Operator
Ladies and gentlemen, good day and welcome to the Jaxampal Pharmaceuticals Ltd. Q2 FY27 Earnings Conference Call hosted by Go India Advisors. 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, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Sonia Chajal from Go India Advisors. Thank you, and over to you, ma'am.
Good day, everyone, and welcome to Q2 and H1 FY27 Earnings Con Call of Jacksonville Pharmaceuticals Limited. We have on call with us Mr. Manish Gupta, Managing Director, Mr. Amrut Medhikar, Chief Operating Officer, and Mr. Nirav Vora, Chief Financial Officer. Please be reminded that discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk pertaining to the business. I now request the management to take us to the scene and provide some more insight on the quarter and half year gone by. With that, we will open the floor to Q&A. Thank you and over to you, sir.
Yes, thank you, Somya, and good afternoon, everyone, and thank you for joining us. If I have to describe the last six months in one statement, it will be that this is a period of a bolder Jetson pass. Not only have we scaled up our ambitions, but we are also backing it up with investments, both in the organic front, without losing sight of shareholder interest. On the back of strong growth in our power brands, even as we invested disproportionately in new launches, in higher growth areas, as well as organization building. We completed two acquisitions, which provide us now with additional growth levers. We also take pride in the way we have been able to structure the transactions, which derisks us and retains the strength of our balance sheet for further initiatives. Our vision is to be a Rs. 500 crore organization by FI 2028, a multi-channel asset-like specialty pharma platform that combines strong niche brands driven by disciplined execution and value equity. Over the last six months, every lever of that strategy came that acceleration is in play with organic momentum, inorganic scale, and financial strength. In the first six months, our organic growth has been 9.3%. While this is faster than what we did last year, it still is short of both our potential and expected. We are behind the scenes around the same, and we stay positive that the growth will only accelerate going forward. As mentioned earlier, the period also saw a scale investment in our people and building new capabilities in the organization, as also integration of our acquisitions. While the wellness portfolio became part of JPL portfolio from 1st October, we fully prepared ourselves for the same in Q2 itself for an effective day-one integration. Our EBITDA margins in H1 were at 22.9% up 40 pips even after these enhanced investments. The trajectory is clear. We expect quality growth in Q3 and we are on track of emission 500 crores by 2.3% of 135 crores and successful inorganic growth. We are confident of fast tracking this journey through meaningful and attractive transactions. To our Chief Operating Officer, Amrit, to take you through the business performance has also progressed on our acquisitions.
And Kru, which is our dermatology brand, grew much higher in the market, as well as Ukroma in dermatology segment also outweighed the market. Now you can see that this growth is largely led by gynecology, where we engage around 35,000 gynecologists, which is most of the universe. Orthopedics and dermatology remain our second and third driver, with prescription momentum and doctor engagement both strengthening in these. Second point is about inorganic playbook. We acquired, it took us into dermatology, and it is now fully integrated in our platform. That is the proof of concept, and that is what we are running, the hospital and institutional channel. It's our very first quarter with us. We have consolidated procurement and distribution along with Jetsampal. This month has two established brands, one in mechanics and second in respiratory, in six states in India, and around 10,000 additional unique boxes have been added. It is already integrated with one of our largest business. The training of the brands will be cross-sold through our existing field force and deeper penetration planned in Madhya Pradesh, Kutya Pradesh, and Karnataka. Early results are encouraging with MR productivity already up by around 10% and our target is to go beyond the threshold of productivity that we aspire for. Structured training and better field force stability are showing up in our doctor coverage, call quality as well as territory productivity. We have also seen launches every
10% people, marketing, and medical inputs are consolidated with a margin stood at 19.3%. As the bottom line, stand-down tax stood at 13 crore, while consolidated tax was 12 crore, with a margin of 15.5% and 12.8% respectively. Despite the enhanced dividend payout and our ongoing investments in acquisitions, the company continues We continue to maintain a strong cash position with cash and bank balance of 135 crores, and we continue to generate net operating cash of 25 crores at a consolidated level during the first half of FY27. Following the completion of wellness portfolio acquisition and the discharge of parts concentration during October 26, our focus is now on leveraging combined commercial capability and realizing business synergies. We are confident that these initiatives will support business performance in Q3 and continue to contribute sustainable growth over the longer term. With that, I conclude my comments on the financial performance. Thank you, and we shall now open the floor for questions and answers. Thank you.
