okay, sir. Is it audible now? Please go ahead with the question. Sir, I have one question regarding the... Where we can witness the impact of CDO ramp up in our margins or in our profits, whether we can see them in gross profit or operating profit we compare with respect to the last quarter, our CDMO business has improved a lot.

28:50 However, our gross margins have not improved and operating profit has improved. Further raw material cost, if we consider that, there may be some higher cost due to the Middle East or West Asia Crisis. But in case of the API, I think the prices reflect around one quarter after the raw material we put out. So can you please explain or to understand the business in this regard? See, as you mentioned, our CDMO business increased significantly. And so our gross margin also improved to from 61% to 63%.

29:40 That's from quarter on quarter. But when compared to year on year, it is almost little over 3% increase was there. We have seen some pressure on margins because of the global companies, But that margin pressure is not that significant to take a shelter that because of that margins were gone down. So we expect to be similar margins we maintain for the coming quarters as well. Okay. Thanks. The second question regarding the asset transfer, would we expect the growth asset around 1.5 as we ramp up our premium of business?

30:27 We have clearly mentioned in our investor presentation. Our first target is to asset turnover ratio take little over 1.0. That's the target. We are almost there right now, but we wanted to take it at least more than 1.0. Okay. Okay, sir. And sir, last question from my side. In the... This quarter, CDM business is significantly contributing around, I think, 44 something. And so I want to know this a contribution from the two, three products or there are multiple products in this regard? Thanks for asking, Vishen. Our CDMO business is well diversified. No products or no customer are contributing significantly in our business. So well diversified CDMO segment.

31:23 Okay. Thank you, Sachin. Thank you. The next question is from the line of Ramesh Chandraya from CF. Please go ahead. Good evening, and thanks for taking my question. And first of all, congratulations to the management for great setup numbers. So my question to doctor is, sir, if I remember correctly, your promise by 2030, our CDMO turnover will be more than 50% of the total turnover. So are we still sticking to that? Are we going to prepone that target to 2028 or '29? I just think we are very comfortable to say that by FY 'thirty, we will definitely reach our target ARPU at least 50% of revenue come from CDMO segment.

32:21 And secondly, sir, just I wanted to know what is the amount of exchange gain we have made during this quarter? Gain on the balance sheet is about INR 5 crores. It's INR 5 crores? Yes. ForEx gain as a separate credit is a 5. INR 5 crores. And thirdly, sir, if I see your presentation, you're mentioning some in licensing of two antibody, you're saying. So can you throw some light on this exactly when we'll be able to generate revenue out of it? These programs are at the preclinical stage.

33:06 We have to continue process optimizing Hyderabad, do GLP toxicity, file IND, and data are good, then we are to do phase one, two trials in India. So it will take three to four years, yeah, in India at least. Okay. So that's all from my side, sir. And again, the analysis is also great. You. The next question is from the line of Rehan from Srinath IMC. Please go ahead. Yes. I have this one question on CapEx side. Like, you have guided, sir. You have guided long term target of 1.1 x asset turnover and 25% ROCE.

33:54 So, sir, given the cumulative CapEx has now crossed for 2,700 per row, So what is the expected trajectory for these ratios over the next four quarters or the like you are seeing? I think yes, sir, terminal ratios will be more 1.0 for sure. And the ROCE because of heavy CapEx this year maybe going to 20% will take some time. But we expect ROCE will continue to grow from last year to 17.7%, but this year is 19 something. Then we continue to grow our ROCE returns as well. Okay. Okay. And just last one more question if I can ask. So you have you have previously observed pilot in shipments for GLP-one peptide like samadrutinib.

34:47 So, sir, has the company now qualified commercial scale synthesizers? And when do we expect meaningful revenue contribution from this category? Within GLP-one space, while there are a few different opportunities that we are working on, unfortunately, we're not able to discuss any project specific details, but we expect peptides to be a meaningful area for Laurus as a company. Okay. That's fine. Thank you. I'll jump back on the queue. Thank you. Next question is from the line of Manoj Bhatti from. Please go ahead. Hello.

35:35 Am I audible? Yeah. Yeah, Manoj. Yeah. You're audible. So first of all, congratulations, doctor Chava, and entire Laurus team for a very, very strong quarter. So I have three questions. First question is, as you mentioned that in CDMO, 55% of the revenue is on the commercial side and 45% is on the start up where the filling of inventory may be there. So just wanted to understand whether this 45% portion of the revenue is going to sustain. How do you see the sustainability of this portion? That is my first question. The majority of the revenue, which is not commercial, is for the phase three supplies.

