Laurus Labs Limited (LAURUSLABS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Loris Labs Q1F527 earnings conference call. As a reminder, all participant lines will be in the listen-only mood and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, be sign an operator by pressing star and zero on your touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Nitin Agarwal. Thank you and over to you, sir.

Thank you. Hi. Good evening, everyone. A very warm welcome to Lauders Labs' Q1F27 earnings call, hosted by Dam Capital Advisors Limited. On the call today, we have representing Lauders Labs management, Dr. Satya Narayan Chava, founder and CEO, Mr. V. V. Ravi Kumar, executive director and CFO, Mr. Krishna Chaitanya Chava, ED, head CDMO, Mrs. Soumya Chava, ED, generics and commercial, and Mr. Vivek Kumar, AVP, investor relations. Before we proceed, I would like to remind you that some of the statements made during the call today could be forward-looking in nature, and a safe harbor statement to this effect has been included in the press release that has been shared on the company's website. I hand over the call to Dr. Chava to make the opening comments, and then we'll open the floor for questions. Please go ahead, sir.

Thanks for the introduction. Good afternoon to all our stakeholders. We continue to make steady progress and a strong demand environment for multiple complex technology platforms and integrated manufacturing capabilities. We reported significant acceleration in our CDMO business, maintained sustained momentum in affordable medicine portfolio, and continued to show tangible advancement in our... We are executing well on our transformation strategy with clear focus and determination to realize the near to medium-term opportunities. At the same time, we continue investing in capacity readiness to better meet our client needs. New technologies, emerging and complex modalities like peptides, ADCs, gene therapy, etc. To seize the next wave of business opportunities that will positively drive future value creation for all stakeholders. Moving on to financial results, LARUS maintained its strong growth momentum, delivering highest quarterly revenue, EBITDA, and profits during the first quarter. The company's revenues were 2026 crores, showing a 29% growth. This was mainly driven by growing contribution of commercial supplies in CDMO segment and continued strength in affordable medicine portfolio. Grass margins were also very healthy and maintained around 62.7% and EBITDA margins further expanded over previous quarter by 7 percentage points to 31.8%. Our product mix within the business divisions and operating leverage have continued to do well, supporting healthy margins for all. We also achieved several milestones in our operations. The first one is we signed a development and commercial agreement with Arvig Therapeutics for two ADC molecules for India markets. Those are in the clinical stage. We have onboarded a big pharma client with significant opportunity side of us. The proud one, the final landowner of 500 plus acres of land parcel from our AP government is in the final stages now. I would like to thank our dedicated team for their relentless effort and strong progress we are achieving now. I would request Ms. Khrushman Chava to share key updates on our CDMO segment.

Thank you, sir. Within the CDMO side, the division has continued to deliver strong operation execution in Q1, reporting a growth of 69% with the sales of 835 crores on the small molecule side. This is mainly driven by acceleration in the late stage clinical and commercial deliveries of the programs for multiple global partners. We continue to see good and encouraging progress across both human health and animal health businesses, both on volume ramp-ups with existing portfolios and also new potential customer engagements. As we continue to strengthen capabilities of our CDMO platform, We are constantly enhancing the service efficiency and also conversion of the opportunities at various different clinical stages, reflecting client trust in our technical and commercial capabilities. Continued investment into capacity creation at our Visag site and also advancing quite well on the commercial scale peptide capacities based on customer demand. I would say, with customers' ongoing demand for enabling services, a strong CDMO business model, and the management execution, in line with which the company is confident to sustain a very healthy business growth. Now, moving on to the Laura's bio side of things. Biodivision reported a Q1 sales of about 35 crores, which is about 21% growth year-on-year, which is broadly in line with our expectation. The growth is supported by customer revenue diversification and also continued pipeline progress on some of the larger global accounts, both in the animal origin-free space and also in the CDMO side. We have continued to demonstrate significant value-add through the expanded application and capabilities, especially in the enzymatic and biocatalysis platform across various different clinical phases, further deepening long-term customer partnerships. Construction work for the commercial-scale fermentation facility. And strengthening of our downstream processing infrastructure is progressing in line with the plan. And we expect phase one of this capacity, which is a little over 400 kiloliters, is expected to be operational towards the end of this year. Thank you. Thank you.

Thank you, Krishna. Now, I would like to request Ms. Samir Chava to share the key updates on our affordable medicines.

