Akums Drugs and Pharmaceuticals Limited (AKUMS) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the ACAM Drugs and Pharmaceuticals Ltd. Q2-FI27 Earning Conference Call. As a reminder, all participant lines will be in the listening 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 touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Ankit Jain from ACOM. Thank you, and over to you, sir.

Good afternoon, everyone. Thank you, Sapnali, for introducing me. Welcome, everyone, to ACOM's Q2 FY27 earnings call. I am Ankit Jain, and I head Investor Relations at ACOM Drugs and Pharmaceuticals Limited. On today's call, we are joined by Mr. Sanjeev Jain, Managing Director, Mr. Sandeep Jain, Managing Director, Mr. Sumit Sooth, CFO, Mr. Zavinder Dogras, Deputy CFO, and Mr. Sahil Maheshwari, Head Strategy. I will commence with a standard disclaimer that any discussion on today's call might include certain forward-looking statements which are predictions or projections of future events. Our businesses face several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied in such statements. At ACOMS, we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of any new confirmations, future events, or otherwise. I hope you have had the opportunity to go through our financial results and review our investor predictions that were shared yesterday. I would now like to hand over the call to our Managing Director, Mr. Sandeep, to discuss our comments. Thank you.

Thank you, Ankit. Namaste, everyone, And thank you for joining us today for our Q2FY27 and H1FY27 earnings call. I am pleased to announce another quarter of strong performance by ACOMS, one of the world's leading pharmaceutical CDMO. The performance was driven by double-digit volume growth during the quarter. The revenue grew by more than 30% on year-on-year basis and EBITDA more than doubled during the corresponding period. Even sequentially, the quarter-on-quarter revenue growth stood at an impressive 15% and EBITDA increased by 11.5%. Led by strong order book and improved utilization of newer facilities, the CDMO business achieved a volume growth of more than 20% on September MET basis, showcasing increasing penetration of our offering within the India pharma market. The improved performance is also an indicator of our resilience during times of global handwaids and geocortical uncertainties. While the availability and the prices of input materials remain volatile, the demand outlook for CDMO remains strong. We today operate at healthy utilization levels of above 50%. During the quarter, we successfully integrated the two manufacturing plants acquired from Moriflame. With this, we have strengthened our beauty and personal care play as a fast-growing category in India. To cater to growing demand, we will operationalize a new facility at Bardi. The plant will have oral solids in Phase I with an annual capacity of over 6 billion units, which will be fully operationalized by Q1FY28. With this plant, we will have two plants in Berthi in line with our stated objectives of geographical diversification. We remain steadfast on expanding as well as deepening our global footprints with special emphasis on regulated market. We have two products approved in Europe, eight filed, and over 30 in R&D, which we expect to commercialize over the next three, four years. Our two facilities are EUGMT certified, and few more are in pipeline. Our European CDMO project is progressing as per our stated plans with supplies commencing in FY28. Our JV with the Zambia government is also progressing smoothly with commercialized supplies from the Indian plant scheduled during Q4 FY27. And considering the prolonged shipping time to Zambia, we expect to book revenues during Q1 FY28. The process for setting up the plant in the Zambia is well underway with technical discussions already complete. The plant is expected to become operational in 2029, expanding our manufacturing presence outside India. Our domestic-branded formulation segment had a steady quarter with 8% year-on-year growth in revenue and market improvement in profitability on a sequential basis. We expect the segment to deliver growth on par with IPM by FY28 as the current initiatives start bearing fruits. Our international branded formulations business saw growth accelerating both on year-on-year and quarter-on-quarter basis. It is expected to maintain this momentum going forward in the year and will be key engine to drive ACOM's growth. API segment continued on its journey towards becoming EBITDA break-even as our endeavor continued. The trade generic segment remained EBITDA positive during the quarter with the third straight quarter of achieving profitability. Sustainability is core to incomes in whatever we do. We are proud to announce that our company has an EcoVisic Bronze Medal. We are on our journey to be amongst the top global companies focused on environment, labor rights, ethics, and sustainability. We also won the Water Management Champion Award by CII for green practices. We also successfully transitioned to S4 HANA this quarter. This will provide real-time analytics across key business performances indicators. With a number of initiatives underway, we remain confident in our ability to create long-term shareholder value and delivering positive results. I shall now request our CFO, Mr. Sumit Sooth, to take you through the details financials for the quarter. Over to you, Mr. Sumit.

