Release Date: May 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Neuland Laboratories Ltd (BOM:524558) has commercialized a new production block in Unit 3, which is expected to boost revenue momentum in the latter half of FY 526.

• The company has a strong reputation in the CDMO business, which is attracting increased interest from customers looking to partner for innovative medicines.

• Neuland Laboratories Ltd (BOM:524558) has invested in capacity building for existing and new molecules, indicating a commitment to future growth.

• The company has a negative net debt position, reflecting strong financial management and a focus on optimizing working capital.

• There is a healthy pipeline of CMS projects, with expectations of commercializing new molecules in FY 526, which could drive future growth.

Negative Points

• Total income decreased by 14% year-on-year, indicating a challenging financial performance for the quarter.

• Gross margins have declined from 58.8% in Q4 FY 524 to 56.3% in Q4 FY 525, impacting profitability.

• The CMS segment experienced a significant downturn in FY 525 due to the natural life cycle of products, affecting overall revenue.

• The company faces uncertainties related to US tariffs, which could impact revenue from its significant US market exposure.

• Neuland Laboratories Ltd (BOM:524558) has not provided specific guidance on future growth, citing the inherent variability and unpredictability of its business.

Q & A Highlights

Q: What was the rationale behind the large CapEx for peptides and unit 3, given the low capacity utilization? A: The CapEx was dedicated to peptides in unit 1, not unit 3. The investment is directed towards creating large-scale manufacturing capabilities, which currently do not exist at Neuland. (Unidentified_4, Vice Chairman and Managing Director)

Q: What could be the potential impact of US tariffs, given that 40% of revenue comes from the US? A: There is no clarity on tariffs at the moment. If imposed, they might be passed on to customers and eventually to patients. The revenue from the US is a mix of GDS and CMS segments. (Unidentified_4, Vice Chairman and Managing Director)

Q: Can you provide some qualitative color on growth expectations for FY26 over FY24? A: We expect growth in FY26, with more growth coming from CMS due to new molecules. However, we do not provide quantitative guidance. (Unidentified_4, Vice Chairman and Managing Director)

Q: How should we view margins in the future, considering past performance? A: Margins in FY24 were highly optimized. While FY25 margins were suboptimal, we expect them to improve, though not necessarily to FY24 levels. (Unidentified_4, Vice Chairman and Managing Director)