Thank you. Our affordable medicine division delivered a strong quarter one performance with revenue reaching to 1,156 crores, which is an increase of 10% year on year. Our growth was driven by higher volumes across our established portfolio, including ARVs and Onco, where we continue to maintain our market leadership. Our recently launched products in the developed market also sustained a strong momentum. Operational execution remains robust, supported by consistent supply reliability, improving efficiencies, and greater resilience across manufacturing and the supply chain. Despite a dynamic and external environment, our teams continue to proactively manage production, shipping, and inventory to ensure uninterrupted customer deliveries and execution excellence. We are also accelerating product registrations across three emerging markets, building a stronger and more diversified growth pipeline. The establishment of a new office in South Africa further strengthens our commercial presence and positions us to capture the growing opportunities in this region. We continue to make a study progress on regulatory filings. Accumulative DMS filings now stand at 92. In developed market formulation dosiers, we filed two dosiers during Q1, taking accumulative product filings to 96. Thank you.

Thank you, Krishna Swami, for the overview of affordable medicines and CDMO business segments. On R&D front, we spent... 5.8% of our revenue on R&D, which is significantly higher, 75% more than the previous year. This was an account of capability development and efforts for our gene therapy ADC technology infrastructure. And there are some complex pipeline building activity on affordable medicine side as well. Having said that, the recurring spends are in line with full year target. We maintain our commitment to invest in portfolio, focusing on product complexity, scale, and sustainable technology platforms. Let me share brief on quality and ESG side as well. In quarter one, the company underwent 24 quality audits by multiple regulatory and customers. Company has successfully passed these audit inspections without any critical findings. On ESG side, we continue to take steps towards meeting our ESG commitments with a focus on clean energy. In Q1, the science-based target initiative was validated. Our targets to reduce our near-term emissions. We can refer our IR for more details on this. As we look forward, we continue to see robust demand for our specialized technology offerings and the integrated manufacturing capabilities. This is significantly accelerating our global position and expanding various market opportunities. We therefore remain confident in our ongoing transformation strategy and in our ability to deliver sustained growth and value creation for all our stakeholders. Now I request Mr. Ravi Kumar to share overall financial highlights.

Thank you, Dr. Satya, and very warm welcome to everyone on our Quarter 1 FI26 earning call. Total income from operations is around 2026 crores. This is resembling the current year, current calendar year. Registering the growth of 29%, the main driver is CDMO, and of course, affordable also has been contributed. Grass margin maintained at 62.7%, about 3.3% higher than before. This is due to the division mix and the process improvement efforts. And EBITDA for the quarter one stands at 644 crores with EBITDA margin of 31.8%, which is about 7% higher than before, which is consistently improving since last several quarters. This is largely on account of improvement in capacity efficiency driven by the growth of late-stage clinical and commercial projects. Our profit after tax is around 368 crore and ROSI is around 19%, which again is 17.7% of the previous year. On the capex front, we invested about 394 crores for the quarter. Our net debt stood at 2,656 crores, and debt by EBITDA is around 1.28 against 1.25 of the last quarter, on the back of strong internal cash flows. So, a slight increase in the debt is due to the capex plans, and the capital allocation part, our strategy remains unchanged, and we will continue to prioritize investment into high-value business segments to drive near-end long-term growth and returns for our shareholders. You can refer our IR presentation for more details. With this, I would request the moderator to open the lines for Q&A. Thank you.

Thank you. Please now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 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. The first question is from the line of Vandita Ramshi from Antara Growth Capital.

Please go ahead.

Hello.

Yes, sir.

Yeah, congratulations. Congratulations, team, and it's very heartening to see these kind of numbers. Just two questions. First question is regarding the capex that we have guided. We started with 1,000 crores, then updated to 1,500 crores, and in our AGM, we spoke about 2,000 crore capex for FY27. I mean, could you please explain what would have changed in the last six, eight months that you have closed to double your guidance on CapEx?

The increase in numbers for the CapEx spend is broadly based on our requirement for capacity to meet our customer demands. The current year investments... Into capacity expansion is based on what our customer demands are and creating capacity to meet that demand.

Got it, sir. And for the second year, which is FI28, would you continue to maintain the older guidance or any revision there?

See, we changed our guidance. Last quarter, we said 3,000 crores for FI27 and FI28. We may do more than that, but we don't have a correct number to give you in this call.

Got it, sir. And last question from my end, just a bookkeeping question, what will be your operating cash flow for this quarter?