Thank you, sir. Thank you very much. Good afternoon, everyone. I am pleased to present the financial highlights for the quarter, 30th September, 2026. Revenue on a consolidated basis stood at 1342 crores, an increase of 31.9% year-on-year. Quarter 2 FY26, it was 1,018 crores, and an increase of 15.1% quarter-on-quarter. Q1 FY27, it was 1167 crores. EBITDA for the quarter stood at a healthy 195 crores, a multi-fold increase of 106% year-on-year. Q2 FY26 was 94 crores, and an increase of 11.5% quarter-on-quarter. Q1 FY27 was 175 crores. Margins were healthy at 14.5% as against 9.3% in Q2 FY26 and 15% in Q1 FY27. EBITDA with other income stood at 224 crores, an increase of 76.3% year-on-year, and an increase of 9.1% quarter-on-quarter. Profit after tax stood at 115 crores, an increase of 168.3% year-on-year. Q2 FY26, it was 43 crores, and an increase of 13.5% quarter-on-quarter. Q1 FY27, it stood at 101 crores. If we come to the segment-wise performance, if we look at the CDMO revenue, it stood at 101,150 crores, an increase of 38.6% year-on-year, and an increase of 15.6% quarter-on-quarter. Revenue growth, as explained by Sandeepji, was largely driven by a healthy increase in volumes. EBITDA for the quarter, for this business, stood at 168 crores, an increase of 99.6% year-on-year. For the quarter 2 FY26, it was at 84, 2.9% quarter-on-quarter. Q1 FY27, it stood at 168 crores. Homestead-branded formulations, revenue stood at 132 crores, an increase of 8.2% year-on-year, and an increase of 14.4% quarter-on-quarter. Ebitda for the quarter stood at 24 crores, a decline of 8.9% year-on-year. Q2FI26, it was 26 crores, and an increase of 103% quarter-on-quarter. Q1FI27, it was 12 crores. For the international branded formulation, revenue stood at 44 crores, an increase of 95.2% year-on-year, quarter to FY26, it stood at 22 crores, an increase of 26.7%, quarter-on-quarter, Q1 FY27, it was 35 crores. A bit up for the quarter was at 9.9 crores, an increase of 80.5% and an increase of 48.3, a decrease of 5.4. Thank you, sir.

We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants, you may press star and 1 to ask a question. We have the first question from the line of Saqsham Siyagi from Daswaladu Advisory. Please go ahead.

Hello, am I audible?

Yes, you are audible.

Okay, thanks for the opportunity. So, my first question was that, like, I just wanted an update on the European Zambia business. Like, how is it going and where do we stand currently? In the previous phone call, you mentioned that you expect the Zambia business to deliver a revenue of $25 million. So, I just wanted to know what's the progress so far on that.

Sure. So, this is Sahil Saksham. So, both the businesses, as we have been telling, both are businesses which are well with us. These are confirmed businesses. I'll first take example because that is closer to delivery. So, post the mid-year elections for the president where the current regime was re-elected, soon after it, we went into discussing the purchase order, and we have now received the purchase order. We are in process of now supplying the purchase orders, which we think, post the manufacturing lead time, we should be able to supply them in Q4. Since this, like most of our CDMO is X-Works, right? So, in our factory, once it leaves our warehouse, we book the revenue. It's X works. Here, we have to deliver at Lusaka warehouse of the Zambian government, right? So, the shipping timelines from Haridwar, from where we'll mostly manufacture to Lusaka in Zambia, is roughly 100 and 120 days. So while we will dispatch the goods in Q4, which will be as a goods in transit in our financial accounts, we'll be able to book the revenue once we have a delivery, which will be in Q1. So the business is, as you rightly said, $25 million fully intact with a margin profile which are slightly better than our CDMO margins, right? So, that all remains consistent. And subsequently, when we deliver this, we will again have a discussion on the another 25 million round of supplies committed by the government of Zambia. So, that's on the Zambia business. On the European business, as we said, we have compiled the dozier. The dozier has been filed. While it is up to the regulator, we believe that it could take one or two quarters. Because by the time we receive the approval of the dozier, the plant has been approved from where we do the commercial supplies. So once we have it, the dozier approved by the European authorities, we will go to our partner and then get the purchase orders for it. So maybe in one quarter time, we'll be in a better position to tell you when we start the supplies for Europe. Both of these businesses are confirmed well within our region.