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Ankur Kumar with Alpha Capital. Please go ahead.
Hello, sir. Thank you for taking my questions. Sir, I want you to understand on this 500 crore revenue vision for the next year. So, currently, we are around 300 crore type on the standalone side. And we have been growing at like 10% CAGR for the last couple of years. And the acquired businesses, I think, are around 75 crore type annual growth rate. So, given these numbers and this 10% type growth rate, the 500 is looking like a tall ask. Sir, can you please explain how are we estimating that?
So, this obviously is an aspirational number, but we have a very clear road map on how to achieve it. And this is without considering any further acquisitions beyond what we have already done. So, while historically, our last six months, we have been growing at 9.3%, obviously, the path doesn't mean it will stay at that level. We are certainly confident of growing faster. We have very clear and distinct plans for that. A lot of investment has been already made, both at the product front, new launches, as also on the people front. And as Amrit mentioned, and even I alluded to, we will be seeing faster growth going forward. So it's a pure organic growth that will lead to these numbers over the next two years. Nothing beyond that. It's all about execution and strategic execution. Yes, we do agree that the year has gone by, but things have already started looking up.
I mean, as Manish said, once on month also, our trajectory has been relatively better. In fact, I think much better in the basket and driven by the same team.
Got it, sir. And sir, on the margin side, what are our estimates for when we are reaching this 500th road? Because I think standalone is still quite good in terms of 20 plus margins. But in console side, this quarter, I think there is not much contribution from subsidiary. There is revenue contribution, but profit side, it's not much.
So, I think on a blended basis, we are confident of reaching the 22% mark again. Standard one, obviously, will be much higher. But we would appreciate that hospital business is the lower margin business. It will stay low on margin business, but it will become far more profitable than where it is to. Confident of over 22% EBITDA margin for the collective business.
Got it, sir. And, sir, in Q3 side, you are estimating 100 plus crore revenue. So, can margin go to 20% from Q3 onwards or like it will take time? How are we thinking on that, sir?
Q3 will definitely deliver more than 22%. It's generally Q4, which is a bit of a drag in India, which pulls down the margin. But otherwise, on the three quarters, we are quite confident. Okay, I'm probably, yeah, on a consolidated basis, we'll be very close to 22%, if not more.
22%? On the consoles here, do you mean, as in we will be able to improve margins on the hospital business and the other business?
Yeah, collectively. Individually, hospitals won't reach those levels. Let's be clear about it.
Got it, sir. So, last question will be on the stand side. You have given quite details in terms of products. So, what is our expansion strategy? Are we looking for adding more products or like we are looking for more expansion in these existing products?
So in quarter three, as I mentioned, for the acquired business of Equitas, we have planned a new brand, which should possibly get commercialized in November end, and go-to market can be in the first week of December. But other businesses, other vertical strategies, we don't have any plans of any new product launches in quarter three. We have planned some launches in quarter So that's about the new product. And therefore, as far as expansion is considered, also we are not planning any method or addition to our current budgeted numbers.
Thank you, sir. Thank you and all the rest. Thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Our next question comes from the line of Sajal Kapoor with Anti-Fragile Thinking. Please go ahead.
Yeah, thank you for taking my questions. Hi, Manish, Amrit, and Nirav. Last November, so same time last year, I nudged you to be more aggressive on inorganic growth, and you have delivered. So, Equitas and Group Pharma in a single quarter. So, credit where it's due. But that has created another problem for me as an investor, and I will try and explain where I'm coming from. So, Amrit, in January, when we interacted, you guided to upward of 10% growth and 1.5x IPM. That's the number that you gave on that call in January earlier this year. Since then, the organic has come in at 10, 9, and 9.3 over the last three quarters, While PharmaRack shows 12% to 19%. Yeah, and from Q3, Amrit, Group Pharma comes in through a BTA, right? So it will sit inside a standalone, and standalone then stops being a clean, organic number. So my humble request is so that we as investors can track both organic and inorganic separately, Starting with the Q3 deck, will you be kind enough to introduce a separate line for organic growth? Thank you.