Operating cash flow, we have not disclosed. We'll get back to you.

Okay, sir. Thank you so much. We see you all the very best.

Thank you. The next question is from the line of Tushar Manudhaneh from Motila Loswal Financial Services. Please go ahead.

Thanks for the opportunity and congratulations on good set of numbers. Sir, if you could firstly highlight what was the constant currency growth for the quarter?

Constant currency growth revenue is around 36 crores. Sir, you are asking this only, right? Only 36 crores? Revenue.

I meant constant currency growth.

36 crores only. 36 crores only. Percentage, you are asking?

Yes, sir.

Percentage is about 2%.

Good morning, everybody.

Hello.

The delivery of late-stage molecules, so this is with respect to supplying to the customer in terms of anticipation of product approval, or these are with respect to products which are approved and we have initiated the supplies for these projects?

It's a mix of words.

Can you share the sort of mix so that which can be a sustainable number and which could sort of have a temporary pause once the inventory build-up completes?

So, in the small molecule CDMO business, about 55% of revenue came from commercial supplies.

Understood. And so if you could just lastly let know what was the customer advance in this quarter or let's say compared to what it was in FY26.

No, we didn't have any customer advances in Germany's quarter. Increased.

Thank you.

Thank you. The next question is from the line of Krish Mehta from Inam Holdings. Please go ahead.

Thank you for taking my question and congratulations on these numbers. So I just wanted to get the split between your FDF and API within the ARV revenue, if you could just disclose that. And the second question I had is that, you know, now this quarter we're seeing that mix of ARV versus non-ARV coming back down to like the one-third, two-third split, which we have spoken about for a while. So, how do you think about this going forward, you know, for the next three, four years? Are we going to be at this mix now? Have we reached that stable level of one-third, two-thirds?

I will answer the last question. See, currently two-thirds is non-ARV and one-third is ARV. We expect this will be the highest. I expect it will go down further, but I don't think it will go up beyond this number.

To answer your first question, for ARV APIs we did about 415 crores and ARV FTF is 254 crores. Together its total ARV revenue is 659 crores.

Okay, thank you very much.

Thank you.

Thank you. The next question is from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead. Yeah, hi.

Good evening, team. Congratulations on a strong quarter. I have two questions. First is, Dr. Satya, take us back to 2023, please. The numbers were weak. The stock was under pressure. Yet you kept investing. What was going through your mind during that period? And what gave you the conviction to stay the course? And I would also like to hear Raviji's comments on this question, please. Thank you.

See, in the

CDMO business, what we have realized, customer would like to see the capacity before giving products. And second, The trend what we have also seen, when they put a very important program of theirs, they don't want to see batch size increases, they don't want to see change of manufacturing lines, change of manufacturing sites to minimize the regulatory complexity. Since we realized this very early in the CDMO growth, We did invest aggressively. We realized we are taking risk, but we are not taking the risk putting the company at a bankruptcy. So, we decided to invest aggressively, creating capacity, and that attracted customers, that attracted complex projects, that also attracted projects at scale.

Let's help it.

And Raviji, being the CFO, it's your job to not approve any project, right? So I'm sure you must be having a very close scrutiny on, you know, at that point in time, because the environment was foggy. And at least to us as investors, it was very less visible. Looking at the numbers, the ROSI was collapsing, the margins, the sales, I mean, the CDMO segment itself saw a big collapse because of disappearing of that purchase order. So what gave you the conviction to sign on the capital allocation decisions that the team was making?

Actually, your question has an answer. FA23 is the best year because of that execution of large budget order. But maybe the execution itself is a classic example or a precedent to approve a CAPEX. So, had we not had capacity before accepting that order, Actually, we should have been missing the entire CDMO opportunity in the last, maybe in the next future years. So, that created a milestone. And fortunately, I am there in this business and with Dr. Sathya for a long time. So, we know, we may have some, differ sometimes, but we go together. So, that's how we have done. And then, you know, only seven quarters, we had not so great results. Those seven quarters, we read Bhagavad Gita well, so we were having a balance of mind, and then we were wishing our judgment to invest continuously. That is really paying well for last five quarters, and then it will repeat in the next years. I hope I answered your question.

