Vimta Labs Ltd (VIMTALABS) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Systematix Institutional Equities): Ladies and gentlemen, good day, and welcome to Vimta Labs Limited Q2 FY27 investor earnings conference call, hosted by Systematix Institutional Equities. 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 the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is now being recorded. I now hand the conference over to Mr. Vishal Manchanda from Systematix Institutional Equities. Thank you, and over to you, sir.
Vishal Manchanda (Systematix Institutional Equities): Thanks, Anam. On behalf of Systematix Institutional Equities, I welcome you to the Q2 FY27 earnings call of Vimta Labs. We thank the Vimta Labs management for giving us an opportunity to host the call. Today, we have with us the senior management of the company represented by Ms. Harita Vasireddi, Managing Director; Mr. Satya Sreenivas Neerukonda, Executive Director; Mr. Siva Ramakrishna, Chief Financial Officer; and Ms. Sujani Vasireddy, Company Secretary. I'll now hand over the call to the company management for opening remarks.
Siva Rama Krishna Kambhampati (Vimta Labs Ltd): Thank you, Vishal. Good afternoon, everyone, and a warm welcome to our Q2 and first half '27 earnings call of Vimta Labs Limited. Please note that the investor presentation and financial results are available on the company's website and the stock exchanges. Also, anything that is said on this call, which reflects our outlook for the future or which could be construed as a forward-looking statement, must be reviewed in conjunction with the risks that the company faces. This conference call is being recorded, and the transcript, along with the audio of the same, will be made available on the website of the company, as well as on the stock exchanges. Please also note that the audio of the conference call is the copyright material of Vimta Labs Limited and cannot be copied, rebroadcasted, or attributed in the press or media
Siva Rama Krishna Kambhampati (Vimta Labs Ltd): without specific and written consent of the company. From the management, we have with us, Ms. Harita Vasireddi, Managing Director, Mr. Satya Sreenivas Neerukonda, Executive Director, Mr. Siva Rama Krishna Kambhampati, Chief Financial Officer, that is myself, and Ms. Sujani Vasireddi, Company Secretary. Now, I would request Ms. Harita Vasireddi, Managing Director of Vimta Labs Limited, to provide you with the updates for the quarter and half year ended 30th September 2026. Thank you, and over to you, ma'am.
Harita Vasireddi (Vimta Labs Ltd): Thank you, Siva. Good afternoon and once again welcome to our Q2 earnings call. I would like to begin with our business performance and the opportunities we see ahead following which I'll hand it back to our CFO who will take you through the financial results. I am pleased to share that we delivered an improved year-on-year performance during the quarter with our revenue growing by approximately 10% year-on-year in Q2 with margins improving by around 10.5% over the same period. On a sequential basis, revenue was broadly stable compared with Q1 and this time is a reflection of longer customer decision-making cycles. Our focus for the next phase is to translate the strong base we have built into stronger revenue momentum while sustaining profitability. In the pharmaceutical space in particular, engagement with customers remains strongly active despite the longer decision cycles. We remain encouraged by the growth in inquiries and our proposals during the quarter and our pipeline of active opportunities is promising. We are focused on converting these discussions into business. The broader pharmaceutical market remains constructive with pharmaceutical exports reaching a record $31 billion in FY '26 and growing at almost 7% in the first quarter of this year. Global CRO demand also remains resilient supported by R&D outsourcing and the growing complexity of drug development. India continues to strengthen its position as a preferred global research and testing destination backed by scientific talent and cost competitiveness. This provides a supportive backdrop for our pharmaceutical services over the medium term. Analytical pharmaceutical services, pre-clinical and clinical research services remain attractive, supported by growing generic pipelines and patent expiries. Rising regulatory scrutiny and data integrity requirements are increasing the importance of high-quality compliant testing capabilities. Hence, these businesses are central to our growth, supported by our scientific capabilities and the breadth of services we offer. A key milestone during Q2 was the commencement of revenue generation from our biologics services. This marked our move from established capabilities to commercial delivery. While the business is at a very early stage and its revenue contribution is currently very modest, we are in active discussions with prospective customers. Our immediate focus is on progressing these opportunities and building a strong commercial foundation. We see biologics as an important avenue to broaden our pharmaceutical services portfolio and support growth over time. Across drug development more broadly, technology adoption in areas such as artificial intelligence, biosimulation, and advanced preclinical models is steadily transforming workflows, creating opportunities for research partners with strong scientific and testing capabilities. In food testing, export and import testing has begun improving from the levels seen in the previous quarter. While the broader food export market is growing at a more measured pace, we are strengthening our focus on domestic opportunities to broaden our customer base and we are well placed to benefit as export-import sample flows recover in this near future. Our electronics testing business remained stable during the quarter with business continuing from existing customers, including the defense OEM manufacturers. The industry outlook is encouraging. Electronics exports are up about 39% this fiscal year. Domestic component manufacturing continues to deepen. The defense budget has increased with a clear emphasis on domestic procurement, and electric vehicle registrations are growing at nearly 90%. These trends are expanding the need for EMI/EMC, reliability, and certification testing. As shared As shared on our earlier calls, we have expanded our Hyderabad capacity
Harita Vasireddi (Vimta Labs Ltd): clinical research during Q3 and Q4. This is supported by a healthy pipeline of active customer discussions on proposals. The pace of improvement will depend on the conversion of these discussions into executable projects, which remains our key operational priority. Our priorities are clear. We must strengthen growth in our established businesses, build a commercial contribution from biologics, and translate customer engagement into revenue. The improvement in preclinical and clinical services, the initial revenue from biologics, and the recovery in export, import-linked food samples gives us a solid base to build upon. The broader growth in pharmaceutical exports, electronics manufacturing, defense localization, and electric mobility reinforces the long-term opportunities across our portfolio. While regulatory complexity, talent availability, and competitive intensity require continued focus, the industry's long-term fundamentals remain favorable. We are confident in the capabilities we have built and their potential to deliver sustainable growth. And we will continue to keep you transparently informed of our progress. Thank you for your continued interest and support. I will now hand over to our CFO to discuss the financial performance, following which we will be happy to take your questions. Thank you.