Yeah, I think that we have been always very open in our communication, and that information will be provided in terms of split between organic and inorganic growth. It will not be like a separate line item, but it will be part of the commentary.
So, schedule the numbers, as you see. However, those numbers will be split into two parts, because group has been present only in six states. Because outside those six geographies, it's a practically ground zero launch product of the MR. There will be some days, which is roughly around 1.75 crores of years, that we have been plattish at around 10%. Your play prescription is upward of 10 percentage, contributing around 11-11.5%. However, this is also lower than my own expectations, and completely changed the trajectory, at least double-tently set up the platform to take it forward. In the game, right?
I mean, if the stock performs, if the organization does better, you are the direct beneficiary yourself. So you have, quote-unquote, you know, ownership-led soul in the game, as they say. Okay. With that context, projecting five years out, what kind of Jackson Pal will make you feel a tad disappointed that, you know, this is not the kind of Jackson Pal Pharma we envisaged and we have not delivered, you know, against our own sort of expectations, forget shareholders. I am just trying to understand that kind of vision for Jacksonville Pharma five years Nothing about next quarter or next year. Forget all that.
Completely appreciate, Sajal. I think Manish has mentioned it twice in his opening statement that we are completely focused currently on our 500 crore's vision of mission 2028. That cannot be called as a LRP or a long-range planning.
We have multiple paths to decide. Currently, we are a singular market company that has its strength challenges. So, we are obviously shareholders and shareholders, the critical shareholders on what could be the next five-year journey. And that may entail us beyond what we are doing today. So, ready with the plan, but there may be certain broadening of strategy as we go along.
Manish, and lastly, just from a business model perspective, there are some smaller companies in India, so maybe I can name RPG Life for the context here. They are also doubling down on APIs because they believe that back-end and owning the back-end is very relevant and increasingly important from an exports or outside India perspective. Currently, I know our focus is purely domestic, and in that context, there are some very good CMOs in India where you can just leverage manufacturing and outsource all of it. But in grand scheme of things, if we have to grow bigger and even enter emerging markets in Africa or elsewhere, how do you see the back end from a business model perspective? Are you comfortable not owning the back end IED API and continue to play on that outsourcing asset light model? Or you reckon that might change in future, if not next year?
Yeah, Sajal, that's what I was alluding to when I gave my comments after Amrut, that we are very clear on the next two years journey, but if we were to take it further, which way to end, because without manufacturing, you cannot do anything outside India, okay, be it emerging markets or regulated markets, and whether it is formulation manufacturing or EPI manufacturing, no doors are open. Unless you have something to do anything outside India. So that's a journey which we are yet to decide. Clear plan for next two years. But we are in discussion with our promoters, as I mentioned, and our board in terms of taking the next steps. Because fortunately, in terms of where we are, both in terms of capital, as also capital commitment, we have lots and lots of flexibility. And there are a fair bit of country in either of the directions we may choose to take. So, it's eased on the matter. We do not have a clear answer for you yet, but it will go one of the ways that you are potentially eluding.
No, that's perfect. That's perfect. And promoter-wise, Manish, we have one of the best promoters available in the country. So that should not be a problem. And I see yourself as a promoter as well. So I think, yeah, promoter, we have got best in class. And hopefully with a little bit of luck, we should be able to get there. But yeah, thank you for all the responses and all the very best. That's all.
Operator
Participants who wish to ask questions, may please press star and one.
Operator
Our next question is from the line of Minghe Damaniya from Biden Asset Management. Please go ahead. Yeah.