Yeah, definitely. Definitely, Raviji. You read the most important book at the point in time which, you know, you created the maximum return on that investment of your time on that one. So thank you for answering that. Second question is, Loras now seems to be at a stage where some investments are being harvested, others are scaling, while a third set is still being seeded. How do you think about balancing these three horizons when allocating capital? Because a lot of what you are seeing today will not be visible to us as outsiders or investors, maybe next five years, maybe four years, who knows?

The one segment, our investments are not going to give returns. Our advanced biologics, our investments into gene therapy, ADCs and all. That investment we are doing consciously because those modalities are the ones which are going faster than others. Except that our investment into small molecule, API, small molecule, drug product, I think we know, we As you always say, the CDMO, CMO business is lumpy but predictable. So now our investment is, TAPEX investment is very heavy because we are able to predict better than earlier.

I just want to add one more point. Yeah, sure, Ravji, please. You see, a few years back, we have taken a call when we started generating more cash. So we started, we took a call that like up to 10% of our investments or our profits into a disruptive technology, either in-house or external. That's also is paying well, and then, for example, some of the initiatives, what we have taken, they are not even generating any revenue, or maybe not meager revenue, not yet generating a meager revenue. So, I think the combination of all these strategies or three points, what you have said, which can create a sustainable organization.

The other point, just one.

The other point I want to add here is, see, any major investment in new areas, it will take 4-4 years. So, unless we invest right now for our growth in FI 30 onwards, so we don't see recruitment of growth coming after 4-4 years.

Absolutely. And unlike generics, as you said, Dr. Satya, ours is a lumpy business, but it also is predictable. How predictable you think is the fermentation and the precision fermentation, the Loras Bio, including the WISAC 400 plus scale that will go commercial starting early next year. How predictable is that side of the business?

See, that business is currently giving, give or take, 200 crores right now. The 200 crores we are very confident that we will generate. Next ramp up, we are banking on multiple products. I hope. All will not succeed, at the same time, all will not fail also. So, we are hopeful some products will succeed and that will give a massive upside. Our next 12 to 18 months will be very crucial, which molecule, which program in our threshold fermentation will take off, which will not take off. So, that is the reason this gestation period we expect 18 months for our bio business to see significant ramp up.

Yeah, and the capacity there is fungible, right? So, even if some molecules fail, the lesson and the learning will be deployed to the next set of opportunity, and we could use the same infrastructure to manufacture something completely different there.

So, capacity, what we have created, upstream, downstream are fungible. So, we can use the same capacity for multiple programs.

Thank you. Thank you. That answers all my questions. Best wishes. Thank you. Thank you.

Thank you. The next question is from the line of Bharat from Quest for Value Capitals. Please go ahead.

Yes. So, congrats for a good set of numbers. Regarding this FI27 capex guidance, as one of the participants already read, so you have effectively doubled capex from 1,000 crores to... in just six months. So, could you help us understand what has changed during the six months period? What new opportunities have emerged that made you to do two successive upward region of Capex? Is it due to increased inquiries from Big Pharma due to separation and diversification?

It is from the capacity needed for our existing customers. Some programs we are doing, advanced intermediates, maybe we have to do API. We are expanding our offerings in the programs. We are investing in new modalities within the small molecules also. So, this CapEx, unlike the earlier CapEx what you have done, this we are doing. For a purpose, for a product, and capacity, what is needed in the near term for our partner's needs.

Thank you. The next question is from the line of Tiansha and Meena from Moonshot Capital. Please go ahead. Sorry to interrupt. Mr. Dhanchan, may we request you use a microphone for asking a question?

Okay, sir. Is it audible now?

Please go ahead with the question.

Sir, I have one question regarding the where we can witness the impact of CDMO ramp-up in our margins or in our profits, whether we can see them in gross profit or operating profit. As we compare with respect to the last quarter, our CDMO business has improved a lot. However, our gross margins have not improved, and the operating profits have improved. Further, raw material costs, if we consider that, there may be some higher costs due to the Middle East or West Asia crisis. But in case of AGI, I think the prices reflect around one quarter after the raw material will be procured. So, Can you please explain our, to understand the business in this regard?

See, as you mentioned, our CDMO business increased significantly, and so our grass margin also improved from 61 to 63%. That's from quarter on quarter. But when you compare to year on year, it is almost little over 3% increase was there. We have seen some pressure on margins because of the global conflicts. Margin pressure is not that significant to take a shelter that because of that margins were gone down. So, we expect the similar margins will be maintained for the coming quarters as well.

Second question regarding the assessments, would we expect the gross assessments around 1.5 as we ramp up our stadium of business?