36:26 So we expect to... They will become commercial soon. For one of the program where we supplied the phase three supplies, The approval also obtained. So we expect to it will become commercial soon. Okay. Okay. And second part is if you can give us some update on Karka JV, how much more CapEx will be required in that, and when do we expect the revenues, and what will be our guidance, if any, on this part? See, Karca JV, we are doing two things. One is oncology, small volume oncology formulations, and large volume normal solid waters. The oncology facility will be ready early next year, and then solid water facility will be second half of two thousand twenty seven calendar year.

37:29 Currently, we have invested so far 400 crores, and then that facility needs another 400 crores. And part of part part of that investment will come from loan from our partner. Yeah. Right. And sir, my last question is on our animal part of CDMO. I think if I remember out of 16, 18 molecules, around two or four tech transfer did happen. So if you can give us an update there also, the kind of jump we are seeing, have we received more tech transfer as number of molecules gone up there? Well, not in a position to share the specific number of molecules that we are working on, But there are a few programs or molecules in that space that are being commercially supplied as we speak.

38:30 You. The next question is from the line of Sachin from Praha Capital. Please go ahead. Hello, Doctor. Shava. Am I audible? Yes. Audible, Sachin. Yes. Yes. So many congratulations to entire Laurus team for wonderful results. Doctor, I'm very impressed the way each success of Laurus is feeding another success. Like, for example, API treated formulation formulation treated CDMO. Now what I want to understand, if you see Laurus three to four years from here on, what's your big picture, doctor Shava? It will be a fully integrated pharmaceutical company offering end to end in pharmaceutical value chain from API to drug product, both in our generic CMO as well as our MC also. Our desire is to offer fully integrated program, not just starting materials, intermediates, API, but to offer including formulations for our big pharma CDMO customers.

39:42 That's our goal and we are going in the direction right now. Understood. And and and more particularly, how you see Laurus Bio evolving in next three three to four years? Because as of now, it's comparatively, it's pretty small. But in your scheme of things, how you think next three, four years, Laurus Bio can shape up? There are two segments where we have invested lot of money. One is bio, and second one is crop sciences. We need maybe another eighteen, twenty four months to assess how big the opportunity, what else we need to do. Do we add more customers, more projects, more infrastructure or more resources in R and D or more resource BD.

40:32 I think that's what the evaluation right now. If you look at in the broad scheme of things, both dividends put together creating two fifty four revenue. That's not significant, but we are investing significantly in both these and we need eighteen to twenty four months to assess where those users will take us from the current stage. Understood. Understood. I think that that's from my side, Doctor. Chao. Thank you. Thank you. Thank you. The next question is from the line of Mittal Mehta from Lucky Investment Managers. Please go ahead. Good evening, sir, and congratulations on a great set of numbers. You know, it is very heartening to know that how you have navigated your company in last ten years from an ARV to a full fledged integrated CDMO.

41:30 So, hearty, congratulation to your entire team, sir. Sir, my question to you is... Yeah. Sir sir, my question to you is, you know So if you see our quarter one exit rates for CDMO is roughly about 800 and roughly about 800 plus crores. Now this and the overall share in the basket is now approximately 42 percent. And do you firmly believe that we can keep growing our CDMO business at about, you know, 30 to 40% for the next three, four years based on the CapEx that we are doing for this? And this entire CapEx is for the CDMO, or we are also investing in other segment of the businesses?

42:16 If you could just throw on this particular questions. The majority of CapEx is for small molecule, whether it is API or CDMO. And we do expect to grow significantly. I may not be able to give you a number what we will grow, but we have good visibility and lot of confidence and conviction that CDMO will definitely give lot of growth for us. Yeah. And, sir, you know, is is it possible for you to, you know, give us a total TAM of this CDMO pipeline that we have built over the last so many years that, you know, we get some confidence as to, you know, the company is on a very serious growth trajectory for the next three to five years.

43:03 Is it possible for you to share that number? I mean, I know... I... I'm certain that there are a lot of confidential agreements, but just sort of broadly if you can give us key how what could be the addressable opportunity in this whole piece? I think we don't want to confuse all our investors by giving a certain number of projects we're handling at certain percentage of and all. So it all depends on the value of each program is more important than the number of programs. So that's more important. And the investment market is you know that CDMO market is growing. A lot of opportunities are there. It is our ability to create capacity, create technology platforms and absorb customer, customer projects and all. Krishna, I want to add anything here. No. I I recall your thoughts because in the... From a number perspective, in the CDMO space, we have commercial programs, be it intermediate or API that are maybe less than a million. And there are programs that are in the double digit or even beyond. Right?