Siva Rama Krishna Kambhampati (Vimta Labs Ltd): Thank you, ma'am. Again, a very good afternoon, everyone. Thank you for joining the Q2 and H1 FY '27 earnings call. I will begin by presenting an overview of our financial performance for the quarter and half-year ended September 30th, 2026. Following that, we'll be taking questions. I'll start with the financial highlights for the quarter. Total income for Q2 FY '27 stood at 1,149 million as compared to 1,045 million in Q2 FY '26, up by 9.9% year-on-year. EBITDA stood at 408 million in Q2 FY '27 as compared to 369 million in Q2 FY '26, up by 10.5% year-on-year. EBITDA margins for the quarter stood at 35.5%. Profit after tax in Q2 FY '27 stood at 206 million as compared to 199 million in Q2 FY '26, a growth of 3.5% year-on-year. PAT margins for the quarter stood at 17.9%. For the half year, total income for H1 FY '27 stood at 2,278 million as compared to 2,038 million in H1 FY '26, up 11.8% year-on-year. EBITDA stood at 819 million in H1 FY '27 as compared to 723 million in H1 FY '26, up by 13.2% year-on-year. EBITDA margins for the quarter stood at EBITDA margins for the half year stood at 36%. PAT in H1 FY '27 stood at 417 million as compared to 388 million in H1 FY '26, a growth of 7.3% year-on-year. PAT margins stood at 18.3%. Coming to balance sheet, we continue to have a net debt-free balance sheet with cash and cash equivalents of 701 million. As stated in our last conference call, we have budgeted approximately rupees 80 crores for CapEx for going FY '27, which includes a maintenance CapEx of around 45 to 50 crores. The remaining investments will primarily focus on strengthening our analytical capabilities and expanding select service offerings. However, I'd like to emphasize that our capital allocation philosophy remains highly disciplined. Planned investments will be phased based on business visibility, customer demand, and project level requirements. With that, we can now open the floor for Q&A. Thank you.
Moderator (Systematix Institutional Equities): Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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. The first question comes from the line of Aditya Chheda from InCred Asset Management. Please go ahead.
Aditya Chheda (InCred Asset Management): Hi, so the question is on growth. The revenue growth is down to 10% in Q2 versus 20% in 20 six after a record CapEx of 100 crores last year. So, if you can throw some outlook on the utilization of the new capacity and what revenues it will support at maturity. And if you have any outlook on the revenue growth. And the second question is on the gross margins and other expenses, whether there was any reclass- classification between the two lines. If not, if you can explain the you know, what drove the decline in gross margins, whether it is service mix or pricing pressure, etc. in your part.
Harita Vasireddi (Vimta Labs Ltd): Regarding the revenue growth, I completely agree with you that it has been more or less stable, but the reasons are more external rather than anything to do with Vimta's ability to deliver growth. We see a certain lull in the R&D pipelines on the pharma side. And this lull is not something that happened just in Q2. So, we've been observing this even in Q1. But we now see signs of recovery. The requests for proposals have started picking up in the previous months, and we're we're optimistic that the rise in the inquiries and the RFPs that we have submitted will be converting to executable projects in the near future. So, as such, we don't give out any outlook for the future quarters, but optimistically, the future quarters would be better and typically that is the case as well, between H1 and H2. H2 tends to always do better typically. added to pharma, there is a bit of a headwind on food as well, and we have talked about this in Q1 too. The exports and imports of samples are badly affected and given the rise in shipment costs, insurance costs, now, the exporters have been deploying various strategies of shipping. So, where we used to draw, maybe, 20 to 25 samples from a shipment, they are only now drawing about two or three samples. So, that's the kind of reduction that has happened on the export-related samples. Import-related food samples also is was severely impacted. But, we're we're seeing signs of recovery, and we're hopeful that this recovery will continue and hopefully come to normal levels in this quarter or latest by Q4. So, these are some high-level factors due to which we are observing a little bit of flatness quarter-on-quarter. But, this is where the strength of Vimta materializes the strength of our multi-service portfolio which is what we're experiencing now. Because we are diversified, we are able to handle the headwinds coming from some of the directions. Overall, there is still growth and I'm pretty optimistic that in the future we will see better results. Coming to the gross margin, you want to take that Gross margins, there are no reclassifications.
Siva Rama Krishna Kambhampati (Vimta Labs Ltd): The gross margin correction, slightly, is as anticipated we have been discussing in the earlier quarters as well because of the additional capacities that we had installed, it can have, our margins can have slight correction. That's one thing, and the other thing is there is a slight increase in the material consumption as well. So, otherwise, there were no reclassifications in the P&L.
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