We have clearly mentioned in our investor presentation, our first target is to asset turnover ratio, take little over 1, 1.0. That's the target. We are almost there right now, but we wanted to take it little more than 1.0.

Last question from my side. In this quarter, the stadium business is significantly contributing around, I think, 44% something. And so, I want to know this contribution from the 2-3 products or there are multiple products in this regard.

Thanks for asking the question. Our CDMO business is well diversified. No product or no customer are contributing significantly in our business. So, well diversified CDMO segment.

Okay. Thank you, sir.

Thank you. The next question is from the line of Ramesh Chantjain from CA. Please go ahead.

Good morning, and thanks for taking my question. And first of all, congratulations to the management for a great setup number. So my question to Dr. Chava is, sir, if I remember correctly, you have promised by 2030 our CDMO turnover will be more than 50% of the total turnover. So are we still sticking to that or are we going to prepone that target to 2028 or 2029?

At this point, we are very comfortable to say that by FA30, we will definitely reach our target of at least 50% of revenue come from CDMOs at night.

And secondly, sir, I wanted to know what is the amount of exchange gain we have made during Thank you.

Thank you. Forage gain on. And the balance sheet is about 5 crores.

It's 5 crores.

Yeah, 4X gain as a separate head is 5 crores. 5 crores.

And thirdly, sir, if I see your presentation, you're mentioning some in-licensing of two antibody this thing. So can you throw some light on this, sir, exactly when you'll be able to generate revenue out

Well, these programs are at the pre-clinical stage. We have to continue process optimising in Hyderabad, do GLP toxicity, file IND, and data are good, then we have to do phase 1, 2 trials in India. So, it will take 3 to 4 years, yeah, in India at least.

Okay, so that's all from my side, sir. And again, congratulations, sir, for the great data.

Thank you. The next question is from the line of Rehan from Sreenetra AMC. Please go ahead.

Oh, yeah. I have just one question on your CAPEX side. Like you have guided long-term target of 1.1x asset turnover and 25% ROCE. So, given the cumulative CAPEX has now crossed for 2,700 crore, So, what is the expected trajectory for these ratios over the next four quarters, or the...

Thank you all.

I think yes or no ratios will be over 1.0 for sure. And the ROSE, because of every capex this year, maybe going to 23% will take some time. But we expect ROSE will continue to grow from last year to 17.7, this year is 19 point something. Then we continue to grow our ROSE returns as well.

Okay. Okay.

And just last one more question, if I can ask. Sir, we have previously observed pilot scale recipients for JLP-1 peptides, like Sanagotide. Who, sir, has the company now qualified commercial scale synthesizers, and when do we expect meaningful revenue contribution from this category?

Within GLP-1 space, while there are a few different opportunities that we are working on, unfortunately, we are not able to discuss any project-specific details, but we expect peptides to be a meaningful area for Lourdes as a company.

Okay, sir. Thank you. I'll jump back in.

Thank you. The next question is from the line of Manoj Bhatev from Karnaline. Please go ahead.

Hello. Am I audible?

Yeah, I am.

So, first of all, congratulations, Dr. Chava and entire Lawrence team for a very, very strong quarter. So, I have three questions. First question is, as you mentioned that in CDMO, 55% of the revenue is on the commercial side and 45% is on the startup where the filling of inventory may be there. So, just wanted to understand whether this 45% portion of the revenue is going to sustain. How do you see the sustainability of this portion? That is my first question.

The majority of the revenue, which is not commercial, is for phase 3 supplies. So, we expect they will become commercial soon. For one of the programs where we supplied phase 3 supplies, the approval also obtained. So, we expect it will become commercial soon.

Okay, okay. And second part is, if you can give us some update on KarkaJV, how much more capex will be required in that, and when do we expect the revenues, and what will be our guidance, if any, on this part?

KarkaJV, we are doing two things. One is oncology. Small volume oncology formulations and large volume normal solid orders. The oncology facility will be ready early next year, and then solid order facility will be second half of 2027 calendar year. Currently, we have invested so far 400 crores, and then that facility needs another 400 crores, and part of that investment will come from loan from our partner.

And so my last question is on our animal part of CDMO, I think if I remember out of 16-18 molecules, around 2 or 4 tag transfers did happen. So if you can give us an update there also, the kind of jump we are seeing, have we received more tag transfers, has number of molecules gone up there?

