Concord Biotech Ltd (CONCORDBIO) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, welcome to the Q2 and H1 FY '27 earnings conference call of Concord Biotech Limited, hosted by Choice Institutional Equities. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not guarantees of the company's future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Maitri Sheth from Choice Institutional Equities. Thank you, and over to you, ma'am.
Maitri Sheth (Choice Institutional Equities): Good afternoon, everyone. On behalf of Choice Institutional Equities, we welcome you all to Q2 and H1 FY '27 earnings conference call of Concord Biotech Limited. Today on the call, we are joined by Mr. Ankur Vaid, Joint Managing Director and Chief Executive
Maitri Sheth (Choice Institutional Equities): Officer, Mr. Ravi Rajgaria - Chief Financial Officer, and Mr. Prakash Sajnani - Assistant Vice Vice President Accounts along with SGA, the Investor Relations Advisors. We will begin the call with opening remarks from the management, followed by a question-and-answer session. Thank you, and over to you, Mr. Vaid.
Ankur Vaid (Concord Biotech Ltd): Thank you, and a warm welcome to all on our Q2 and H1 FY27 earnings conference call. We are pleased to report a strong performance for the quarter ended 30th September 2026. Revenues for Q2 FY27 grew 25% year-on-year. For the first half of the year, the 6 months ended 30th September 2026, revenue grew 26% over the same period last year. So, the momentum has held through both quarters. What is particularly encouraging is how broad this growth has been. It came from every product category and every geography. Immunosuppressants, anti-infective, anti-fungal, and oncology all grew. Anti-infective, anti-fungal, and oncology grew faster in percentage terms on account of increased market penetration for the products commercialized in the last couple of years. These newer segments are clearly gaining traction, and we are optimistic of [inaudible]. At the same time, we continue to win a larger share of our customers spend in immunosuppressants. To provide further perspective, our immunosuppressant business delivered a high double-digit growth while anti-infective and anti-fungal grew in line with the company average growth. Our oncology business nearly doubled compared to the corresponding period last year. Taken together, this shows a healthy, well-balanced portfolio, leaving us well placed as we move into the second-half of the year. Speaking of highlights for H1 FY27, we received ANDA approvals for tofacitinib and mycophenolate mofetil oral suspension, which strengthen our formulation portfolio. We also filed a Drug Master File for fidaxomicin in the US, which adds to our API opportunities in that market. We successfully completed the US FDA inspection of our Unit 2 formulation facility at Valthera, Ahmedabad. We also received ANVISA approval for our Unit 3 facility at Limbasi. Both outcomes reflected our continued focus on regulatory compliance and strengthen our position to serve customers in regulated markets. We have launched Inspira, our dermatology division. It takes us beyond our existing portfolio into science-led skin health solutions. The aim is to meet changing patient needs and build stronger relationship with dermatologist and other healthcare professionals. Lastly, board recommendation of 1:1 bonus issue has been approved by shareholders and will take effect in the coming weeks. The bonus issue reflects our confidence in delivering sustained growth and long-term value for all our stakeholders. Moving on to segmental performance, API revenue grew by 30% year-on-year during the quarter, while formulations revenue increased by 6%. The domestic formulations business delivered a strong growth of 29% in Q2. The relatively modest growth in overall formulation revenue was primarily attributable to a shift in the procurement strategies across emerging markets, with certain customers increasingly opting to procure API instead of finished formulations, as well as the transition of business from Advagen to our wholly owned subsidiary in the US, Stellaron Biotech. On the growth front, we are actively engaging with several large domestic and global customers for our injectables business, and we expect to finalize contracts in the near term. Securing these contracts would drive higher utilization of our injectables manufacturing facility, providing significant growth potential. The resulting faster ramp-up is
Ankur Vaid (Concord Biotech Ltd): expected to support revenue growth and improve margins over time. At Concord, we believe it is more appropriate to evaluate the overall business growth, rather than view API and formulation revenues in isolation. Our focus remains on expanding end-customer sales and increasing our wallet share, irrespective of whether the business is rooted through API or formulations. While the revenue mix may vary depending on individual customers procurement strategies, we continue to see an improvement in our share of their overall procurement. Domestic API revenue grew by 42% year-on-year in Q2 FY27, while export revenue increased by 8%. However, including deemed exports, the overall contribution from exports would be significantly higher. This is because several customers are increasingly shifting their procurement to Indian subsidiaries from where the products are subsequently exported to regulated These trends are largely driven by individual customer procurement strategies. Accordingly, we believe the more meaningful metric is the overall growth in our share of customer's total procurement supported by deeper customer relationships and new customer editions across both domestic and international markets. Speaking about margins for the current year, we witnessed a gross margin contraction of approximately 400 basis points year-on-year, primarily driven by an increase in raw material prices, particularly the solvents, amid ongoing geopolitical uncertainties and broader supply chain disruptions. We believe these pressures are temporary in nature and have impacted our quarterly performance. However, on a full year basis, we expect to recover the margin impact through an improvement in revenue, coupled with effective cost optimization measures and optimum inventory management. Margins were also impacted by higher power and fuel costs. This was partly offset by the renewable energy sources in which we invested last year. As power and fuel costs stabilize, we expect to realize the full benefits of these renewable energy investments, providing further support to our overall margin profile. On the EBITDA front, our reported margin stood at 33.8% in Q2 FY27. For H1 FY27, EBITDA margins remained fairly stable at 33.0 compared to 33.2 in H1 FY26, despite the contraction in gross margins. This demonstrates the inherent operating leverage and resilience of our business model. Excluding expenses associated with our new injectable facility and Stelis, where revenues are yet to ramp up, our H1 FY27 EBITDA margin would have been approximately 37.8%, closer to our historical margin levels. As these investments begin to contribute to revenue and the input cost environment normalizes, we expect our margins to progressively improve. Before I conclude, I would like to highlight the key strengths and growth opportunities that position Concord well for the future. Over the years, Concord has established itself as a leading research driven biopharmaceutical company with deep expertise in fermentation technology. Our extensive portfolio of fermentation-based APIs, supported by a robust pipeline, strong R&D capabilities, and established manufacturing capacities provides us with a solid foundation to capitalize on growth opportunities ahead. In addition to strengthening our core API business, we are actively exploring CDMO opportunities in fermentation-based APIs. Our established technical capabilities, process expertise, and manufacturing infrastructure position us favorably to pursue these opportunities and create additional avenues for growth. We are also building a presence in the US formulations market through Stelis, our front-end distribution platform.