Okay, sir. Understood. That's it. And my second question is only setting up a baddi facility. Like, what's the current status and how much K-PET is it going to take to establish the facility?

Sure. So, baddi is baddi, which is a second plant in baddi, which the MDs are also mentioned in his opening remark. So, this is a large facility which we'll commission, right? So in the phase one of it, we will start with oral solids, which we'll have across various forms of tablets. Then we'll have another phase of it, which will contribute another 6 billion odd tablets. So we'll have roughly 12 billion tablets from this facility. Apart from this, we are also planning some other doses forms within this facility itself. So this will, as I said, this is a large facility, the phase one of which will be operational in the next three, four months. Subsequently, the other phases of this. So, broadly, this is what we'll do. On the CAPEX, as we mature the facility, we will let you know. But broadly, what we have seen is our CAPEX, usually what we do observe in oral solids, we usually have three times the turn in our gross block.

And how are you planning to fund that? Like, is it going to get funded internally or you are trying to raise debt for that?

You know, we have the flexibility of raising debt and we have our own funds. I mentioned during our presentation that the company sits on a healthy free guide flow. We will weigh our options of what is more beneficial if the loans are available at lower the cost of our investment. We'll take loans, otherwise we'll...

Okay, sir. Understood, sir. And lastly, I just wanted to get an update on the API segment since its contribution to the overall revenue is just 2.1%. So, how are we planning to improve that and by when can we expect to see a growth in that contribution?

Sure. So, I think, as we said, so one is percent of revenue to the overall business. So, while the CDMO is a far-going, right, we've seen 20% volume growth over four quarters now. The coming quarters also look healthy and encouraging, right? So, and then we'll have Zambia, then we'll have Europe, then all the efforts on the European. So, can the percentage of API in the overall scheme of things dramatically move up? Not in the near term. The focus of the management of gross margins and focusing on general products which have better gross margins. And secondly, also the geographies which we sell. Today, almost 90-92% of our revenue comes from the Indian markets, right? We have two CPs which are approved. Two more CPs are in pipeline. Also, we have our EDQM, which is a European audit, which we conducted, right, of receiving approval, right? So, all of those things will help us diversify the products as well as diversify the geography, right? So, based upon which we see.

Okay. So, do we have any rough timeline by when we can expect this, you know, there's an improvement or contribution of this API segment?

So, no timelines as of now. I think consistently around.

Okay, sir. Thank you very much, and all the best for the next quarter.

Thank you. We have the next question from the line of Abhi Chan from AJ Capital. Please go ahead.

Hi, good afternoon. Hope I'm audible.

Yes, you're audible, sir.

Congratulations on a good pair of numbers. My first question is that just in terms of the, you know, H1, F527 revenue and EBITDA, I wanted to understand what part of it was recognized against the, you know, 100 million advance that you have, including product development revenue under the input method, And what will the cash and non-cash split of European revenue be like between F528 to F530 when the revenue realization starts coming in from the business?

Let's first come to the accounting for the European contract, right? So, the revenue recognition starts happening at the time when we have the dozier approval, right? So, typically, if the plants are approved and the dozier is approved, then the revenue gets recognized. Pre-preparation for this is the capital investment in the plant, trying to do the work at the R&D centers to have a quality product, and then you start revenue recognition once you have your plants ready. Now, this will more be a composite accounting because you'll first have to look at how much is already spent on those endeavors, and then how do you spread it over the contract period. This is slightly complex because you're also earning interest on the money that you've got, right? While you see in a balance sheet, there's a notional interest cost also. So, largely, mostly from the time when you start supplying and when you get your approval. So, you will probably see an abnormal revenue coming when you get your plant approval. So, typically, that's how the revenue regulation will happen. If you have anything else, I'm happy to answer.