Well, not in a position to share the specific number of molecules that you're working on, but there are a few programs or molecules in that space that are being commercially supplied as we speak.

Okay. All right, sir. That's it from my side. Thank you so much.

Thank you. The next question is from the line of Sachin from Prahas Capital. Please go ahead.

Hello, Dr. Shava. Am I audible? Yeah, audible, Sachin. Yeah. So, many congratulations to entire Laura's team for wonderful results. Dr. Shawa, I'm very impressed the way each success of LORUS is leading another success. Like, for example, API-created formulation, formulation-created CDMO. Now, what I want to understand, if you see LORUS three to four years from here on, what's your big picture, Dr. Shawa?

It will be a... A fully integrated pharmaceutical company offering end-to-end in pharmaceutical value chain from API to drug product. Both in our generic CMO, as well as our NCE also, our desire is to offer fully integrated program, not just starting materials, intermediates, API, but to offer including formulations for our big pharma CDMO customers. That's our goal, and we are going in the direction right now.

Understood. And more particularly, how do you see Loras Bio evolving in the next three to four years? Because as of now, comparatively, it's pretty small. But in your scheme of things, how do you see the next three to four years, Loras Bio can shape it?

There are two There are several segments where we have invested a lot of money. One is bio, and second one is crop sciences. We need maybe another 18-24 months to assess how big the opportunity, what else we need to do. Do we add more customers, more projects, more infrastructure, or more resources in R&D or more resource BD? I think that's the evolving stage right now. If you look at in the broad scheme of things, both divisions put together creating 254 revenue. That's not significant, but... We are investing significantly in both these and we need 18-24 months to assess where those divisions will take us from the current stage.

Understood. Understood. I think that that's from my side, Dr. Chava. Thank you.

Thank you. Thank you. The next question is from the line of Mitul Mehta from Lucky Investment Managers. Please go ahead.

Good evening, sir, and congratulations on a great set of numbers. You know, it is very heartening to know that how you have navigated your company in last 10 years. From an ARV to a Uh, full-fledged, integrated CDMO. Uh, so, hearty congratulations to your entire team, sir. Sir, my question to you is, yeah, sir, my question to you is, you know, uh, so, if you see our quarter one exit rates for CDMO is roughly about 820, roughly about 800 plus crores. Now, this, and, and the overall share in the basket is now approximately 42%. And, uh, do you, do you, do you firmly believe that we can keep growing our CDMO business at about, you know, 30 to 40% for the next three, four years based on the CapEx that we are doing for this? And this entire CapEx is for the CDMO or we are also investing in other segment of the businesses? If you could just throw on this particular, uh, questions.

The majority of Capex is for small molecule, either it is API or CDMO. And we do expect to grow significantly. I may not be able to give you a number what we will grow, but we have good visibility and lot of confidence and conviction that CDMO will definitely give lot of growth for us.

And sir, you know, is it possible for you to, you know, give us a total TAM of this CDMO pipeline that we have built over the last so many years, so that, you know, we get some confidence as to, you know, the company is on a very serious growth trajectory for the next three to five years. Is it possible for you to share the number? I mean, I know, I am certain that there are a lot of confidential agreements, but just sort of broadly, if you can, you know, give us key how, what could be the addressable opportunity in this whole piece.

I think we don't want to confuse all our investors by giving a certain number of projects we're handling at certain percentage of and all. So, it all depends on the value of each program is more important than the number of programs. So, that's more important. And the addressable market is, you know, the CDMO market is growing. A lot of opportunities are there. It is our ability to create capacity, create technology platforms and absorb customer projects and all. Krishna, you want to add anything here?

No, I call your thoughts because from a number perspective, in the CDMO space, we have commercial programs. Be it intermediate or API that are maybe less than a million. And there are programs that are in the double digit or even beyond, right? So just giving a number might not give a complete picture and thereby that was one of the reasons why we've categorically tried to refrain from giving a breakup because that might not be accurate representation of how the business is doing.

Or is it possible for you to share, like, how much each product or each program would be contributing to the overall? I mean, is it a very concentrated, like, I mean, is it like a top three or a top five, or it's a basket of products that is sort of contributing to the growth in the overall CDMO business?

Fortunately, within the CDMO space, the revenues are well diversified, and We don't have any particular high concentration of any particular program or customer for that matter. It's a well diversified set of products that currently we have.

And also within the CDMO, what percentage would be for the patented molecule and non-patented molecule?