Ankur Vaid (Concord Biotech Ltd): business is currently at a nascent stage. We believe it has significant potential to emerge as a meaningful contributor to our growth over the coming years. Looking ahead to FY '27 and beyond, we remain confident in our ability to sustain our growth momentum, supported by strong business visibility from our pipeline, and execution of our long-term growth strategy. Our niche capabilities in fermentation-based products and leadership position in key molecules continue to provide us with a distinct competitive advantage. While remaining mindful of external developments and evolving business environment, our priorities remain clear: deepening relationships with existing customers, expanding our market presence, capitalizing on emerging opportunities, and continuing to invest in our core capabilities. With these strategic priorities in place, we are confident of further strengthening Concord's market position, and transitioning our capabilities and emerging opportunities into sustainable long-term business growth. With that, I would now like to hand over to Raviraj to take you through the financial performance. Thank you.
Ravi Rajgaria (Concord Biotech Ltd): Thank you, sir. And good afternoon, everyone. Let me take you through the financial performance for the Q2 and H1 FY '27. Revenue for Q2 FY '27 stood at 309.1 crore, compared to 247.1 crore in Q2 FY '26, registering a year-on-year growth of 25%. For HY '27, revenue increased by 26% to 566.6 crores, compared to 451.1 crore in the same period HY FY '27-6. API revenue for the quarter stood at 250.1 crore, registering a growth of 30% year-on-year, while formulation revenue stood at 58.9 crores, growing by 6%. As highlighted earlier, we believe Concord's performance is best evaluated on the basis of overall business growth, rather than the quarterly revenue mix between APIs and formulation, as customer procurement strategies may influence the mix between these segments. Domestic revenue grew by FY '27, while the export revenue increased by 8%. As discussed earlier, changes in the customer procurement patterns can influence the reported revenue mix between domestic and export markets. Gross margin for quarter 2 FY '27 stood at 76.2%, contracting by approximately 400 basis points on year-on-year basis, primarily due to higher raw material prices and changes in the product mix. For H1 FY '27, gross margin stood at 77.4% compared to 79.1% in HY FY '26. On a half-yearly basis, margins have remained relatively stable, despite the input cost pressure experienced during the quarter. EBITDA for quarter 2 FY '27 stood at 104.4 crores, registering a year-on-year growth of around 18%. For HY FY '27, EBITDA increased by 25% to 187 crores. EBITDA margin stood at 33.8 crore, 33.8% for quarter 2 FY '27 and 33% for H1 FY '27. Excluding the expenses associated with our new injectable facility and Stalon, where the revenues are yet to scale up, EBITDA margin would have been 37.1% for quarter 2 FY '27 and 37.8% for FY '27 for the first half. This reflects the underlying profitability of our established business, excluding investment in the growth initiatives. When I talk about the PAT for Q2 FY '27, it stood at 69.6 crores, registering a year-on-year growth of 10.3%. For H1 FY '27, PAT increased by 90 19% to 120
Ravi Rajgaria (Concord Biotech Ltd): 7.3 crore. PAT margin for Q2 and H1 FY '27 stood at 22.5%. However, if we look at the PAT excluding the share of profits from our JV, PAT for H1 7 crores compared to 103.2 crores, with a growth of 23% year-on-year. Lastly, Concord continues to maintain a zero-debt balance sheet with cash and cash equivalents of around 445 crores as of September 30, 2026, reflecting our continued focus on financial discipline and balance sheet strength. With this, I would like to conclude my remarks on the financial performance and open the floor for questions and answers. Thank you.
Moderator: Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have the first question from the line of Yash Tanna from ithoughtPMS. Please go ahead.
Yash Tanna (ithoughtPMS): Yeah, hi. Good afternoon. Am I audible?
Ankur Vaid (Concord Biotech Ltd): Yes.
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