Bharat Parenterals Ltd (BPLPHARMA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (PhillipCapital PCG): Ladies and gentlemen, good day, and welcome to the Bharat Parenterals Limited Q2 and H1 FY '27 earnings conference call hosted by PhillipCapital PCG. 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 concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Bahim Desai, Strategy and Investor Relations from Bharat Parenterals Limited. Thank you, and over to you, Bahim, sir.
Bahim Desai (Bharat Parenterals Limited): Thank you. Good afternoon everyone and a warm welcome to the Q2 and H1 FY '27 earnings call of Bharat Parenterals Limited. I am Bahim Desai, Director Strategy and Investor Relations. I hope you have had a chance to look at our results, the investor presentation and the management discussion and analysis. All of them are on the stock exchange and on our site. Before I begin, a quick disclaimer. Some of what I say today is forward-looking. It reflects our current expectations and carries risks and uncertainties, so actual results may differ. In May, I told FY '26 our base year, and I said FY '27 is where we expect the commercial inflection. I am pleased to say that Q2 is the first quarter where that inflection shows up in the group's profit. Our teams have worked towards this for several years, so I want to walk you through it carefully, what drove it, what's structural and what will move around from quarter to quarter. Let me give you the consolidated picture first, and then I will go business by business. Consolidated revenue for the quarter was INR 136.3 crores. That is up 110% on INR 64.6 crores in Q2 last year, and up 45% on Q1 basis FY '27. Last year's Q2 was a soft base. Export shipments were deferred and our general injectables line was shut for close to a month. So, I would point you to a 45% sequential growth as the cleaner measure of progress and even on that basis, it is a strong quarter. EBITDA was INR 26.6 crores, INR 23.6 crores, a margin of 17.3%. A year ago, it was INR 0.8 crores. Last quarter, it was INR 8.5 crore at 9.1%. So, the margin expanded by more than 800 basis points in a single quarter. Profit after tax was INR 11.8 crores against a loss of INR 8.6 crores in Q2 last year, and a loss of INR 3.6 crores in Q1. Of that INR 11.8 crores, INR 9.4 crores belongs to BPL shareholders. The remaining INR 2.4 crores is our minority partner's share of Innoxel's profit, since we own 59 55.9% of Innoxel. For the first half, revenue was INR 230 crores, up 27%. EBITDA was INR 32.1 crores, up 120 %, and the margin moved to 14% from 8.1%. Profit after tax was INR 8.3 crores against a loss of INR 9.5 crores. Profit attributable to owners was INR 10.4 crores, roughly 10x the INR 1 crore of H1 last year. The minority share is still a loss of about INR 2.2 crores for the half because Innoxel's first quarter was a loss. Just as important as the numbers is where they are coming from. Innoxel and Varenyam Healthcare are higher-margin growth platforms together made up 45% of our revenue before eliminations this quarter, up from about 40% a year ago. Innoxel is now the largest EBITDA contributor in the group, producing more than 50% of the EBITDA across our four companies. That is the shift in our in mix our strategy was built around. Going to BPL stand-alone now. Coming to the stand-alone business, which is the parent company and the foundation of the group, revenue for the quarter was INR 78.6 crores, up 88.4% year-on-year and 41.5% on Q1 FY '27. Part of the year-on-year jump is recovery from last year's weak Q2, so the sequential growth is the better guide.