Within the way Loras Labs as a company represents CDMO, all of these are innovator programs which are on-patent molecules. All the off-patent molecules that we support for various different companies from contract manufacturing point of view are internally referred to as CMO, and the value from this is captured in the affordable medicines revenue.

So, which means a very significant, I mean, 70 to 80 percent or 90 percent of the business would be from the patented molecules.

In the CDMO space, Predominantly, yes. Maybe even more than that.

Okay. And the therapeutic concentration also is very well diversified? I mean, one or two therapies contribute significantly to the overall CDMO pipeline? I mean, business?

Therapeutic area also is very diversified. There is no specific therapy area that has, you know, any high concentration risk.

Sir, you know, you have been primarily into an investment curve, and, you know, this investment curve also seems to be continuing. And, obviously, the revenues are sort of, I mean, the growth, obviously, we can see that, you know, your CDMO business is growing at. The upward of 35-40%. But just to sort of map Loras on return matrix, I mean on return on capital employed, if I were to sort of dissect your CDMO and sort of build up P&L for your CDMO business, would your return on capital employed at maturity or maybe at good scale up would be significantly higher than the total ROCE of the company?

We can't separate the CDMO and the generics part of it. So, we can't have a calculate the separate our OC per CDMO. Okay, thank you. Okay, great sir. Thank you very much.

Thank you.

Thank you. The next question is from the line of Thawalkud from Jeffries. Please go ahead.

Yeah, hi, sir. So just wanted to get some more, you know, comments on your custom synthesis sales run rate, given that we do have high visibility, typically at least for next two quarters. So is it fair to say ballpark, maybe plus minus 100 CR here and there, but we can maintain the current run rate? Is that a fair understanding?

That's a fair statement to make, sir. Yes.

Okay. And also, can you give what was the commercial sales contribution within the custom synthesis for FY26? You said it's 55% for 1Q FY27.

It's in the same number. But we expect in the coming quarters and years that will grow. 50% came from commercial supplies last five minutes.

Okay, okay. And one for Ravi, sir. Sir, if I got it correct, you said it's 2% constant currency growth for the quarter. So, can you explain? Because against most currencies, especially the dollar and euro, I think INR depreciation is like in 10% rate. So, how is our constant currency growth so low, given that INR growth is 30%?

So, we have even a rupee sales also, right? The entire sale is not in the dollar terms. And what I said is, what I said is like the 526 and the first quarter compared. Okay.

Okay.

So what would be the total export percentage in terms of total console revenue?

Export, direct export is I think about 55-60%. I have to just check.

Okay. And lastly, one more if I can, can you throw some more color on the LORUS bio division in terms of what category of products are currently largest within that division? Is it insulin, food, protein, industrial enzymes currently? And in terms of new product, what are the largest, what are going to be the largest category of product?

Currently, about 40% revenue comes from animal origin, free cell culture, ingredients and enzymes, and the remaining 60% came from various CDM molecules at the early stages. It's spread over some alternate food proteins, some colors. Some superabsorbed polymers, it's spread, it's not one segment which is concentrating more.

Okay. Okay. That's it from my side. Thank you.

Thank you. The next question is from the line of Abhijit, an individual investor. Please go ahead.

Hi. Good evening, everybody. Congratulations on the fantastic set of numbers. I have a question with regards to the Arabic therapeutics to ADC contracts that you've seen. I just did a quick google search and I noticed that they have a different type of ADC. Can you give more disclosure on the product that you're developing? Are you partnering with them and to develop it from scratch, or there is already a certain product that is already there and they're asking you to help them scale it up?

You know, we also made a small investment into Arabic Therapeutics Lungback. We have licensed two pre-clinical assays, which completed in vitro, proof of concept. And we need to do GLP tasks here in India. That will be mid-off next year. We expect to start pre-clinical tasks. And based on that, we will plan our future course of action. These are part of their MOTA program, and these are for two therapeutic categories. We will give you more details later, which are both are solid tumor.

And another question is with regards to the organization itself, I think you clearly demonstrated that you are capable of executing small molecule CDMO contracts, and you are positioning yourself as a large molecule player with all your investments in cell gene therapy, peptides, ADG. Would you like to give a more visionary disclosure to the investors with regards to the next five years?