Yeah. Hi. So I have a question on your actuation, Meghuk. So first of all, it is when you think about or when you acquired Equitas Healthcare or the Wellness Group for your group, Parma. I wanted to understand the rationale between selecting those two specific companies or assets rather than just going deeper and stronger in your core areas like maybe a Gainab or a Dermat, maybe improve your rank in your covered market, because one can assume that the synergy benefit just going deeper into your own portfolio might be a lot more operative in value. I want you to understand why you can turn out to two very different core areas when you can just go deeper, considering this challenge.
Partly respond to it, and then Amrit will give advice that any acquisition is a bit of strategy and also a bit of opportunity. You may wish for a lot of things to be done, but it has to fit your strategy as also to pay for it. So, yes, we are not open to acquisitions in Guinea and also where we are already strong. Those are certainly desirable, but there were very few opportunities or very expensive opportunities in that area. We didn't look at some, but clearly they were outside our scope. Now, coming to specific these two assets, Amrath, if you can give a clear rationale.
Mr. Damian, first part, let me start with Equitas. For Equitas, if you look at historically, the legacy of Jackson Powell had always been into the tray channel, which is doctors sitting outside the hospital in excess of around 11.5% contribution to hospitals or dispensaries. You are playing corporate chains are now contributing in excess of 11.5%. So that's a huge surge, and that's the area that we wanted to tap immediately before it becomes too late for us. And Equitas provided us that handle, that entry point, because it is a successful player across majority of the popular companies to be able to cross-sell some of the JPL brands, the central brands, into that channel. So, that's the opportunity for us because what we always look at is in the organization area because, one, it's a very old organization, almost similar culturally. So, I get a last and most important, even the familiar in nature for group parma as well as for equitas. And lastly, it's a co-prescription business. So, hopefully, the scale-up will be much easier for us to do in a strength area of Jaskampal. So I hope I answered Mr. Damaniya, both your part of the question.
Yeah, yeah, very right here. My second question is more on, so if you look at the IPM growth, seems like a bulk of the growth is also coming from, let's say, new product introductions into the market. Now, you alluded that you are willing to launch a new product, but have you thought about Maybe in-licensing some of the brands from, let's say, an MNC or like any other comprometer as, like, it's not like an acquisition strategy, but something where you think you can do a much better job than the brand owners currently do.
Yes, yes. So, Mr. Damani, we had always been evaluating those opportunities. However, as Maniji said, that ultimately depends on what are you ready to pay, because most of these in-licensing opportunities, those provide scale to you. But at a very, very low margin. So we have been careful. We are still in the process of evaluating one or two opportunities, which may eventually fructify. We do not know which way it will finally move, but I can say right now. In terms of new product successes, I think if you look at the split of our contribution or growth levers, which is element of price growth, volume growth, and new products, we are completely aligned with the pharma industry in India. So our contribution of new products is equally good, as good as any other therapy company or any other IPM company.
Got it. And my last question, I think a lot of participants have kind of pushed about your organic standalone growth. Would, let's say, a couple of quarters or more, let's say, in the next couple of quarters, would you expect your standalone revenue growth to be in-line or better to the IPM growth rate? Is that a fair reaction to...
Yeah, so I am not providing you a very long-term listing, but quarter three, as we had already committed, we are targeting a three-digit number of crossing 100 crores.
Okay, perfect. Thank you.
Operator
Thank you. Ladies and gentlemen, if you wish to ask questions, you may please press star and one on your touchstone telephones. Our next question comes from the line of Harshil Parekh with BTH Capital. Please go ahead.
Hi, sir. Thanks for the opportunity. Just one question on the group pharma business acquisition. So, this business comes at what margin? Is it like, for example, Aquitas business is at a lower margin, right, the hospital business? So, just wanted to understand the margins for the group pharma business.
It is similar to Jackson Pal, sir.
Operator
Thanks. Thank you.
Operator
Participants, to ask a question, you may please press star and 1. Those who wish to ask questions may press star and 1 at this time. Our next question comes from the line of
Operator
Urmish Shah with MoneyVisers. Please go ahead.