Bahim Desai (Bharat Parenterals Limited): 134.1 crores against 136.1 crores last year, which is broadly flat. That is the honest comparison and it and it means that the second-half has to carry the year's growth. This was an execution quarter. Our domestic tender book came down from 119 crores at the end of June to 65 crores at the end of September, largely as supplied against it. Capacity use tells the same story. In the first half, general block ran at 70% against 48.5% for FY '26. Beta-lactam was at 33% and cephalosporins was at 31.5% against 21 and 24% respectively last year. That leaves meaningful headroom. We do not We do not need new capacity to deliver the stand-alone growth we have guided, and additional volume can be absorbed on our existing cost base. Our total order book stood at 117 crores at the end of September across domestic tenders, exports, and international tenders, which gives us good visibility into the second half. Now margins, I want to be straightforward with you here. EBITDA was 7 crores, 3x last year's 2.3 crores, but the margin was 9%, down from 12.3% in Q1 FY '27. The reason is input material cost. Prices of several of our inputs rose sharply because of the ongoing geopolitical conflicts. Our material cost went up by about 5 percentage points of revenue in a single quarter, and the gross margin came down to 35% from 40% in Q1 and 44.1% in Q2 last year. What was within our control, we managed well. Employee cost fell to 9.3% of revenue from 11.7% in Operating expenses grew 33% year-on-year against revenue growth of 88%. Profit after tax was 5.4 crores, up 98.7%, and net margins improved to 6.9% from 6.6% in Q1 and 6.5% a year ago. I'll also be clear about the risk. A good part of our order book was priced before input costs went up. Until those prices ease or the books turn over to orders priced at current costs, margins on that book will stay under some pressure. For the first half, standalone EBITDA was 13.9 crores at 10.3%. That is inside our 10 to 15% range even after absorbing this quarter's input cost increase. The balance sheet continues to strengthen. The standalone business generated 65 crores of cash from operations in the half and spent about 15 crores on CapEx, leaving roughly 50 crores of free cash. Trade receivables are down to 105 crores from 120 crores in March and 130 crores a year ago. Debt-to-equity is 0.08x. You'll also see investments grow from about 1 crore to 56 crores. This is surplus cash placed in various market instruments, not new investments in businesses. Moving on to Innoxcel Lifesciences. I'll spend a little bit more time on Innoxcel because this is the quarter where its model started to show show in the numbers. Revenue was 44.5 crores, up 253% year-on-year, and more than double of Q1's 21.4 crores. EBITDA was 14.6 crores at 33% margin against losses of 2.1 crore a year ago and 1.8 crore in Q1 FY '27. Innoxcel also made a profit after tax of 5.4 crores after losses of 11 crores a year ago and 10.4 crore last quarter. This is the operating leverage we have been talking about. Innoxcel's cost base is largely fixed. Between Q1 and Q2, revenue went up by 23.1 crores and EBITDA went up by 16.5 crores. Put simply, most of each additional rupee is of revenue is now flowing through to profit. I would keep the 33 % in context. This revenue is still mostly licensing, milestone, and development income, and that arrives when our partner reaches milestones, not evenly every quarter. A lighter milestone quarter will bring the margin down, so the half year is the more representative read. Innoxcel's H1 revenue was 65.9 crores, up 219%, and already close to the 74 72.4 crores it did in the entire of FY '26. EBITDA for the half was 12.8 crores, just under the 20% floor of our margin guidance. After tax, the half
Bahim Desai (Bharat Parenterals Limited): is still at a loss of about 4.9 crores because of the first quarter. The bigger news came after quarter closed. On 20th of October, the first product Inoxil makes under a CMO agreement was exported to the US by our sponsor partner. This is a milestone we have been building towards since Inoxil was founded and it moves Inoxil from development and validation work into recurring commercial supply. In May, I said we expected first commercial supply in Q2. It came about 3 weeks into Q3. None of that supply revenue is in these numbers. It builds through the second-half. But this year will still be mainly a licensing and milestone year for Inoxil, with manufacturing revenue starting. We expect the second contract manu manufacturing product to be commercialized within FY '27 upon receiving the approval from the US FDA. The platform behind this is in place. Inoxil has its EIR from the US FDA inspections and its EU GMP certificate from the Belgian regulator covering all four of the lines. That combination is not common for a dedicated contract manufacturer and it is what our partners are building their US programs on. As always, I won't name our partners or the molecules. Those agreements are under confidentiality. Moving on, Verenium Healthcare, Moving to Verenium Healthcare, our domestic branded business, which I founded in 2016. Quarter 2 revenue was 19.7 crores, up 32 33.2% year-on-year. EBITDA was 1.8 crores at 9.2% margins and profit after tax was 1 crore rupees. Revenue was down 21.5% vis-à-vis quarter one FY '27, which is the which is this business' normal cycle. Our sales are highest in Q1 and taper through to Q4. So, Verenium is best judged on year-on-year and half-year numbers. On that basis, H1 revenue was 44.9 crores, up 43.2% year-on-year, at an EBITDA margin of 11%, with profit after tax of 3.8 crores. Our guidance for the year is 20% to 25% growth at at an 8% to 13% margin. So, we are running well ahead on growth and inside the band on the margins. We ended September with 229 approved field representatives against our target of 250 