See, we already make a few payload linker programs for Big Pharma, and see, for us to wet our hands, We need to get technology absorption. Instead of developing, we thought to invest in a small biotech company and get access to their technology. So now with these two ADC programs, we have access to their conjugation, purification, and Philippines opportunities there. That is one area where we are investing. And we also license some patients from IIT Kanpur, those who are helping in our gene therapy programs, Our investment into Immune Act, helping us to understand the lentiviral and then cell therapy, and based on the programs, what we have from partners, we have also invested, as Krishna mentioned earlier, into a large peptide manufacturing capacity as well. So, eventually, we are investing in the future modalities where the market is moving.

Okay, one last question with regards to the peptides. Everybody in the market is trying to focus on the peptides, so the weight loss, the GLPs. But I think there is a lot of revolution that's happening in the peptide treatments for other sectors, right? Like gastro, I think, I was reading is something, there's a lot of work going on in it. Would you like to disclose more that saying that are you looking at the overall sector or are you looking at specific sectors where the growth is? Because I think the market itself is growing around 30% plus. So, if you can give some more details on it, Krishna, you want to answer?

Yeah, there's a few different class of programs that we expect to support in this space. Additional color in due force, but yeah, it's multiple classes that we expect to support.

Not just JLP, we also have programs other than JLP. Okay, thank you so much. Thanks for coming.

Thank you. The next question is from the line of Tushar Manudhanev from Motilala Usual Financial Services. Please go ahead.

Thanks for the opportunity. And sir, just a clarification. The constant currency growth in Q1 FI27 over Q1 FI26, if you could clarify.

Vivek, we will come back to you on that. Actually, what I said is on the pull year of FI26 and quarter one of FI27.

No, I meant to ask Q1FI27 over Q1FI26.

That's what Vivek will offline tell you.

Sure, sir. And with respect to this incremental capex, while it is for a specific customer, but is it for a specific product?

These are not meant for one customer, multiple customers and multiple products.

The CapEx guidance which you raised from 1500 to 2000, so incremental fine rate crore is for multiple products, is that the way to understand?

Yeah, you're right.

And if you could just clarify, like again, for animal health, crop science, or human health, and for API or intermediates?

It's a mix of both human health and animal health portfolio.

And for a, again, sorry, API or intermediate?

Both, both.

As you've seen, Larus is investing more in serving our partners' API needs. We do have some business in advanced intermediates in CDMO segment, but mostly it is API for us.

Yeah.

That's correct.

And just last one, if I may, this regulatory approval for your customer, where the product of tech is sort of expected to scale up, this is for like the global market, regulated market, emerging markets, if you could, you know, give some color to that.

We expect it as global, regulated and, you know, LMIC as well, but it's global.

Thanks a lot for addressing your questions.

Thank you. The next question is from the line of Dhyansham Meena from Moonshot Capital. Please go ahead.

Thank you, sir, for the opportunity. This is just a follow-up question regarding the CDMO business. As Dr. Tava mentioned, we have very well diversified CDMO business. Can we know in terms of the percentage? If our any molecule in the end product becomes blockbuster, how much we can earn in our business?

That is my question, sir. I think we can't give you those granular details, product-wise and customer-wise revenue, because of our current financial issues, we can't give you beyond what we are disclosing.

No, I don't want to, regarding any particular molecule, I just, the idea in this regard, that if one molecule becomes a blockbuster in what we make in our CDM business, how much percentage we can earn in our business in that molecule? Just an example.

So, again, that's an interesting question. The answer to that, sir, is... It is not very easy to, you know, come up with a percentage potential contribution to our top line based on the blockbuster status of the customer. The reason I say that is because there might be programs that use, let's say, 500 milligram dosage per day, or there might be programs that use, let's say, one or two milligrams a day or even less. And also comes down to what the value of that each milligram is, right? So while the program might mean blockbuster for our customer, what it means or what it entails to us as an API supplier could mean completely different based on that particular nature of their product.

Okay, thank you, sir. Just one more follow, if I can get. Do we have molecules in our sodium business which are generating around 200 crore or more?

Yeah, yeah, if the answer is yes, no, yes, we do have. Yes, sir. Oh, thank you, sir. That's all.

Thank you. Ladies and gentlemen, we will consider the last question of the day, and I now hand the contents over to the management for closing comments.

Thank you, everyone, for your very insightful questions and your continued support to the organization.

Thank you.

Thank you.

Thank you. On behalf of Loris Labs that concludes this conference, thank you for joining us, and you may now disconnect your lines.