44:11 So just giving a number might not give a complete picture, and thereby, that was one of the reasons why we've categorically tried to refrain from giving a a breakup because that might not be accurate representation of how the business is doing. Or is it possible for you to share, like, how much each product or each program would be contributing to the overall? I mean, is it a very concentrated, like... I mean, is that, like, a top three or a top five? Or it's a basket of products that is sort of contributing to the growth in the overall CDMO business? Fortunately, in... Within the CDMO space, the revenues are very diversified, and we don't have any particular high concentration of any particular program or customer for that matter.

45:07 It's a it's a very diversified set of products that currently we have. And also within the CDMO, what percentage would be for the patented, you know, molecule and non patented molecule? Within our within the way Laurus Labs as a company represents CDMO, all of these are innovator programs which are on patent molecules. All the off patent molecules that we support for various different companies from contract manufacturing point of view are internally referred to as CMO, and the value from this is captured in the affordable medicines revenue.

45:59 So which means a very significant... I mean, 70 to 80% or 90% of the business would be from the patented molecules? In the in in the CDMO space, predominantly, yes. Maybe even more than. Yeah. Yeah. Maybe even more than that. Okay. And the therapeutic the therapeutic concentration also is very well diversified? Or, I mean, one or two therapies contribute significant to the overall CDMO pipeline... I mean, business? Therapeutic area also is very diversified. There's no specific therapy area that has any high concentration risk. Right. Sir, you have been primarily into an investment curve, and this investment curve also seems to be continuing.

46:48 And obviously, the revenues are sort of I mean, the growth, obviously, we can see that your CDMO business is growing at the upward of 35%, 40%. But just to sort of map, Laurus, on return metrics, I mean, on return on capital employed, if I were to sort of dissect your CDMO and sort of build up p and l for your CDMO business, would your return on capital employed at maturity or maybe at at good scale up would be significantly higher than the the total ROCE of the company? We can't separate the CDMO and the generics part of it. So we can't have a calculate the separate ROC per CDMO.

47:35 Okay. Thank you. Okay. Great, sir. Thank you very much. Thank you. Thank you. Thank you. The next question is from the line of Talal Kud from Jefferies. Please go ahead. Yes. Hi, sir. So just wanted to get some more comments on your Customs and Business sales run rate, given that we do have high visibility, typically, at least for next two quarters. So is it fair to say ballpark, maybe plusminus crores here and there, but we can maintain the current run rate? Is that a fair understanding? That's a fair statement to make, sir. Yes.

48:21 Okay. And also, can you give what was the commercial sales contribution within the custom synthesis for FY 'twenty six? You said it's 55% for 1Q FY twenty twenty seven? It's in the same number. But we expect in the coming quarters and yes, that will grow. 50% came from commercial supplies last financial. Okay. Okay. And one for Ravi sir. Sir, if I got it correct, you said it's 2% constant currency growth for the quarter. So can you explain because for against most currencies, especially the dollar and euro, I think INR depreciation is like in 10% rate.

49:17 So how is our constant currency growth so low, given that INR growth is 30%? So we have even a rupee sales also, right, that the entire sale is not in the dollar terms. And what I said is what I said is like the the FY twenty six in the first quarter comparison. Okay. Okay. So what would be the total export percentage in terms of total console revenue? Export direct export is, I think, about 55%, 60%. I have to just check. Okay. And lastly, one more, if I can.

50:06 Can you throw some more color on the Laurus Bio division in terms of what category of products are currently largest within that division? Is it insulin, food protein, industrial enzymes currently? And in terms of new product, what are the largest what are going to be the largest category of product? Currently, about 20% revenue comes from animal origin free cell culture ingredients and enzymes. And the remaining 60% came coming from various CDMO molecules at their leaf stages.

50:53 It's spread over some alternate food proteins, some colors, some super absorbent polymers. It's spread, it's not one segment which is consolidating more. Okay. Okay. That's it from my side. Thank you. Thank you. The next question is from the line of Abhijit, an individual investor. Please go ahead. Congratulations on the fantastic set of numbers. I have a question with regards to the Arabic Therapeutics two ADC contracts that you've seen. I just did a quick Google search, and I noticed that they have a different type of ADC.

51:47 Can you give more disclosure on the product that you're developing? Is it from the... Are you partnering with them and to develop it from scratch, or there is already a certain product that is already there and they're asking you to help them scale it up? We also made a small investment into Advic Therapeutics on that. We have licensed two preclinical assets, It's completed in vitro, proof of concept. And we need to do GLP tasks here in India. That will be mid of next year. We expect to start preclinical tasks. And based on that, we will plan our future course of action.

52:35 These are part of their motor program, and these are for two therapeutic categories. We will give you more details later, which are both are solid tumor. And another question is with regards to the organization itself. I think you clearly demonstrated that you are capable of executing small molecule CDMO contracts and you're positioning yourself as a large molecule player with all your investments in cell gene therapy, peptide, ADGs. Would you like to give a more visionary disclosure to the investors with regards to the next five years?