All right. No, so just building on, so as of now, in the H1 figures, we don't see any impact of this. No, no, no. In the P&L. Okay. My second question builds on that. Sorry.

I said there's nothing that's built.

Okay. So all of that is sitting in the balance sheet I'm reviewing right now. My second question builds on that only that, you know, the interest income is about 20% of the PVT. And I think it's only advanced. So, what happens to other income and to OCF as the deposits are used, FY28 onwards, when this commercialization starts kicking in and coming in the P&L?

So, what typically happens is that because you've got an advance, right? So, the advance will be proportionately used over the contract period. Let's say if the contract is for 60 months, right? Right. So you will you will probably have the have the advance, which is the 80 million, which is left off the first 20 million that will probably get set off and the remaining money will start coming in with the supplies. Right. So this has to be proportionately done. As I said, it's a detailed working. Once we have the approvals, we'll have it out in the notes of the balance sheet that we will have.

Right, sir. No, I understand that. Lastly, sir, just a hygiene question. I just wanted some update from the management on this, you know, one state BC Shopal notice that was there for the FI 90 to 25-year period. Any update that you can provide to the investors and potential investors about what amount is in dispute and have you made any provision on the balance sheet?

No, so this is the NPPA disclosure that we made is what you're talking about, right? Yeah, so if you look at the disclosure, we clearly mentioned that we are doing job work for a marketing company, right? And in the disclosure, we clearly mentioned that the contract with that company states that anything that comes which is on account of NBP or others is not our liability. So, because the way the notice was issued both to us and them, as for the LODR, we are supposed to make a disclosure. So, we do not have any financial liability. It's clearly mentioned over here.

All right. So, no provisioning, sir.

No provisioning. No, nothing at all, sir. Nothing at all.

That's it from my side, sir. And thank you. And all the best. Thank you. Thank you.

Thank you. We have the next question from the line of Mead Bhuva from Antiquity Ventures and Partnerships. Please go ahead.

Yeah, hi. Good. I have a couple of questions. My first question is on the KPEX plans on the government. So, can you please give some numbers on how much KPEX will you be doing in the next three years, annuals?

So, the historic numbers are there in the financials, but for H1, because we, as Sahil was just mentioning, and Sandeepji mentioned about the Oriflame acquisition, and there has been an investment in the Bhatti plant of around 43-odd crores. The Oriflame deal which was in public domain was, for this quarter, as I mentioned, there is an investment of 200, but the required plants, as I keep mentioning, that on a 100, if we are spending 5% on the maintenance, capping 100 crores gets into the plants, right? And there has been a small investment in our HANA also. So that's about it.

Got it, got it. On the growth side of domestic branded and international branded, do you provide any growth numbers for the coming years and the margin size?

So, while we don't specifically call out any guidances on any of our business verticals, right, but the general tone is both of the businesses are performing fine, right? You have the international business segment, which is one of our focus business segments as we diversify from Indian markets, right? Right. Not just in the core business, core geographies, which we are currently present, which is African Southeast Asia, the intent is can we also move beyond into the further regulated markets across Latin America, Middle East, as well as Europe. Right. So this is a business which we continue to do. And it's a high EBITDA business, which we do. Right. The second is the domestic branded business, where we today are largely strong in gynecology, followed by cardiology. So these are the two business segments that we focus on. We today have almost 1,600 people on ground. We recently added people, as we mentioned in our last call. So we have grown roughly 8% year on year in this business, and the endeavor is how can we maintain an 8% to 10% growth in this business as well. With continued improvements in PCPM and profitability, right? So this is how we look at these two businesses which form Intexel core part of our ICMS group, which have a better beta profile than the core manufacturing business.

Good. Thank you so much. That's it for me.

Thank you. A reminder to all the participants, you may press star and one to ask a question. We have the next question from the line of Divya Daga from Bidget Global Securities. Please go ahead.

Hi, sir. I have a couple of questions. First, can I note the contribution in revenue and PAC from Oriflame?