by year-end. Our second division, Bhuva, in gynecology and women's health, launches later this year and takes the franchise beyond the anesthesia and critical critical care portfolio we have built in the hospitals. It will be a cost before it is a revenue, and that is already built into our margin range. Moving on to Verenium Bio Lifesciences, VBPL is pre-revenue, its operating cost in Q2 was 0.14 crores and the capital work in progress stood at 33.7 crores. We are targeting completion of the construction by second quarter of calendar year 2028, subject to commissioning and regulatory timings. Moving on, cash generation from the group was strong in the half. Consolidated cash from operations was 83.3 crores, more than double of the 38.4 crores we generated in the whole of FY '26. Before tax paid, 39.4 crores of that came from operations and 48.4 crores from releasing working capital. The first number reflects our underlying earnings power and it is encouraging to see it build. The second is a release that we would not expect to repeat at the same scale. Consolidated borrowings stood at 160 crores at the end of September, most of it being at Inoxil. On 29th September, our board approved a preferential issue of 9,12,759 shares at INR1,522.85 per share, raising roughly around 139 crores from 15 non-promoter investors. WhiteOak's funds are the largest participants, with Nine Rivers Capital's Aurum Rising Fund being the second largest, Ashoka India Equity and Perpetuity amongst the other investors. Shareholders approved the issue at our EGM on 23rd of October. Up to 135 crores will go into our subsidiaries over the next 2 years, and CRISIL Ratings is the monitoring agency. After allotment, promoter holdings promote from 60
Bahim Desai (Bharat Parenterals Limited): 3.2% to just about under 60% at 59.3%. And there is no promoter pledge. This money is not in the 30 September balance sheet. To the investors who have joined us, thank you. We see your participation as an endorsement of the path we have set out and we take the responsibility that comes with it very seriously. Lastly, since 17th August our shares have also been tradeable on NSE under the symbol BPLPHARMA. And our shareholder base grew by 22% from the June quarter end to September quarter end. On the guidance front, we are maintaining our FY27 guidance. Innoxcel and Varenyam Healthcare are running ahead on growth in the first half and the standalone business goes into the second half with the order book and the capacity to deliver. For the standalone business, revenue growth of 10 to 15% on FY26 base of 234 crores and an EBITDA margin of 10 to 15% remains consistent in line with what we guided at the start of the year. For Innoxcel, revenue growth of 35 to 45% at a margin of 20 to 25% with out-licensing income of roughly 85 to 90 crores. The first half is well ahead on revenue and just under the band on the margins front. Because milestones do not come in a straight line, we would rather see the second half licensing timing and the supplier ramp before we look at these ranges again. For Varenyam Healthcare, growth of 20 to 25% at a margin of 8 to 13% was the guidance. The half-year is ahead on both, but the business tapers going into Q4 and the new division is still a cost, so we are not revising at present. Varenyam Biolifesciences stays pre-revenue this year. With that, I'll hand it back to the moderator. We are happy to take your questions.
Moderator (PhillipCapital PCG): Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. [cough] The first question comes from the line of Henil B with Equicorp Partners. Please go ahead.
Henil B (Equicorp Partners): Thank you for the opportunity, sir. I hope I'm audible.
Bahim Desai (Bharat Parenterals Limited): Yes, you are.
Henil B (Equicorp Partners): Yeah. Sir, starting with sir, congratulations on good set of results. Sir, starting with Innoxcel, I think so we've got about eight 42 total assets and about eight of assets are on the B stage and five are in the pre-filing stage. So, if you could give some more understanding, what is the typical gestation period when we actually go from a D or a B stage to filing and commercialization? And how many of these 13 advanced stage assets do you expect to be launched across FY28, '29, and '30? And what kind of potential do you actually see in these assets?
Bahim Desai (Bharat Parenterals Limited): So, the gestation period, first of all to answer your questions, firstly thanks for your congratulations on the set of results. Going forward on your question, as far as the gestation period is concerned, it depends on the type of filing that there is, that that we are going ahead with. If it's an ANDA filing, the gestation period is much shorter because the stability requirement for an ANDA filing remains 6 months on the exhibit batches. If it's a 505(b)(2) NDA filing, then the stability requirements on for filing is 12 months real-time data. So, generally an ANDA takes I would say roughly between 15 to 18 months for from manufacturing of exhibit batches to the approval, obviously depending on the USFDA. typically that is a much la- longer process when we talk about a 505(b)(2) NDA. In Innoxcel's pipeline, we have a mix of both ANDAs as well as 505(b)(2) NDAs. So, I would say to answer your question on FY28, '29, and '30, it's I would say most of our assets which are currently under development would be in the market by FY30. Sequentially, FY28 would be our ANDAs that we expect to to be there as well as a couple of our 505(b)(2) NDAs which would be filed in this year. We are
Bahim Desai (Bharat Parenterals Limited): we are looking at filing of various of our products between now and end of the year. So, we expect the approvals to come in 12 to 15 months, making it possible for us to launch in FY 20, I would say calendar year '28 so it would be FY 29.
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