Yeah, thank you for the opportunity. I just have two questions. First one is on the degrowth in IndoorCap and Equidex in terms of brand match. Could you just give me the reason of why we are seeing a degrowth?
These are two different therapy brands. Indocap is primarily GP Physicians and Orthopedic and Rheumatology. These are the top four states of the brand. It had its own challenges because it had been a legacy brand, very old molecule. Thank you. We are trying to make some innovation in terms of packaging as well as in terms of broadening its current. We will see those outcomes happening because execution and go-to-market should GPM should happen somewhere, I think, in November. So we will see that survival of the brand, sir. And the second, this product belongs to a category which is restricted. We can only work on the prescription generation which the team is currently moving on.
On Indocan, and coincidentally, it has not de-grown, but it has grown slower than the market. It's 4 and up. 1% less. 1% less than the market, sir.
But on Equirex, yes, it will be a bit of market-determined growth purely on account of NRX.
So, sir, when you say that the first phase of innovation will bore results in November, so can we expect, at least in the next financial year, that these figures may be improving?
Yes, sir, of course. I mean, all the efforts are on to do that. And I'm very confident that we'll see at least part results in quarter three itself, even though we may have this part.
One question on the product mix. Now, since we have had two acquisitions in terms of Equitas and Group, going two years down the line, three years down the line, and with our vision of 500 crores, what would be the product mix that you envisage in terms of contribution to the top line?
Currently, we will continue to be in the similar therapy area. The only one area which was clearly missing out from Jackson Park was hospitals and critical care portfolio, which has got added. And with that, we have two more big specialties, so to say, which got added. One is critical care specialists themselves, and second is infectious disease specialists in the hospital segment. So, these two got added therapies, which is gynecology, from the contribution point of view, this is the largest contributor for Jacksonville, followed by orthopedics, and then followed by dermatology.
Thank you, sir. Thank you.
Operator
To ask a question, ladies and gentlemen, you may press star and one. Our next question comes from the line of Gulam Soni, an individual investor. Please go ahead.
Hi, sir. Thank you for the opportunity. Can you hear me?
Yes. So, my question is that, sir, we have 287 crores of revenue in FY26. Now, we are expiring for 500 crores in FY28. So, going beyond FY28, are we expecting kind of doubling the debt from FY26 in FY29? So, sir, we had 27 crores of revenue and now we are aspiring for 500 crores of revenue, right, in FY28. So, going beyond FY28, with some operating leverage and that MR strength is also increased and some operational excellence that we have demonstrated in the last two years. So, are we expecting to double the tax from FY26 base?
It is very easy to decipher where the numbers will come, because our model is the same asset light and all, so depreciation and all is never a leakage in our scenario, except in for tax. So, it's very easy to arrive at those numbers. I don't want to tell you whether it is feasible or not. You do the math, you will arrive at the outcomes.
Thank you, sir. My another question was that we have some very good managerial bandwidth in terms of Amruta, sir, and Manish, sir. So beyond 500 crores, what are the brands or kind of therapy areas in chronic or sub-chronic that we are targeting to, you know, make some big brands like the legacy ones from GFS?
So, as I mentioned, sir, for this 500 crore vision, we are currently focused purely on these four therapy areas, which I mentioned, gynec, ortho, dunce. Beyond that, we are exploring opportunities because eventually we want to build an organization which is focused on, we want to reduce our dependence on the acute therapy because those are more cyclical in nature and does not bring sustainable and predictable numbers for us. This is going to be our focus area, and therefore, any opportunity coming our way into the chronic segment, we will certainly evaluate. But as mentioned earlier, the kind of valuation that we have seen for those kind of targets is certainly not what we would like to pay currently.
Operator
Thank you. Ladies and gentlemen, we will now take one last question, which will be from the line of Vansh Gupta with Prescient Capital. Please go ahead. Hi.
Yes, hi. Thank you for the opportunity. Am I audible? Right. Thank you, sir. So, last quarter of the week spoke about the brand premiumization in our portfolio, which I believe the management of that would lead to higher gross margins. However, if I look at our gross margin on the stand-alone business, they've hovered around 60-65% for the last eight-nine quarters. So, would you share some light on what can be like a sustainable gross margin for us going forward?