Let me explain. So, Oriflame, we bought it at around 56 crores, right? This is again, as I was mentioning to an earlier question, we expect that Peak should deliver a 3x revenue for us, right? As we said, we are entering into color cosmetics, so we are building up revenues. We also have existing manufacturing revenues that would also come in from Oriflame, right? So this year largely is a period where we will build upon customers and revenues, and gradually this business in a couple of years should start meaningfully contributing.

What was the contribution on patch level from Oriflame?

Negligible, negligible.

Okay, my next question is, as our buddy facility, Capex, happens, I want to know how much contribution in top line will be there from it, and when will it start?

So, buddy, as I said, will gradually, in three phases, operationalize this facility, right? Right. If we speak about it, this facility should deliver at least 10 to 15% of our CDMO business in three years from now. So this is how we look at this business.

Okay. And my last question is, as I can see throughout phone calls, there is some delay in Zambia's execution, I guess?

So, execution is on track. This is what we are mentioning is since there were midday or regular elections for the presidents, post which you would understand we could only get a government contract post which, right? So, then it was extensively fast-tracked. We received, discussed, negotiated the purchase order, the quantities, the pricing. Post which we have now received it, it is within our bag. We are in process of procuring the raw materials, then manufacturing it, which will take three-odd months for us to do. And once we do it, we'll ship it, which will again take three to four months. So, we'll dispatch it in Q4, book revenues in Q1.

Okay. So, is there any target for this year's top line? How much are we going to?

As we mentioned, this year, we don't expect top lines from Zambia to come.

Of course, but in general, overall top lines?

No, we don't give very specific guidances on this. The business remains healthy as we have discussed all the business segments. So, the businesses remain healthy across all.

Okay, that's all I have. Thank you so much.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address all the questions from the participants in the question queue, we request you to kindly limit your questions to two world participants. If you have a follow-up question, please rejoin the queue again. We will take the next question from the line of Vansh Gupta from Prasant Capital. Please go ahead.

Thank you for the opportunity. Am I audible?

Yes, I'm audible, sir.

Thank you. A couple of questions from my end. I see that our CDMO revenue has gotten a revival since the last two or three quarters. I just wanted to get an understanding of which therapeutic area specificity has been in this growth of ours. I mean, is our portfolio tilted heavily towards anti-infectives, cardiac segment? If you could share some light on that, please.

So, right. So, I correct. It's been performing well for the four or five quarters now. So, on the therapy segments, we are largely a contract manufacturer, right? So, what matters to us is whether it's an injectable, is it a vial, is it a tablet, is it an oral liquid, right? Right. Therapy has little meaning for us in one sense. Right. Also, since we almost have a 10, 11 percent market share within the Indian market as a overall. Right. So we broadly mimic the market in a way. Right. So our large contribution would be therapies which are large in the Indian market only. And similarly would be our contribution across the unit dosage forms. Right. So to answer your question, we don't have any tilt towards any therapies.

And is there any specific tailwind that's helping us increase the volume in our CDMO business for the last two, three quarters? I understand that, of course, the IPM has been growing well as well. We've had record volume growth this quarter. So I just wanted to get some understanding on what is driving the volume growth in our CDMO business.

So, while we did a deep analysis into this, for the last four quarters, year on year, we have been, for every quarter, delivering almost a 20% volume growth now, right? So, this is across existing as well as new customers, right? Existing also are running well. This is across our prescription-oriented customers, our private-level customers, right, regional customers, right? So, this is something which is, as a basket in the whole IPM, we are seeing a growth on. On top of it, since we have added cosmetics, our nutra facilities also there, right? So, beyond pharma as well, we would soon show growth, right? So, that's what I wish to submit.

You got it, sir. And so, for our domestic branded formulation business, I believe you've been guiding for about double-digit volume growth for the past two or three quarters. However, when you look at our top-line growth in the segment, it's been about 7-8% for the past two quarters. Are you facing any challenges or headwinds that are preventing us from going in double digits? And also, if you can share the current PCPM of your domestic branded businesses, Facebook, that would be great, sir.