53:24 See, we already make a few payload linker programs for big pharma. And see, for us to wet our hands, we need to get technology adoption. It is now developing. We want to invest in a small biotech company and get access to their technology. So now with these two ADC programs, we have access to their conjugation, purification and fill finish opportunities there. That is one area where we're investing. And we also licensed some patients from IIT Kanpur. Those are helping in our gene therapy programs and investment into ImmunoACT helping us to understand the lentiviral and then cell therapy.

54:12 And based on the programs, what we have from partners, we also invested as mentioned earlier into large peptide manufacturing capacity as well. So eventually we are investing in the future modalities where the market is moving. Okay. One last question, in regards to the peptides, everybody in the market is trying to focus on the peptides, the weight loss, the GNPs. But I think there is a lot of revolution that's happening in the peptide statements for other sectors, right, like gastro, I think I was reading is something... There's a lot of work going on in it. Would you like to disclose more than saying that are you looking at the overall sector, or are you looking at specific sectors where the growth is? Because I think the market itself is growing around 30% plus.

55:00 So if you can give some more details on it. Krishna, you want to answer? Yeah. There's a few different class of programs that we expect to support in this space, which we will give additional color in due course. But yes, it's multiple classes that we expect to support. Not just GNP, we also have programs other than GNPs. Yes. Okay. Thank you so much. Thank you. The next question is from the line of Prashar Manudhani from Motilal Wholesale Financial Services. Please go ahead. Thanks for the opportunity. And sir, just a clarification. The constant currency growth in Q1 FY twenty twenty seven over Q1 FY twenty twenty six, if you could sort of clarify.

55:49 Vivek, we'll come back to you on that. Actually, what I said is on the full year of FY 2026 and quarter one of FY '27. No, I meant to ask Q1 FY twenty seven or Q1 FY twenty six. That's what Vivek will offline tell you. Sure, sir. And with respect to this incremental CapEx, while it is for a specific customer, but is it for a specific product? These are not meant for one customer, multiple customers and multiple products. The CapEx guidance which you raised from INR 1,500 crores to INR 2,000 crores, so incremental INR 500 crores is for multiple products. Is that the way Yes, to you're right.

56:36 And if you could just clarify like again for animal health, crop science or human health and for API or intermediates? It's a mix of both human health and animal health portfolio. Okay. And for again, for APR intermediate? Both. As you've seen, the lot of this investing more in serving our partners API needs. We do have some business in advanced intermediates in CDMA segment, but mostly it is API for us. Yeah. Yeah. That's good. Alright. Go ahead. Got it, sir. And just just last one, if I may. This regulatory approval for your customer where the product offtake is sort of expected to scale up.

57:31 This is for like the global market, regulated market, emerging markets, you could give some color to that. We expect it as global, regulated and LMIC as well, but it's global global. Got it. Thanks a lot for addressing your question. Thank you. The next question is from the line of Tien Tsin from Moonshot Capital. Please go ahead. Thank you, sir, for the opportunity. This is just follow-up question regarding the CDMO business. As Doctor. Tawa mentioned that we have very well diversified CDMO business. Can we know the in terms of the percentage if our any molecule in the end end product becomes blockbuster?

58:27 How much we can earn in our business? That is my question, sir. I think we can't give you those granular details. The product wise and customer wise revenue because of our content issues. We can't give you beyond what we are disclosing. No. No. We... I don't want to better... Regarding any particular molecule. I just... The idea in the regards that if one molecule becomes blockbuster in what we make in our CDO business, how much percentage we can earn in our business in that module? Just an example. So again, that's interesting question. The answer to that, sir, is is not very easy to, you know, come up with a percentage potential contribution to our top line based on the blockbuster status of the customer.

59:25 The reason why I say that is because there might be programs that use, let's say, five hundred milligram dosage per day, or there might be programs that use, let's say, one or two milligrams a day or even less. And also comes down to what value of that each video gram is. Right? So while the program might mean blockbuster for our customer, what it means or what it entails to us as an API supplier could mean completely different based on that particular nature of their product. Okay. Okay. Thank you, sir. Just one more follow-up, if I can get.

1:00:13 Do we have molecules in our video business which are generating around INR 200 crore or more? Yes, yes. The answer is yes, no. Yes, we do have. Yes, sir. Thank you. Ladies and gentlemen, we will take that as the last question of the day. And I now hand the conference over to the management for closing comments. Thank you everyone for your very insightful questions and your continued support to the organization. Thank you. Thank you. Thank you. On behalf of Laurus Labs, that concludes this conference. Thank you for joining us and you may now disconnect your lines.