Your voice is a little bit not audible, sir. If you can, maybe just keep a little away and go a little slow.
Right, sir. I'm audible now.
You are audible, sir. Just speak a little slow. We can decide. Right.
So, sir. So, sir, last quarter, we have spoken about brand criminalization leading to higher gross margins for our business. However, if I look at the gross margins on the standalone business, they have hovered in the range of 64-65% over the last eight, nine quarters. So, can you please share what can be like a sustainable gross margin for us going forward, given that we've also acquired Group Pharma, which is like the 78-80% gross margin business. So, could you shed some light on what can be like a sustainable margin going forward?
So let me answer this. Margin trajectory, or initiating the business from, but that journey will be far slower, and it will nowhere match with JPL cross margin at any point of time.
And the blended part, of course, will be presented in consolidated numbers.
Got it. So just like, directionally, can we expect improvement in our gross margin as well going forward, or should they be in the same region as they are right now, on a consolidated basis?
On a stated basis, we should be closer to where we are in the Q2.
Yeah, because that's the first quarter of consolidation of Equitas.
Got it, sir. And sir, when we talk about brand premiumization, are we essentially referring to like new brands that we are intending to launch? And is it so that we are expecting majority of the bulk of our growth that we're expecting for the rest of the year? Are we expecting bulk of that growth to come from newer products that we're launching? Or are we expecting some existing brands to do well for us?
Obviously, the business is based on the existing brands. New brands will take their own sweet time because these are more trust and credibility-based which will take their own sweet time growth on the new brands because the scale is...
When we are concerned about the improvement in our EBITDAs and our top line in Q3 and I believe Q4 as well, we are expecting bulk of our growth to come from the existing brands. And if that is the case, would you like to share which brands are you bullish on for the remainder of the year?
Currently, the top 10 brands which I mentioned in my opening statement, those brands will contribute majorly for the data.
But there is no specific brand that we believe is going to help carry the majority of the growth.
See, there is, unlike many, many pharma businesses, we are not two brand or one brand driven organization. So, the majority of these brands leaders into their own respective, equally, we are pushing each of those 30% of the business.
Thank you, sir. Can you just give us like the expected timeline for and we can expect that to reflect in other venues as well?
I can't comment on these external audits and market research as the lead and lag is there.
See, they have been 16.8%. 16.8% is our highest pivot that they've shown. I mean, last quarter. Because I just want to also differentiate. Right.
You have to also bear in mind, the IPM data that the agencies provide is on sampling basis. I mean, I will say about what IPM reflects, but yes, we are nowhere as yet near the IPM.
That makes sense. Just one last question on YN, given that it's been a quarter or so since we acquired the Equitas portfolio, are we facing any challenges in the ramp-up of the portfolio?
Not at all. It has rolled out the way exactly we had envisage. So you have to bear in mind that hospital business is a rate-driven, contract-driven business. So contracts are taken for a year, typically. You would also notice that there has been price pressures in the last 12 months, especially on the IP. These are critical care products you can't do much about. So nothing has been a surprise. The actions that we have taken will start reflecting in their financials only from Q4 onward because we have done a lot of work on their supply chain, better procurement, and more efficient procurement. All of these benefits will only start occurring.
Right, sir. Understood. So, would it be fair to assume that we are still holding on to our guidance of 100 crore top line YF by 28 for the Equitas portfolio?
For the portfolio, yeah. Nothing changes for us.
Got it, sir. That's all from my end. Thank you so much for the responses.
Operator
Thank you. I would now like to hand the conference over to the management for closing comments. Over to you, sirs.
Thank you, participants, for all your questions and engagement. Should we have any further queries, please reach out to our IR team at GoIndia advisors. We remain committed to transparent communication and to creating long-term value for all our stakeholders. Thank you once again and wish you a good evening. Thank you. Thank you.
Operator
Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.