Sure. So, once, maybe, we always would have guided volumes on our CDMO business, right? For individually, for marketing business, we don't guide volume growth. But you're right, our growth has been a single high-digit, 82 odd percent that we do. This is what we think will remain as we speak, right? Near to the IPM is what we think our volume growth will be. Specifically on PCPM, PCPM is roughly 2.5 for us, right? As I said, we have gynae, which is our most important therapy, almost 45% of our revenues come from gynae, where we have three divisions, which are mature divisions, where the PCPM is almost above 3.2, right? Then we have cardio, which is our large division. We have, as I said, had 200 new field force members joining us in Q1, which have dragged overall Acumetis PCPM down to 2.5, but the endeavor obviously remains how to be. Have a better Physician Connect, launch better products in the market, and subsequently, as the divisions mature, how can we achieve a PCPM up of 3?

And, sir, have we seen any improvement in our PCPM sequentially for the last 90 quarters?

So, as I said, we have had new 200-odd folks which has temporarily resulted in a dip, but the mature divisions still operate at a piece of number of three, which over the last three, four years has meaningfully increased. If you would go through it, it has sizably increased.

Understood, sir. And also, sir, in the prior quotas, we had discussed that you were working on some fast-launch products. Is there any update on the same?

So, you said fast-launch products?

First to launch, first to launch.

In some niche markets, we... So these are, within the CDMO businesses, as we would have communicated...

That's right, that's right, sir.

We have DCGI approvals, right? So we usually get almost two to three DCJs every month, right? So which takes our tally to almost 30-odd DCJs annually, right? So these are the products which are early in the market, maybe first, second order here in the market, who would have received it? And that always remains our focus, right? R&D, if you see, is upward of 3% of our CDMO revenues investment, which flows into, a part of it flows into these new launches.

That's all for mine. Thank you.

Thank you. A reminder to all the participants, we request you to kindly limit your questions to two per participant. If you have a follow-up question, please rejoin the queue again. We have the next question from the line of Akshay Shah from VVD Asset Managers, LLP. Please go ahead.

Thank you for the opportunity. And Hartej, congratulations for excellent execution in CDMO businesses. Sir, my question is that can you give some highlights on how the API prices are moving right now and how is it expected to move in next six months?

Sure. So, API prices have gone up, right? If you really look at it, quarter on quarter, these have moved roughly 2% to 3%, while if we compare it to last quarter two, these would have moved up by 5% to 7% as a basket, right? So this is on the API prices. While one can only guess, these are mostly traded as commodities and extensively depend upon the input material costs, which is basic materials in KSM, and also depend on husk and solvents. So these prices have also gone up dramatically. We expect there should be some slight upward movements only in the APA prices, at least in this quarter. And that's how we view the two, three months. Subsequently, we'll see how the quarter four or January onwards the pricing will look. But as of now, this is on a slight upward trajectory only.

And, sir, I see that your CDMO business has grown roughly 35% to 39% in terms of revenue. And you say that the ETI prices have moved by 5% to 6%. So, volume growth is more than 20% in that case?

Yes. So, as I also mentioned in my earlier call, for the last four quarters, every quarter in or year, compared to the previous quarter, last fiscal, we have gone above 20% in our volume.

So, can you share what was the volume growth in this quarter, why or why?

So, broadly, this is above 20%. So, mid-wise as well as quarter-wise, this should be above 20%.

Okay. Thank you so much.

Thank you. We have the next question from the line of Praveen Jayaraman from Evendus Spark Institutional Equities. Please go ahead.

Hello, I'm your audible.

Yes, you're audible.

Yeah, thanks for the opportunity. Sir, my first question would be on the R&D side. What would be your R&D expense as a percentage of our top line? And what could be a steady-state R&D expense?

This is broadly 3% of our revenues. We largely do roughly 130-odd crores in our R&D, right? The whole endeavor for R&D is how can we have good products identified, researched upon. As we move into the regulated markets, we expect this R&D expense also to move up, right? Right, but broadly, three-odd percent, three-and-a-half percent is something for the seed from the CDMO revenue that we expect to reinvest into quality pipeline assets.

What would be the manpower behind this, sir, in terms of count?

We broadly have 375 scientists and roughly 100-odd people who support the R&D apart from scientists, right? So that is broadly our pool of R&D manpower.

So, in terms of the major contracts which we speak upon, we examine the European one, which will be the upcoming ones. Do we have like a big similar contracts in pipeline, which we are working on, which would be the upcoming ones in the near future, which we could end up on?

So, there is nothing which we have disclosed as of now, right? So, I'll rest over here. While the endeavor always remains, how do we grow the business? There is nothing which we have disclosed as of now.

Most of my other questions are answered, sir. So, thanks for your time. Thank you for your opportunity. Please update.

Thank you. A reminder to all the participants, you may press star and 1 to ask a question. We have the next question from the line of Sangeeta Purushuttam from Cogito Advisors. Please go ahead.

Yeah, hi. Good afternoon. Can you hear me? Yes, you are audible. Okay. Firstly, congratulations for a great set of numbers. I have two questions. One is that as far as the CDMO business is concerned, what should we take as an outlook in terms of growth for the rest of the year as well as for next year? If you could give some color on that. The second question is on the domestic branded formulation business. You know, if you could give us some sense of, you know, what is actually happening there? Why is it that, you know, we have seen a dip in the EBITDA? Are there any challenges that you're looking at which are likely to get resolved going forward? We're just some color on what's happening there, and what are your expectations of this business?

Sure. So I'll address both. First is on the CDMO side of the business, right? So our top line is governed by two things, volume and price, right? As I just mentioned, price is on a slight upward trend, but we really don't know how the long-term trading of the API prices would look like. On the volumes, as of now, as I said, we have seen multiple quarters where the volume growth was significant, and we have a 60-odd day of order cycle visibility, right? So, for the current quarter as well, we see good traction in our penetration in the CDMO services, right? So, the volume will continue. As we progress, we'll be able to tell, but there's no reason why to believe that the volume growth will not be there in the IP market, right? So, that's there on the CDMO segment. On the Acumen test, if you really look at on the gross margin level, this has continued maintaining a 74-75% gross margin business, right? So, most of our EBITDA drag was due to a 1,600 MR count, on top of which there is a 450 line manager across first, second, and third line managers, right? So, the idea today is, since it's a growing business, it's a sub-500-odd, 57th-odd rank in India, right? The whole idea is how can we further grow this business vertical? We are investing into our manpower. We are investing into launching new products. Our new product launch has almost contributed half of our growth, right? So, these are the initiatives which we are taking from a long-term vision of how do we see this company three or four years down the line, right? So, and hence, we are doing all the right initiatives which will help us grow this. Not specifically looking at quarter-to-quarter, whether it was 10 or 12-to-24 or quarter-bitda. The investments are going into manpower, which I would like to say.

Okay. And if I can just squeeze in a related question, how do the trade generics then fit into the picture? You know, what do you expect from that business?

Trade generics was, if we had to just have a historical flavor onto it, trade generics was a key business segment for us, which at one point in time even contributed above 400-odd crores for us, right? It added two major challenges. One was there was a huge working capital cycle which was involved in this business, and secondly, the margins were not supportive of driving this long-term growth, right? So we decided to prune down this business, which was well stated as our objective for FI25, and subsequently in FI26, we also had time where we reduced EBITDA losses. This quarter, for the last quarter, right, we have been doing it. Now, what we have done is, so trade generics will also have to appreciate is that there might be an opportunity in the future where trade generics get sizable momentum, right? So, there have been talks around that you would have discontinuation of branded play, right? You had talks around Tier 3, Tier 4 geographies where the supply network would be built around the resilience in supply chains, all of this, right? So we have pockets of the businesses which are profitable, extremely lean structure. So if you see, the idea is not to lose money over there, but to keep a point in the door that if any time this business becomes a meaningful opportunity, Thank you very much.

Ladies and gentlemen, that was the last question. And with that, we conclude the question and answer session. I now hand the conference over to Mr. Ankit Jain for the closing comment.

Thank you, everyone, for attending the earnings call for ACOMS. If you have any remaining questions, you can reach out to the Investor Relations team. Thank you, and have a good day.

Thank you, everyone. Thank you very much.

Thank you, members of the management. On behalf of the ACOM Drugs and Pharmaceuticals Limited, we conclude this conference. Thank you, everyone, for joining with us today, and you may now disconnect your line.